Top 10 Candlestick Patterns To Trade the Markets
Posted by freemexy on March 30th, 2021
Candlestick patterns are important tools in technical trading. Understanding them allows traders to interpret possible market trends and form decisions from those inferences. There are various types of candlestick patterns which can signal bullish or bearish movements. This article will briefly touch upon what candlestick patterns are and introduce the top 10 formations all traders should know to trade the markets with ease.To get more news about WikiFX, you can visit wikifx.com official website.
WHAT ARE CANDLESTICK PATTERNS？
A candlestick is a single bar which represents the price movement of a particular asset for a specific time period. The information it displays includes the open, high, low and close for that time period.
CANDLESTICK PATTERNS CAN BE BULLISH OR BEARISH
In order to recognize and apply the most commonly used candlestick patterns to a trading strategy, traders need to understand how the inclination of these patterns can affect the market direction (trend). The tables below summarize the two main categories of price movement that candlesticks can indicate. Many of these patterns are featured in our top 10 list below.
The evening and morning star candlestick patterns occur at the end of upwards/downward trends respectively and tend to indicate reversal patterns.
The names come from the star shaped formation of the arrangement.
As you can see from the image below, the first candlestick is in the direction of the trend, followed by a bullish or bearish candle with a small body. The third candlestick is seen in the direction of the reversal, ideally closing passed the halfway point of the first candlestick.
Trading this candlestick pattern will require a confirmation candle in the direction of the respective reversal – for example, traders will look for a bearish candle after the evening star.
A bullish or bearish engulfing candlestick pattern may indicate reversal patterns.
The Doji candlestick chart pattern is associated with indecision in the market of the underlying asset. This could mean potential reversal of the current trend or consolidation.
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Joined: December 6th, 2018
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