Candlesticks description
It’s no secret that candlestick patterns are powerful indicators signalling major price movements in forex trading.
They form a very powerful aspect of technical analysis and tend to produce accurate results if mastered, perfect for learning forex trading for beginners.
Whether it’s a continuation or a reversal signal, these series of patterns can easily give you a heads up what might be coming soon.
The beauty of candlestick chart patterns is that anyone can use them.
They are perfect for all levels of experience and can be used on any timeframe.
It’s important to also note that these patterns can provide confluence with other trading strategies, price action signals, or technical indicators.
When combined, it can make a powerful strategy.
The goal of this guide is to be the last destination you’ll need when it comes to learning the candlestick pattern basics.
After reading this, you will be able to accurately identify these candlesticks in the markets correctly and able to know whether the market is giving you a bullish, bearish, or a continuation signal to enter and bank some pips.
Not only that, but you’ll also understand exactly why these patterns occur in terms of orders and momentum changes – understanding this factor can help build a bigger picture of your trading ideas!
So, let’s go through the major candlestick chart patterns and how to use them as effectively as possible.
Before we dive into each pattern, let’s go through some of the basics and build up a foundation – making life and learning easier as we progress, shall we?
Let’s start with:
What Are Candlestick Patterns & Why Do We Use Them?
To make things clear – candlestick charts, Japanese candlestick patterns, Japanese chart patterns, and similar terms are all the same.
Candlestick patterns are specific formations that indicate whether a move is going to continue or reverse.
Which allows traders to place trades based on their meanings.
These patterns are formed based on what the market is doing at the previous trading session.
Due to the design of the Japanese candlestick patterns, they show a high, open, close, low with the difference between the open and close filled in with a body.
This is to make that particular trading session easier to interpret.
As you can see above, they are pretty easy to read and at a single glance can give you all the price information you need to make a trading decision.
Each trading session can be different, but the core reason why the Japanese candlestick is a popular choice for traders is because of this:
It’s easy to see whether the buyers or sellers won, and by how much.
This gives you an idea of where the momentum lies.
You won’t get this from a Line Chart.
We use candlesticks to give us an idea of where the market goes, but our unique method of entering trades – execution method – utilizes candlesticks to help avoid false signals and generate optimal entries.
Now you have a better understanding of what candlestick chart patterns are and why we use them.
There a few common questions asked that will certainly help with your knowledge going forward.
One of the most common questions beginners like to ask about candlestick charts is:
How many candlestick patterns are there?
Roughly speaking there are over 100 candlestick chart patterns recognised.
There are so many different combinations available.
There are single, double, triple, and quadruple types of candlestick patterns + more that aren’t as well known.
However, today we will show you 21 of the best candlestick patterns to learn and begin with.
Hammer
Bullish / Bearish Engulfing
Piercing line
Morning doji star
Three white soldiers
Shooting star
Evening doji star
Three black crows
Dragonfly Doji
Gravestone Doji
Tweezer top/bottom
Falling three methods
Rising three methods
Three line strike
Three black crows
Bullish/Bearish Harami
Bullish/Bearish Hikkake
This will be enough candlestick patterns for your trading career, if you master all 21 then you will be navigating the markets with ease.
Do candlestick patterns work?
Candlestick chart patterns do work.
By using the price action from the market these unique patterns will generate signals that can indicate whether the market will reverse or continue.
These patterns become even more powerful when you use other market signals for confluence, such as support and resistance levels.
However, like all trading strategies and signals, they do still fail from time to time and nothing works 100% of the time.
The more you practice with them, the better you’ll be.
You’ll also pick up some quirks yourself by knowing which candlestick patterns will work better in which situations, but this comes from hours and hours of experience
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