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Different patterns of Candlestick part.3


Dual candlestick pattern

The Engulfing Candles

The bullish engulfing pattern is a bearish candle followed by a bigger bullish candle. This means buyers are preparing for strong upward movement after a recent downtrend or a period of consolidation.
The bearish engulfing pattern is when the bullish candle is followed by a bearish candle engulfing the previous candle. This means sellers are overwhelmed by buyers and a strong downtrend is imminent.

The Tweezer Bottoms and Tops

This dual candlestick reversal patterns are spotted after an extended uptrend or downtrend and it looks like a pair of tweezers.

Such patterns have following characteristics:

  • The first candlestick is same as overall trend. With price moving up, the first candle should be bullish.
  • The second candlestick is opposite of the overall trend. With price moving up, the second candle should be bearish.
  • The shadows of the candlesticks should be equal length.
  • Tweezer tops have same highs, while Tweezer bottoms have the same lows.

Triple Candlestick pattern.

The Morning Star and Evening Star

Usually, Morning star and Evening star are a triple candlestick patterns that occurs at the end of a trend. For a Morning Star, after a bearish candle, a small indecisive candle is produced, and the third candle is bullish with short or no shadows. For an Evening Star, first candle is bullish, then a small candle creates a pause, and third candle is bearish.

The Three White Soldiers and Black Crows.

These patterns occur after an extended upward or downward trend. The three white soldiers are formed when three bullish candles follow a strong downtrend, while the black crows are formed when three bearish candles follow a strong uptrend.

The first candle of white soldiers should end the downtrend or suggests that the period of consolidation is over. The second candle’s body is bigger than the first and it should close near its high, leaving short or no upper shadow. The third candle is at least the same size as the second candle.

The three black crows are similar in characteristic, but forms at the end of an uptrend.

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