Hello and welcome to my blog about candle stick patterns, i hope this blog will help you to understand some of the basic's in candlestick recognition, if time alows it i will try to update with new patterns, links i find usefull and other tools that might be handy.
Read Me First!
Note that the patterns in this guide is not a recipe for success in the stock market, this guide shows only that some pattern often repeats itself, to figure out the market direction you should always consider the basis of several other criteria's in addition to pattern recognition, a piece of advice is never to trade with more money than you can afford to lose and dont invest money you need within a reasonable time, i do not recommend to lend money for trading purpose, that said read on.
Read Me First!
Note that the patterns in this guide is not a recipe for success in the stock market, this guide shows only that some pattern often repeats itself, to figure out the market direction you should always consider the basis of several other criteria's in addition to pattern recognition, a piece of advice is never to trade with more money than you can afford to lose and dont invest money you need within a reasonable time, i do not recommend to lend money for trading purpose, that said read on.
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The picture to the right explains the basis of the candlestick shape and colour.
The Image in the green square shows a variation of candlestics that often come after a decline and if so they usually (not always) indicates that the market is rejecting lower prices and is a typical bull sign for increasing prices, note that if this type of candlestick appears after several days uptrend it could mean the opposite, nick name Hammer.
The image in the red square shows a variation of candlesticks that often comes solely or by several variations after a large uptrend and usually (not always) indicates that the market is rejecting higher prices and is a bear sign for lower prices, note that if this kind of candlestick appears solely or in group after a pullback they may mean the opposite, nick name "inverted hammer".
Examples 1
Examples 2
Red square 3. in the picture above usually indicates a continous downtrend while red square 4 is slightly more bullish and may turn the table.
The hanging man pattern is seldom triggering a big selloff so i would wait a bit for confirmation like in all patterns, before putting money on it.
The picture in the green square shows a rare bottom pattern with a inverted hammer but it may not indicate more than a little uptrend before further selloff.
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| Click on image to enlarge |
Bollinger bands is another tool that might help indicate a stronger continous trend or a change in the general short term direction, the trigger is usually when the bollinger bands are narrowing.
Another indicator is when 50 MA is crossing 100 MA from the downside up, this usualy but not always may indicate a longer term bullish setup nick name "Golden Cross" in the uposite case it may indicate a bearish long term setup, simmular crossing's MA 100/200, MA 150/300, MA 200/400 and MA 250/500.
Break above or below 200, 250, 300, 400, 500 MA usually but not always (politic's you know) means bullish above or bearish below when passed with a good margin in longer term setups.
Doji the sign of indecision
Doji/s may be a table turner when they appear at the top of a Bull trend as well as the appearing at the bottom of a Bear trend, the more doji's there are the stronger the turn i like to say although there is no guarantee that the market turns, it might just be a respite before contiuation of the same trend, the Doji/s shape/s have one thing in common their tails on both sides of the candlestick have aproximately the same length and the OP-EOD is usually flat and/or simmular to + - a few points/lower/higher price than the previous day EOD price/points the 3 first candlesticks in the picture below are common Doji's and the 4 th candle is simmular but not always.
I'm going to update this blog with other patterns, tecnical's, tools and simmular stuff when time alows it .
Feel free to add comments, tips, tricks and request's.
Another indicator is when 50 MA is crossing 100 MA from the downside up, this usualy but not always may indicate a longer term bullish setup nick name "Golden Cross" in the uposite case it may indicate a bearish long term setup, simmular crossing's MA 100/200, MA 150/300, MA 200/400 and MA 250/500.
Break above or below 200, 250, 300, 400, 500 MA usually but not always (politic's you know) means bullish above or bearish below when passed with a good margin in longer term setups.
Doji the sign of indecision
Doji/s may be a table turner when they appear at the top of a Bull trend as well as the appearing at the bottom of a Bear trend, the more doji's there are the stronger the turn i like to say although there is no guarantee that the market turns, it might just be a respite before contiuation of the same trend, the Doji/s shape/s have one thing in common their tails on both sides of the candlestick have aproximately the same length and the OP-EOD is usually flat and/or simmular to + - a few points/lower/higher price than the previous day EOD price/points the 3 first candlesticks in the picture below are common Doji's and the 4 th candle is simmular but not always.
I'm going to update this blog with other patterns, tecnical's, tools and simmular stuff when time alows it .
Feel free to add comments, tips, tricks and request's.
Link to my market comment blog (it's in Norwegian and mostly text only so u can use Google translate).
Link: http://osedagligemarked.blogspot.com/
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