Candlestick shapes (patterns, patterns)
What are candlestick patterns?
Candlestick patterns (patterns, candlestick patterns) - graphical exchange models of technical analysis Japanese candleswhich traders use to predict the reversal or continuation of the trend (trend) on the trading chart of the selected instrument.
How are candlestick patterns formed?
As a rule, candlestick patterns consist of several consecutive candles of a certain shape, where each individual candle plays a big role, and together they make a pattern that most likely shows the further movement of the price chart Such figures have long been noticed by traders, and conclusions on them are based on observations of the market.
What are the candlestick patterns?
Candlestick patterns have different names, which correspond to the appearance of the figure. For example, hammer"is a candlestick with a small white body and a long lower spike, with no upper spike. Such a pattern indicates a recent prolonged decline and serves as a signal for a reversal. All the names of the models are "speaking", in order to make it easier to determine which trend we are talking about: "takeover pattern", "counterattack", "grip by the belt", etc.
Similar to technical analysis patterns, candlestick patterns are divided into trend reversal and trend continuation patterns. In addition, candlestick patterns can be used to confirm the validity of technical analysis patterns.
How to trade on candlestick analysis patterns?
Nowadays there are many technical indicators, trading strategies and tactics based on the candlestick analysis. Candlestick patterns can be found on any timeframe. In this case, the younger is the timeframe, the more candlestick patterns can be found on it, but the feature of the candlestick patterns, as well as of the technical analysis figures, is that their truthfulness depends directly on the timeframe size, that is, the older is the timeframe, the higher is the truthfulness of the candlestick pattern. It is recommended to use candlestick analysis and search for candlestick patterns on time intervals from H4 and older.
Popular candlestick patterns
- Head and shoulders: peculiarities of building and trading on
- Figures "Flag" and "Pennant" - Peculiarities of trend continuation patterns analysis
- "Dodgy": the complicated qualities of a simple graphic model
- Harmonic pattern "5-0": almost 100% probability of working out
- Others