The 10 most profitable candlestick patterns
There are literally hundreds of candlestick patterns that traders use to increase their trading performance. Best used with other technical analysis tools, here are the top 10 patterns that provide the most consistent results.
* The dark cloud cover: This 2 candlestick high probability formation is bearish. Generally the first candlestick is continuing the bull trend and the next candlestick will gap up and open appearing to continue the trend, but fail to make any bullish headway and close well below the open and well into the real body of the first candlestick.
* Doji: When the opening and closing price are essentially the same, the candlestick formed resembles a plus sign, cross, or inverted cross and is referred to as Doji. It represents indecision on the part of the market, and is interpreted by traders that a turning point is imminent.
* The engulfing candlestick pattern: This formation consists of just two candlesticks. The first of the two will open and close within the real body of the second candlestick, and as such the second one will have an open and close outside the first candlesticks real body. This can be a bearish or bullish engulfing pattern depending upon the full or empty bodied candlesticks in the pattern.
* Evening star pattern: The evening star is a 3 bar candlestick pattern. Initially the first candlestick is long and bullish resuming the bull trend. Second is a small candlestick that gaps up and fails after that to make much headway. The next day or session is a gap down and a bearish candlestick who's close reaches well into that of the first candlestick in the pattern.
* The Hammer: This is a single candlestick. The hammer is always bullish It will indicate a continuation in a bull trend and a reversal in a bearish one. It just a small body and a long tail. The tail is imply the bears trying their best to push price down and failing by end of day to keep it there.
* Hanging Man: Identical to the Hammer, this candlestick pattern occurs during an uptrend, and signals a continuation of the price movement.
* Harami: This is a simple two day candlestick pattern that has a relatively small body on the second day that is completely surpassed on both sides by the previous day's candlestick and is always of the opposite color. It usually occurs during a minor correction in a bear or bull market and signals that this temporary uptrend or downtrend is reaching an end, and the underlying trend will continue. It is especially considered a strong indicator when it appears together with low trading volume.
* Morning star pattern: A bullish 3 bar pattern. The morning star pattern will start out bearish continuing the prevailing trend. Then it will gap down and turn up ever slowly closing above but near the open. The next day BAM, it will gap up and close much higher than the open.
* Piercing line pattern: This pattern is a bullish reversal pattern with two candlestick in the formation. The first will continue the downtrend. The second candlestick will gap down appearing to continue the trend but will ultimately close higher than the open and well within the real body of candlestick #1.
* Shooting Star: The opposite of the Hammer, this is a one-day formation and occurs in an uptrend. Trading opens higher and trades much higher but prices end near the low. This pattern is viewed as a bearish reversal. - 23222
* The dark cloud cover: This 2 candlestick high probability formation is bearish. Generally the first candlestick is continuing the bull trend and the next candlestick will gap up and open appearing to continue the trend, but fail to make any bullish headway and close well below the open and well into the real body of the first candlestick.
* Doji: When the opening and closing price are essentially the same, the candlestick formed resembles a plus sign, cross, or inverted cross and is referred to as Doji. It represents indecision on the part of the market, and is interpreted by traders that a turning point is imminent.
* The engulfing candlestick pattern: This formation consists of just two candlesticks. The first of the two will open and close within the real body of the second candlestick, and as such the second one will have an open and close outside the first candlesticks real body. This can be a bearish or bullish engulfing pattern depending upon the full or empty bodied candlesticks in the pattern.
* Evening star pattern: The evening star is a 3 bar candlestick pattern. Initially the first candlestick is long and bullish resuming the bull trend. Second is a small candlestick that gaps up and fails after that to make much headway. The next day or session is a gap down and a bearish candlestick who's close reaches well into that of the first candlestick in the pattern.
* The Hammer: This is a single candlestick. The hammer is always bullish It will indicate a continuation in a bull trend and a reversal in a bearish one. It just a small body and a long tail. The tail is imply the bears trying their best to push price down and failing by end of day to keep it there.
* Hanging Man: Identical to the Hammer, this candlestick pattern occurs during an uptrend, and signals a continuation of the price movement.
* Harami: This is a simple two day candlestick pattern that has a relatively small body on the second day that is completely surpassed on both sides by the previous day's candlestick and is always of the opposite color. It usually occurs during a minor correction in a bear or bull market and signals that this temporary uptrend or downtrend is reaching an end, and the underlying trend will continue. It is especially considered a strong indicator when it appears together with low trading volume.
* Morning star pattern: A bullish 3 bar pattern. The morning star pattern will start out bearish continuing the prevailing trend. Then it will gap down and turn up ever slowly closing above but near the open. The next day BAM, it will gap up and close much higher than the open.
* Piercing line pattern: This pattern is a bullish reversal pattern with two candlestick in the formation. The first will continue the downtrend. The second candlestick will gap down appearing to continue the trend but will ultimately close higher than the open and well within the real body of candlestick #1.
* Shooting Star: The opposite of the Hammer, this is a one-day formation and occurs in an uptrend. Trading opens higher and trades much higher but prices end near the low. This pattern is viewed as a bearish reversal. - 23222
About the Author:
Reading a candlestick chart is an absolute necessity if you plan to become a successful trader. It doesn't matter if you're just learning to trade or a seasoned pro getting out of a rut , candlestick patterns are the end all for accurately assessing price action. Download our candlestick chart mastery manual at http://www.candlestickgenius.com
posted by X - Men @ 4:42 AM
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