Matching Low Candlestick Pattern – Definition and Guide

The candlestick pattern Matching Low is a formation of two bearish candles presented in markets with a downward trend. It has moderate reliability and indicates that the price is likely to change from a bearish to a bullish trend. This pattern can be identified as follows: The current market trend is bearish. During the first period, a big black candle is formed. In the … Read more

Bullish Harami Cross Candlestick Pattern

Harami Bullish Cross pattern

Definition and identification

The candlestick formation Bullish Harami Cross is a trend reversal pattern that occurs in bearish markets, and indicates that there is a probability that a change from bearish to bullish trend will occurs. This pattern has a moderate reliability and can be identified as follows:

  • First a long candle is produced, which can be white or black.
  • Doji is then formed in the next period, which is within the range of the previous candlestick.
  • The previous trend must be necessarily bearish.

Harami Bullish Cross pattern

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Evening Star Candlestick Pattern

The Evening Star candlestick pattern is a highly reliable trend change formation that occurs in bull markets and indicates that there is a high probability that the price will change from a bullish to a bearish trend. This pattern can be identified in the following way:

  • The previous trend must necessarily be bearish.
  • A large white candlestick is followed by a candlestick (white or black) with a small body that opens and closes above the body of the large white candle. 
  • In the following period, a black candlestick is formed and its opening price is formed below the minimum price of the body of the previous candlestick while the closing price occurs inside the body of the great white candle that started the formation.

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Candlestick Patterns Indicator for Metatrader 4

This is an indicator for candlestick charts designed for Metatrader 4 which is based on the recognition of various types of patterns commonly used by many traders to open and close positions in the market. As you know, the Japanese candles usually form easily recognizable chart patterns which are indicative of possible future price behavior in the form of drops, rises, a continuation of the current trend, and trend changes. Logically, these patterns do not have a 100% percent reliable, but in some cases, this is quite high.

Logically, these patterns are not 100% reliable so sometimes produce false signals but are usually quite accurate. The problem is that it takes hours of practice and dedication to analyze price charts to detect these patterns, therefore only the most experienced traders effectively dominate its use to open and close positions in the market. That’s where this indicator is useful because it identifies 10 major candlestick patterns both in bullish and bearish trends and other minor patterns that often occur with some regularity. The result is that the trader can take advantage of any interesting opportunity such as a possible trend change indicated by one of these chart patterns.

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Bullish Harami Candlestick Chart Pattern

The candlestick pattern Bullish Harami is a reversal pattern formed by two candles, which has a low reliability, occurs during downward movements and indicates that the current downward market trend has possibilities of changing its direction to an uptrend. This pattern can be identified as follows:
  • The current trend should be bearish as it is a reversal formation which indicates a possible change from bearish to bullish trend.
  • First, the price forms a long a candle that can be bullish (white) or bearish (black).
  • Subsequently, the price forms a smaller candle inside the candle of the previous period (a candle is enclosed within the range of the larger candle), which can be bullish or bearish.

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Three White Soldiers Candlestick Pattern

The candlestick pattern Three White Soldiers is a highly reliable formation which occurs in both downward and upward trends and indicates that there is a high probability that the market continues to trend upward (continuation pattern) or reverse the downward trend that was dominating the market so far (reversal pattern). This pattern can be identified as follows:

  • The current trend may be bullish as bearish. If the trend is upward, there is usually a decline (previous price movement in bearish) or a period of price consolidation before the market resumes its upward move through this formation.
  • The price profuce three consecutive white candles.
  • Each candle produces a new high.
  • The opening of each candle is inside the body of the previous candle.
  • Each candle closes near the peak.

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High Wave Candlestick Pattern – Definition and Example

The candlestick pattern High Wave candle is a formation which indicates indecision in the market and it has a medium reliability. This pattern can be identified as follows:

  • A small body of white or black color with fairly long tails above and below which could have or not the same extension.
  • It can occur in both the higher parts (highs) as in the lowest parts (lows) of market trends.

Engulfing Bearish Candlestick Pattern

The candlestick formation Engulfing Bearish is a highly reliable trend change pattern that is formed in bull markets and indicates that there is a high probability that the market will change its direction from bullish to bearish. Sometimes it could be the beginning of a bearish trend. This pattern can be identified in the following way:

  • First we have a candlestick with a small white real body, followed by a black candle with a long real body that encompasses in its entirety the white real body of the previous candle. In other words, the range of the first candlestick is within the range of the second candlestick.
  • The previous trend of the market must be bullish.
Engulfing bearish pattern

 

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The Most Popular Candlestick Patterns

List of the most well-known Japanese candlestick patterns used by traders from a variety of financial markets, including Forex, stocks, commodities, and others. These patterns are grouped according to their reliability.

The principles of technical analysis can be traced to the mid-17th century when Japanese farmers used charts to track the price of rice. Later, in the mid-18th century, these farmers began the use of candlestick charts, specifically shortly after 1850. The development of this important tool of analysis of prices is credited to Munehisa Homma, a rice trader from Sakata.

Currently, the candlestick chart is one of the most widely used tools for market analysis worldwide thanks to its easy interpretation and the large amount of information that it presents which can be used to study any financial market including the Forex. It also facilitates the interpretation of more or less reliable chart patterns which are used by many traders as trading signals to open and close positions.

The candlestick patterns can provide the trader with invaluable information on the price action with a simple glance. While common candlestick formations can provide important data about what is “thinking” the market, they can sometimes generate false signals precisely because they are frequent. Therefore, it is also important to know the more advanced patterns which have a high degree of reliability and their use in combination with other market analysis tools. As with any other resource of technical analysis, the candlestick patterns should be used with other analysis tools to confirm their signals.

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Bullish Kicking Candlestick Pattern

The Bullish Kicking Candlestick Pattern is a formation that occurs in both downtrends as uptrends, which has a high reliability and indicates a possible change in the market trend. We can identify this pattern as follows:
  • In this pattern the market trend is not important.
  • The first candlestick of the formation consists of a Black Marabozu.
  • The second candlestick consists of a white Marabozu with a gap (hole) upwards with respect to the first candlestick.