Imperial Knight

These are reversal patterns that show up after a pullback bullish patterns or a rally bearish patterns.

Doji and spinning tops have small real bodies, and can form in the harami position as well. 

A White Marubozu forms when the open equals the low and the close equals the high. As in this case, price continues lower.

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Are you using candlestick charts as your default chart type for price action analysis? Most likely, the answer is yes. In that case, why not make the most out of it by mastering candlestick patterns? According to Thomas Bulkowski’s Encyclopedia of Candlestick Charts, there are candlestick patterns (including both bullish and bearish versions).

The longer the white candlestick is, the further the close is above the open. This indicates that prices advanced significantly from open to close and buyers were aggressive. While long white candlesticks are generally bullish, much depends on their position within the broader technical picture.

After extended declines, long white candlesticks can mark a potential turning point or support level. If buying gets too aggressive after a long advance, it can lead to excessive bullishness. Long black candlesticks show strong selling pressure. The longer the black candlestick is, the further the close is below the open.

This indicates that prices declined significantly from the open and sellers were aggressive. After a long advance, a long black candlestick can foreshadow a turning point or mark a future resistance level. After a long decline, a long black candlestick can indicate panic or capitulation. Even more potent long candlesticks are the Marubozu brothers, Black and White.

Marubozu do not have upper or lower shadows and the high and low are represented by the open or close. A White Marubozu forms when the open equals the low and the close equals the high. This indicates that buyers controlled the price action from the first trade to the last trade. Black Marubozu form when the open equals the high and the close equals the low. This indicates that sellers controlled the price action from the first trade to the last trade.

Long Versus Short Shadows The upper and lower shadows on candlesticks can provide valuable information about the trading session. Upper shadows represent the session high and lower shadows the session low. Candlesticks with short shadows indicate that most of the trading action was confined near the open and close. Candlesticks with long shadows show that prices extended well past the open and close.

Candlesticks with a long upper shadow and short lower shadow indicate that buyers dominated during the session, and bid prices higher. However, sellers later forced prices down from their highs, and the weak close created a long upper shadow.

Conversely, candlesticks with long lower shadows and short upper shadows indicate that sellers dominated during the session and drove prices lower. However, buyers later resurfaced to bid prices higher by the end of the session and the strong close created a long lower shadow. Candlesticks with a long upper shadow, long lower shadow, and small real body are called spinning tops. One long shadow represents a reversal of sorts; spinning tops represent indecision.

The small real body whether hollow or filled shows little movement from open to close, and the shadows indicate that both bulls and bears were active during the session. Even though the session opened and closed with little change, prices moved significantly higher and lower in the meantime. Neither buyers nor sellers could gain the upper hand and the result was a standoff. After a long advance or long white candlestick, a spinning top indicates weakness among the bulls and a potential change or interruption in trend.

After a long decline or long black candlestick, a spinning top indicates weakness among the bears and a potential change or interruption in trend. Doji Doji are important candlesticks that provide information on their own and as components of in a number of important patterns. Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns.

Any bullish or bearish bias is based on preceding price action and future confirmation. Ideally, but not necessarily, the open and close should be equal. While a doji with an equal open and close would be considered more robust, it is more important to capture the essence of the candlestick. Doji convey a sense of indecision or tug-of-war between buyers and sellers.

Prices move above and below the opening level during the session, but close at or near the opening level. The result is a standoff. Neither bulls nor bears were able to gain control and a turning point could be developing. Different securities have different criteria for determining the robustness of a doji. Determining the robustness of the doji will depend on the price, recent volatility, and previous candlesticks. Relative to previous candlesticks, the doji should have a very small body that appears as a thin line.

Steven Nison notes that a doji that forms among other candlesticks with small real bodies would not be considered important. However, a doji that forms among candlesticks with long real bodies would be deemed significant. Doji and Trend The relevance of a doji depends on the preceding trend or preceding candlesticks. After an advance, or long white candlestick, a doji signals that the buying pressure is starting to weaken. After a decline, or long black candlestick, a doji signals that selling pressure is starting to diminish.

Doji indicate that the forces of supply and demand are becoming more evenly matched and a change in trend may be near. Doji alone are not enough to mark a reversal and further confirmation may be warranted. After an advance or long white candlestick, a doji signals that buying pressure may be diminishing and the uptrend could be nearing an end.

Whereas a security can decline simply from a lack of buyers, continued buying pressure is required to sustain an uptrend.

Therefore, a doji may be more significant after an uptrend or long white candlestick. Even after the doji forms, further downside is required for bearish confirmation. This may come as a gap down, long black candlestick, or decline below the long white candlestick's open.

After a long white candlestick and doji, traders should be on the alert for a potential evening doji star. After a decline or long black candlestick, a doji indicates that selling pressure may be diminishing and the downtrend could be nearing an end. Even though the bears are starting to lose control of the decline, further strength is required to confirm any reversal.

Bullish confirmation could come from a gap up, long white candlestick or advance above the long black candlestick's open.

After a long black candlestick and doji, traders should be on the alert for a potential morning doji star. Long-Legged Doji Long-legged doji have long upper and lower shadows that are almost equal in length. These doji reflect a great amount of indecision in the market. Long-legged doji indicate that prices traded well above and below the session's opening level, but closed virtually even with the open.

After a whole lot of yelling and screaming, the end result showed little change from the initial open. Dragonfly and Gravestone Doji Dragonfly Doji Dragonfly doji form when the open, high and close are equal and the low creates a long lower shadow. Dragonfly doji indicate that sellers dominated trading and drove prices lower during the session. By the end of the session, buyers resurfaced and pushed prices back to the opening level and the session high.

The reversal implications of a dragonfly doji depend on previous price action and future confirmation. The long lower shadow provides evidence of buying pressure, but the low indicates that plenty of sellers still loom. After a long downtrend, long black candlestick, or at support , a dragonfly doji could signal a potential bullish reversal or bottom. After a long uptrend, long white candlestick or at resistance , the long lower shadow could foreshadow a potential bearish reversal or top.

Bearish or bullish confirmation is required for both situations. Gravestone Doji Gravestone doji form when the open, low and close are equal and the high creates a long upper shadow.

Gravestone doji indicate that buyers dominated trading and drove prices higher during the session. However, by the end of the session, sellers resurfaced and pushed prices back to the opening level and the session low. As with the dragonfly doji and other candlesticks, the reversal implications of gravestone doji depend on previous price action and future confirmation. Even though the long upper shadow indicates a failed rally, the intraday high provides evidence of some buying pressure.

After a long downtrend, long black candlestick, or at support, focus turns to the evidence of buying pressure and a potential bullish reversal. After a long uptrend, long white candlestick or at resistance, focus turns to the failed rally and a potential bearish reversal. Before turning to the single and multiple candlestick patterns, there are a few general guidelines to cover. Bulls Versus Bears A candlestick depicts the battle between Bulls buyers and Bears sellers over a given period of time.

An analogy to this battle can be made between two football teams, which we can also call the Bulls and the Bears. The bottom intra-session low of the candlestick represents a touchdown for the Bears and the top intra-session high a touchdown for the Bulls.

The closer the close is to the high, the closer the Bulls are to a touchdown. The closer the close is to the low, the closer the Bears are to a touchdown. While there are many variations, I have narrowed the field to 6 types of games or candlesticks: Long white candlesticks indicate that the Bulls controlled the ball trading for most of the game.

Long black candlesticks indicate that the Bears controlled the ball trading for most of the game. Small candlesticks indicate that neither team could move the ball and prices finished about where they started. A long lower shadow indicates that the Bears controlled the ball for part of the game, but lost control by the end and the Bulls made an impressive comeback.

A long upper shadow indicates that the Bulls controlled the ball for part of the game, but lost control by the end and the Bears made an impressive comeback. A long upper and lower shadow indicates that the both the Bears and the Bulls had their moments during the game, but neither could put the other away, resulting in a standoff. What Candlesticks Don't Tell You Candlesticks do not reflect the sequence of events between the open and close, only the relationship between the open and the close.

On a bearish pin bar formation, we will typically sell on a break of the low of the pin bar and place a stop loss 1 pip above the tail of the pin bar.

There are other stop loss placements for my various setups taught in my advanced price action course. This provides a tight stop loss with our stop loss just above or below the pin bar high or low and a large potential risk reward on the trade as a result. To effectively trade the pin bar formation you need to first make sure it is well-defined, see pin bar characteristics listed at the top of this tutorial.

Not all pin bar formations are created equal; it pays to only take the pin bar formations that meet the above characteristics. Next, try to only take take pin bars that are displaying confluence with another factor. Generally, pin bars taken with the dominant daily chart trend are the most accurate.

However, there are many profitable pin bars that often occur in range-bound markets or at major market turning points as well. How to trade pin bars from key chart levels Trading Pin Bar Signals with Support and Resistance Confirmation, is perhaps one of the most effective ways to trade forex, if not thee most effective way to trade.

Below, we will show some examples of trading pin bars from key levels. Follow along closely because this is likely to be one of the most powerful Forex trading strategies you will ever learn. Pin bars are one of the most valuable tools that price action traders have in their Forex trading arsenal.

They often form at major market turning points, correction levels, or within a trend as continuation signals. When combined with a strong support or resistance level, pin bars can be one of the most accurate trading signals available.

The best pin bar setups occur near confluent levels of previous price action as the market moves in one direction and then regresses back to re-test a previous support or resistance level. The beauty of price action analysis is that it teaches you how to analyze market movement based on inherently generated data; namely price data. Reversal bars taken at confluent levels can act as a map to long-term profits in the forex market. The more confluence added to a pin bar formation the more accurate it becomes.

The more confluence you can combine with a pin bar signal the higher its accuracy becomes. Pin bars are adaptable to ever-changing forex market conditions and can be very profitable even in ranging markets. They can be very accurate if the formation is clear and obvious and combined with solid support or resistance confirmation. Pin bars of this clarity and magnitude can be entered after the close on a market order. Pin bars can be taken at major market turning points counter-trend if they are very well formed.

Often times long-term trend changes are set off by large pin bars that can result in some serious gains for traders aware of the potential. When pin bars form at the top or bottom of a consolidating market that is taking a breather after a large directional movement they can often signal trend resumption is near. The last pin bar on the right side of the chart set off a very powerful move that resulted in a breakout of the range and subsequent downward trend resumption.

 

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The hammer and inverted hammer were covered in the article Introduction to pocketdice.ga article will focus on the other six patterns. For a complete list of bullish (and bearish) reversal patterns, see Greg Morris' book, Candlestick Charting Explained. Before moving on to individual patterns, certain guidelines should be established.

The Hammer candlestick formation is a significant bullish reversal candlestick pattern that mainly occurs at the bottom of downtrends. This article describes the hammer candlestick, including performance statistics and rankings, written by internationally known author and trader Thomas Bulkowski. 

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Inverted Hammer Discussion

A hammer is a type of bullish reversal candlestick pattern, made up of just one candle, found in price charts of financial pocketdice.ga candle looks like a hammer, as it has a long lower wick and a short body at the top of the candlestick with little or no upper wick. In order for a candle to be a valid hammer most traders say the lower wick must be two . This article describes the inverted hammer candlestick, including performance statistics and rankings, written by internationally known author and trader Thomas Bulkowski.

Candlestick Basics. If you prefer a video explaination of candlesticks, then please see Candlestick Charts pocketdice.gastick charts are an effective way of visualizing price movements. There are two basic candlesticks: Bullish Candle: When the close is higher than the open (usually green or white) ; Bearish Candle: When the close is . Abandoned Baby: Belt Hold: Breakaway: Concealing Baby Swallow: Engulfing: Hammer/ Dragonfly Doji: Harami: Harami Cross: Homing Pigeon: Inverted Hammer/ Gravestone Doji.

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