Candlestick patterns are used to predict the future direction of price movement. Discovered 11 of the most common candlestick patterns in Forex Line and how you can use them to identify Bullish and Bearish
A candlestick is a way of displaying information about an asset’s price movement.
It has three basic features:
- The body, which represents the open-to-close range
- The wick, or shadow, that indicates the intra-day high and low
- The color, which reveals the direction of market movement – a green (or white) body indicates a price increase, while a red (or black) body shows a price decrease
Before you start trading, it’s important to familiarise yourself with the basics of candlestick patterns and how they can inform your decisions.
Six Bullish candlestick patterns in Forex Line
Bullish patterns may form after a market downtrend, and signal a reversal of price movement. They are an indicator for traders to consider opening a long position to profit from any upward trajectory.
The hammer candlestick pattern is formed of a short body with a long lower wick, and is found at the bottom of a downward trend.
A hammer shows that although there were selling pressures during the day, ultimately a strong buying pressure drove the price back up. The colour of the body can vary, but green hammers indicate a stronger bull market than red hammers.
Bullish Harami Cross
The Bullish Harami cross pattern suggests that the previous trend may be about to reverse. The pattern can be bullish. The bullish pattern signals a possible price reversal to the upside
- A bullish harami cross is a large down candle followed by a doji. It occurs during a downtrend.
- The bullish harami cross is confirmed by a price move higher following the pattern.
The bullish engulfing pattern is formed of two candlesticks. The first candle is a short red body that is completely engulfed by a larger green candle.
Though the second day opens lower than the first, the bullish market pushes the price up, culminating in an obvious win for buyers.
The piercing line is also a two-stick pattern, made up of a long red candle, followed by a long green candle.
There is usually a significant gap down between the first candlestick’s closing price, and the green candlestick’s opening. It indicates a strong buying pressure, as the price is pushed up to or above the mid-price of the previous day.
The morning star candlestick pattern is considered a sign of hope in a bleak market downtrend. It is a three-stick pattern: one short-bodied candle between a long red and a long green. Traditionally, the ‘star’ will have no overlap with the longer bodies, as the market gaps both on open and close.
It signals that the selling pressure of the first day is subsiding, and a bull market is on the horizon.
Six Bearish candlestick patterns
Bearish candlestick patterns usually form after an uptrend, and signal a point of resistance. Heavy pessimism about the market price often causes traders to close their long positions, and open a short position to take advantage of the falling price.
Bearish Hammer (Hanging Man)
The hammer candlestick pattern is formed of a short body with a long upper wick, and is found at the top of a upward trend.
A hammer shows that although there were buyinh pressures during the day, ultimately a strong selling pressure drove the price back down. The colour of the body can vary, but red hammers indicate a stronger bear market than green hammers.
The bearish harami is a candlestick reversal pattern that is often found at turning points of trend. This pattern signals that a bearish reversal is about to happen. When the next candle drops below the low of the green bar, the mindset of market participants changes to a bearish mode.
The bearish harami is also known as a pregnant candle. That’s because when you look at this candle pattern, it looks like the side of a pregnant woman.
Bearish Harami Cross
The Bearish Harami Cross pattern suggests that the previous trend may be about to reverse. The pattern can be bearish. The bearish pattern signals a possible price reversal to the downside
- A bearish harami cross is a large up candle followed by a doji. It occurs during an uptrend.
- The bearish pattern is confirmed by a price move lower following the pattern.
The shooting star is the same shape as the inverted hammer, but is formed in an uptrend: it has a small lower body, and a long upper wick.
Usually, the market will gap slightly higher on opening and rally to an intra-day high before closing at a price just above the open – like a star falling to the ground.
A bearish engulfing pattern occurs at the end of an uptrend. The first candle has a small green body that is engulfed by a subsequent long red candle.
It signifies a peak or slowdown of price movement, and is a sign of an impending market downturn. The lower the second candle goes, the more significant the trend is likely to be.
The evening star is a three-candlestick pattern that is the equivalent of the bullish morning star. It is formed of a short candle sandwiched between a long green candle and a large red candlestick.
It indicates the reversal of an uptrend, and is particularly strong when the third candlestick erases the gains of the first candle.
Dark cloud cover
The dark cloud cover candlestick pattern indicates a bearish reversal – a black cloud over the previous day’s optimism. It comprises two candlesticks: a red candlestick which opens above the previous green body, and closes below its midpoint.
It signals that the bears have taken over the session, pushing the price sharply lower. If the wicks of the candles are short it suggests that the downtrend was extremely decisive.
How to identify bearish and bullish candlestick pattern in Forex Line charts
When bullish candlestick pattern appear twice on chart it is a signals of bullish and uptrend.
When bearish candlestick pattern appear twice on chart it is a signals of bearish and downtrend.
BULLISH CANDLESTICK PATTERN SIGNALS
BEARISH CANDLESTICK PATTERN SIGNALS
Avoid trading on candle pattern appear Bullish and Bearish not consistent
Forex Line Candle pattern will be disappeared if current candlestick move lower or higher than previous candle pattern