Bullish reversal candlestick patterns

-Bullish reversal candlestick patterns signify that buyers are momentarily

in control.

5 bullish reversal candlestick patterns

1. Hammer
-When the market opens, the sellers took control and pushed price lower

-At the selling climax, huge buying pressure stepped in and pushed price
higher

-The buying pressure is so strong that it closed above the opening price

In short, a hammer is a bullish reversal candlestick pattern that shows

rejection of lower prices.

2. Bullish Engulfing Pattern

- On the first candle, the sellers are in control as they closed lower for the
period

-On the second candle, strong buying pressure stepped in and closed
above the previous candle’s high — which tells you the buyers have won
the battle for now

-In essence, a Bullish Engulfing Pattern tells you the buyers have
overwhelmed the sellers and are now in control.

3.Piercing Pattern
- On the first candle, the sellers are in control as they closed lower for the
period

-On the second candle, buying pressure stepped in and it closed bullishly
(more than 50% of the previous body) — which tells you there are buying
pressure around
4.Tweezer Bottom
- The first candle shows rejection of lower prices

-The second candle re-tests the low of the previous candle and closes
higher

- On the first candle, the sellers pushed price lower and were met with
some buying pressure

-On the second candle, the sellers again tried to push price lower but
failed, and was finally overwhelmed by strong buying pressure

-In short, a Tweezer Bottom tells you the market has difficulty trading
lower (after two attempts) and it’s likely to head higher.

5.Morning Star
- The first candle has a bearish close

-The second candle has a small range

-The third candle closes aggressively higher (more than 50% of the first
candle)

- On the first candle shows, the sellers are in control as the price closes
lower

-On the second candle, there is indecision in the markets as both the
selling and buying pressure are in equilibrium (that’s why the range of the
candle is small)

-On the third candle, the buyers won the battle and the price closes higher

-In short, a Morning Star tells you the sellers are exhausted and the
buyers are momentarily in control.
How to find high probability bullish reversal
setups
You don’t want to trade any candlestick patterns in isolation because it
doesn’t offer an “edge” in the markets.

So here’s how you do it...

-If the market is trending higher, then wait for a pullback towards Support

-If the price pullback towards Support, then wait for a bullish reversal
candlestick pattern

-If there’s a bullish reversal candlestick pattern, then make sure the size
of it is larger than the earlier candles (signalling strong rejection)

examples:

Morning Star:

Bullish Engulfing Pattern:

Bearish reversal candlestick patterns
-Bearish reversal candlestick patterns signify that sellers are momentarily
in control.

5 bearish reversal candlestick patterns:

Shooting Star
-When the market opens, the buyers took control and pushed price higher

-At the buying climax, huge selling pressure stepped in and pushed price
lower

-The selling pressure is so strong that it closed below the opening price

-In short, a Shooting Star is a bearish reversal candlestick pattern that

shows rejection of higher prices.

Bearish Engulfing Pattern

-On the first candle, the buyers are in control as they closed higher for the
period

-On the second candle, strong selling pressure stepped in and closed
below the previous candle’s low — which tells you the sellers have won
the battle for now

-In essence, a Bearish Engulfing Pattern tells you the sellers have
overwhelmed the buyers and are now in control.
Dark Cloud Cover
-On the first candle, the buyers are in control as they closed higher for the
period

-On the second candle, selling pressure stepped in and it closed bearishly
(more than 50% of the previous body) — which tells you there are selling
pressure around

-in terms of strength, the Dark Cloud Cover isn’t as strong as the Bearish
Engulfing pattern.

Tweezer Top
-On the first candle, the buyers pushed the price higher and were met
with some selling pressure

-On the second candle, the buyers again tried to push the price
higher but failed, and was finally overwhelmed by strong selling pressure

-In short, a Tweezer Top tells you the market has difficulty trading higher
(after two attempts) and it’s likely to head lower.

Evening Star
-On the first candle, it shows the buyers are in control as the price closes
higher

-On the second candle, there is indecision in the markets as both the
selling and buying pressure are in equilibrium (that’s why the range of the
candle is small)

-On the third candle, the sellers won the battle and the price closes lower

-In short, an Evening Star tells you the buyers are exhausted and the
sellers are momentarily in control.
How to find high probability bearish reversal
setups
-If the market is trending lower, then wait for a pullback towards
Resistance

-If the price pullback towards Resistance, then wait for a bearish reversal
candlestick pattern

-If there’s a bearish reversal candlestick pattern, then make sure the size
of it is larger than the earlier candles (signaling strong rejection)

-If there’s a strong price rejection, then go short on next candle’s open

Bearish Engulfing Pattern:

Shooting Star:
Indecision candlestick patterns
Indecision candlestick patterns signify that both buying and selling
pressure is in equilibrium.

And these are 2 indecision candlestick patterns you should know:

Spinning top
-A spinning top is an indecision candlestick pattern that where both
buying and selling pressure is fighting for control.

1. - When the market opens, both the buyers and sellers aggressively
tried to gain control (which results in upper and lower shadows)
2. At the end of the session, neither have gained the upper hand
(which results in a small body)

Doji
-A Doji represents indecision in the markets as both buying and selling
pressure are in equilibrium.

-The candle’s open and close are around the middle of the range

-The upper and lower shadows are short and about the same length

1.Dragonfly Doji

-This tells you there is a rejection of lower prices as buying pressure

stepped in and pushed the market higher towards the opening price.

2.Gravestone Doji

-This tells you there is a rejection of higher prices as selling pressure

stepped in and pushed the market lower towards the opening price.

Continuation candlestick patterns

Continuation candlestick patterns signify the market is likely to continue
trading in the same direction.

4 continuation patterns:

Rising Three Method

- The Rising Three Method is a bullish trend continuation
pattern that signals the market is likely to continue trending
higher.

- On the first candle, it shows the buyers are in domination as

they closed the session strongly
-On the second, third, and fourth candle, buyers are taking profits which
led to a slight decline. However, it’s not a strong selloff as there are new
buyers entering long at these prices

-On the fifth candle, the buyers regain control and pushed the price to
new highs

Falling Three Method

-The Falling Three Method is a bearish trend continuation
pattern that signals the market is likely to continue
trending lower.

- On the first candle, it shows the sellers are in domination

as they closed the session strongly lower

-On the second, third, and fourth candle, sellers are taking
profits which led to a slight advanced. However, it’s not a
strong rally as there are new sellers entering short at these prices

-On the fifth candle, the sellers regain control and pushed the price to new
lows

Bullish Harami
-The Bullish Harami works best as a continuation pattern in an
uptrend. It signals the buyers are “taking a break” and the price is
likely to trade higher.

-On the first candle, it shows strong buying pressure as the candle
closes bullishly

-On the second candle, it shows indecision as both buying and selling
pressure is similar (likely because of traders taking profits and new
traders entering long positions)

Bearish Harami
-A bearish Harami works best as a continuation pattern in a downtrend.
It signals the sellers are “taking a break” and the price is likely to trade
lower.

-On the first candle, it shows strong selling pressure as the candle closes
bearishly

-On the second candle, it shows indecision as both buying and selling
pressure is similar (likely because of traders taking profits and new
traders entering short positions)

How to find high probability trend

continuation setups
-If the market is in a range, then wait for it to breakout out of Resistance

-If the market breaks out of Resistance, then wait for it to form a
continuation candlestick pattern (like Rising Three Method or Bullish
Harami)

-If the market forms a continuation candlestick pattern, then go long on

the break of the highs

-And vice versa for short setups

examples:

A variation of the Falling Three Method on

USD/ZAR:
Rising Three Method and Bullish Harami on
EUR/USD: