Candle Stick Patterns

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Course to Candle Stick Patterns Candlestick patterns are graphical representations of price movements for a specific security or currency in a financial market. They are used in technical analysis to provide insight into market sentiment and potential price trends.

Each candlestick pattern consists of a body and shadows (or wicks) that represent the range between the opening and closing prices, as well as the high and low prices of a security over a specific time frame (usually one day). The body of the candlestick is colored to indicate whether the security closed higher (green or white) or lower (red or black) than its opening price.

There are many different candlestick patterns, but some of the most commonly recognized ones include the following:

Bullish patterns: Hammer, Bullish Engulfing, Morning Star
Bearish patterns: Shooting Star, Bearish Engulfing, Evening Star
Neutral patterns: Doji, Spinning Top

Candlestick patterns are one of the most widely used trading strategies. They provide traders with an easy way to visualize and analyze the market in order to make better informed trading decisions. Candlestick patterns can be used to identify potential entry or exit points, support and resistance levels, reversals and trend continuation signals, among other things.

The first step in using a candlestick pattern is to determine what type of pattern it is. There are three main types of candlestick patterns: reversal patterns, continuation patterns, and miscellaneous patterns. Reversal patterns form when current price action is at odds with the direction that prices have been moving, indicating a potential change in trend direction. Examples of reversal patterns include doji stars, hammer candlesticks, inverted hammers, bullish engulfing candles and bearish engulfing candles. Continuation patterns form when current price action supports the existing trend and indicates that it will likely continue in its current direction. Examples of continuation patterns include long lines (also known as marubozu) and morning/evening star formations. Miscellaneous candlestick patterns indicate indecision between buyers and sellers but don’t necessarily indicate future market direction or a potential change in trend; examples include spinning tops, harami crosses and doji stars (neutral).

Once you’ve identified which type of pattern your chart is displaying, you can then start looking for potential entry or exit points based on the data provided by the pattern. For example if you notice a hammer formation forming on your chart it could be an indication that bulls are taking control and that prices may rise soon; conversely if you spot an inverted hammer formation this might indicate upcoming bearishness in the market with prices potentially declining soon thereafter.

It’s important to note however that just because a certain candlestick pattern appears on your chart this doesn’t mean that prices will move as predicted every time; rather these tools should be used alongside other indicators such as volume analysis or technical analysis tools like Fibonacci retracements or Bollinger bands in order to verify any predictions made using candle stick charts before entering into any trades!

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