Candlestick pattern recognition is a extremely powerful analysis method in trading.
The candlestick pattern recognition technique is employed by many successful traders in forex trading. The pattern recognition offers traders lots of insightful information.
- Recognition whether or not the trading climate is dominated by buyers or sellers
- Recognition whether or not there was weakness in buyers or sellers
- Recognition whether or not there is change in investor sentiment
The pattern recognition provides wonderful clues regarding market trend and direction.
Candlestick Pattern Recognition Classes
Candlestick pattern recognition is initially developed by ancient Japanese. There are quite a number of candlestick patterns. According to specific characteristics, these patterns are commonly sorted into numerous classes like bullish pattern, bearish pattern, reversal pattern and continuation pattern.
More specific classes are bullish reversal pattern, bearish reversal pattern, bullish continuation pattern and bearish continuation pattern.
Candlestick in Candlestick Pattern Recognition
Candlestick is visual image of price fluctuations for currency pairs. It’s constructed by the high, low, open and close prices of currency.
If the open price is on top of the close price then a stuffed candle is drawn. The candle is often in black or red colour On the other hand, if the close price is on top of the open price, then a hollow or green colour candle is shown.
The stuffed or hollow portion of the candle is understood as real body. It maybe short, normal or long depending on its proportion to the lines on top of or below it. The lines on top of and below the candle are referred as to either tails, shadows or wicks that represent the high and low price ranges within a specified time period, e.g. one minute, five minutes, or one week or one month.
Candlestick pattern recognition does’t need any type of subtle data. It does’t need any further statistics as well. The recognition is merely using four main price points, i.e. open, close, high and low, to measure market sentiment. The recognition can forecast the forthcoming movement of the market.
Candlestick Pattern Recognition Overview
Three White Soldiers – The pattern recognition exists when a group of three (3) white candlesticks are consecutively close with higher closes. These three (3) white candlesticks indicate more strength if they appear after a period of stable prices and at a low price area.
Three Black Crows - The pattern recognition exists when a group of three (3) black candlesticks are consecutively close with lower closes. The three (3) black crows presage lower prices if they appear at high-price levels or after a mature advance.
Bullish Engulfing – The pattern recognition is comprised of a large white real body which engulfs a small black real body following a downtrend. The bullish engulfing is an important bottom reversal pattern.
Bearish Engulfing – The pattern recognition is comprised of a large black real body which engulfs a small white real body following a uptrend. The bearish engulfing is an important reversal pattern.
Morning Star – This candlestick pattern recognition is a major bottom reversal pattern formed by three (3) candlesticks. The first candle is a long black real body, the second one is a small real body which gaps lower to form a star, the third one is a white candlestick that closes well into the first session’s black real body.
Evening Star- This candlestick pattern recognition is a major top reversal pattern formed by three (3) candlesticks. The first candle is a tall white real body, the second one is a small real body which gaps higher to form a star, the third one is a black candlestick which closes well into the first session’s white real body.
Morning Doji Star – This candlestick pattern recognition is same as a morning star except the middle candlestick (i.e., the star portion) is a doji instead of a small real body. Due to a doji in this pattern, it is more bullish than the regular morning star.
Evening Doji Star - This candlestick pattern recognition is same as an evening star except the middle candlestick (i.e., the star portion) is a doji instead of a small real body. Due to a doji in this pattern, it is more bearish than the regular evening star.
Candlestick pattern recognition experience can be effectively and easily acquired using candlestick pattern indicator. The candlestick indicator is a technical tool. The candlestick indicator recognises the developing candlestick patterns on the trading chart. It informs the recent patterns identified. It also effectively and accurately display the latest pattern to you. The indicator can recognise patterns on every and each timeframe as well as for all currency pair.
You may also interested in : Candlestick Pattern Indicator
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