7 reversal candlestick patterns in investing

In the previous post, instructions on 12 basic candlestick patterns, here are 7 reversal candlestick patterns commonly used in investment:

Bullish Engulfing candlestick pattern – Engulfing get a raise chief

Identifying characteristics:

Appears at the end of a downtrend.
The bullish green candle will have to be large enough to cover the entire body of the preceding candle (no need to care about the beard).
The reversal signal will become stronger when the red candle ahead is a Doji.

Shown:

The Bullish Engulfing Bullish Engulfing candlestick pattern provides the strongest signal when appearing at the bottom of a downtrend, triggering a reversal of an existing trend, as buyers enter the market and push the price higher. again.

For this to happen, the previous price trend must be a strong, clear downtrend. So when a large bullish candle appears, it shows that buyers are rushing into the market to control the downtrend and gain momentum to push the price up. After the green candle is over, many traders will once again want to determine if this is really the starting point for an uptrend, so they will be able to push the price down to the support areas. main and against the rising price action. However, the bears did not seem to have enough strength to sink the price further, so they ended up creating green candles. And this is also the time to confirm the uptrend is about to start.

Bearish Engulfing candlestick pattern – Decline decline

Identifying characteristics: the exact opposite of Bullish Engulfing.

Appears at the end of an uptrend.
The bearish red candle will have to be large enough to cover the entire body of the preceding candle (no matter what the beard).
The reversal signal will become stronger when the red candle ahead is a Doji.

Shown:

Reflecting the market’s indecision in the current trend. This can be understood that the sellers have overwhelmed the buyers, especially the longer the following candle, the stronger the bearish signal. The buyers were too weak to push the price up, so the sellers took full control of the situation and pushed the price down.

Piercing Line candlestick pattern – Bullish piercing line

Identifying characteristics:

The candle ahead is a strong bearish candle.
The candlestick behind is a bullish candle with a length more than half of the body of the previous candle.

Shown:

The Piercing line pattern is viewed as a bullish or sideways reversal candlestick pattern in the future. It shows strong buying power as the price is pushed up or above the previous day’s average price causing the sellers to start confused as the price moves back up.

Dark Cloud Cover candlestick pattern – Dark clouds cover

Identifying characteristics:

The front candle is a strong bullish candle.
The candlestick behind is a bearish candle with a length more than half of the body of the previous candle.

Shown:

Under the increasing pressure of the market, the buyers with excitement made a new high. However, after that, it was met with selling pressure in the opposite direction, pushing the price far to lower than 50% of the first candle, showing that sellers can still control the balance, adding to the bearish sentiment. with hesitant investors.

Morning star candlestick pattern – Morning star

Identifying characteristics:

The first candle is a strong bearish candle.
The middle candle is a small candle, a very short body can be a Doji – not a bearish or bullish candle.
The last candle is a strong bullish candle about 50% higher than the first candle.

Shown:

After the price dropped sharply before, the market appeared small candles or Doji candles to restrain the growth of the sellers, helping the two buying and selling sides to balance each other. After that, the market started forming a large green candle whose length was within the candle or at least 50% higher than the first candle, showing that the bulls are looking for ways to dominate and gain control when they are in control. created an equilibrium position in the previous candle.

Evening Star candlestick pattern – Evening Star

Identifying characteristics: opposite of Morning Star

The first candle is a strong bullish candle.
The middle candle is a small candle, a very short body can be a Doji – not a bearish or bullish candle.
The last candle is a strong bullish candle about 50% higher than the first candle.

Shown:

After the previous strong buying price, the market appeared small candles or Doji candles to restrain the growth of the buyers, helping the two buying and selling sides to balance each other. After that, the market started forming a large red candle whose length was within the candle or at least 50% higher than the first candle, showing that the sellers are looking for ways to dominate and gain control when they are ready. created an equilibrium position in the previous candle.

Harami candlestick pattern – Mrs. Gourd

Identifying characteristics:

The first candle is a strong bullish or bearish candle that covers the entire following candle.
The second candle is a reversal candle compared to the first candle with a very short body or a Doji that fits inside the body of the first candle, it doesn’t matter the candlestick.
Harami is even more evident when there is a gap between the first if and the second candle.

Harami pattern is a cluster of 2 reversal candles that are easy to identify. This candlestick pattern gives a moderately strong signal but gives a very good risk/reward ratio when entering orders. This pattern appears relatively often in the market at different time frames. Therefore, if you know how to use them, you can create effective trading opportunities.

Shown:

When a market trend has lasted for a while, the market will become more careful and cautious before wanting to continue. treey the first candle has a very long body representing strong buying or selling force. However, in the next session, the market was in a state of tension when the price moved in a narrow range. Shows that the dominant side in the previous candle is no longer overwhelming, the vigilance of investors also gradually appeared, creating a market reversal signal. However, traders need to observe further developments to determine whether the price has reversed or just a temporary pause before continuing the trend.