Basic Japaness candlestics Patterns

Dual Candlestick Patterns

Engulfing Candles

The bullish engulfing pattern is a two candlestick pattern that signals a strong up move may be coming. It happens when a bearish candle is immediately followed by a larger bullish candle.
This second candle “engulfs” the bearish candle. This means buyers are flexing their muscles and that there could be a strong up move after a recent downtrend or a period of consolidation.
On the other hand, the bearish engulfing pattern is the opposite of the bullish pattern. This type of candlestick pattern occurs when the bullish candle is immediately followed by a bearish candle that completely “engulfs” it. This means that sellers overpowered the buyers and that a strong move down could happen.

Tweezer Bottoms and Tops

The tweezers are dual candlestick reversal patterns. This type of candlestick pattern are usually be spotted after an extended uptrend or downtrend, indicating that a reversal will soon occur.

Notice how the candlestick formation looks just like a pair of tweezers!

Amazing!

The most effective Tweezers have the following characteristics:

• The first candlestick is the same as the overall trend. If price is moving up, then the first candle should be bullish.
• The second candlestick is opposite the overall trend. If price is moving up, then the second candle should be bearish.
• The shadows of the candlesticks should be of equal length. Tweezer Tops should have the same highs, while Tweezer Bottoms should have the same lows.
• Triple Candlestick Patterns

• Evening and Morning Stars

  The morning star and the evening star are triple candlestick patterns that you can usually find at the end of a trend. They are reversal patterns that can be recognized through these three characteristics:

  1. The first candlestick is a bullish candle, which is part of a recent uptrend.
  2. The second candle has a small body, indicating that there could be some indecision in the market. This candle can be either bullish or bearish.
  3. The third candlestick acts as a confirmation that a reversal is in place, as the candle closes beyond the midpoint of the first candle.

  Three White Soldiers and Black Crows

  The three white soldiers pattern is formed when three long bullish candles follow a downtrend, signaling a reversal has occurred. This type of triple candlestick pattern is considered as one of the most potent in-yo-face bullish signals, especially when it occurs after an extended downtrend and a short period of consolidation. The first of the three soldiers is called the reversal candle. It either ends the downtrend or implies that the period of consolidation that followed the downtrend is over.
  For the pattern to be considered valid, the second candlestick should be bigger than the previous candle’s body. Also, the second candlestick should close near its high, leaving a small or non-existent upper wick.
  For the three white soldiers pattern to be completed, the last candlestick should be at least the same size as the second candle and have a small or no shadow.
  The three black crows candlestick pattern is just the opposite of the three white soldiers. It is formed when three bearish candles follow a strong uptrend, indicating that a reversal is in the works.
  The second candle’s body should be bigger than the first candle and should close at or very near its low. Finally, the third candle should be the same size or larger than the second candle’s body with a very short or no lower shadow.
  

  Three Inside Up and Down

  The three inside up candlestick formation is a trend-reversal pattern that is found at the bottom of a downtrend. This tripe candlestick pattern indicates that the downtrend is possibly over and that a new uptrend has started. For a valid three inside up candlestick formation, look for these properties:

  1. The first candle should be found at the bottom of a downtrend and is characterized by a long bearish candlestick.
  2. The second candle should at least make it up all the way up to the midpoint of the first candle.
  3. The third candlestick needs to close above the first candle’s high to confirm that buyers have overpowered the strength of the downtrend.

  Conversely, the three inside down candlestick formation is found at the top of an uptrend. It means that the uptrend is possibly over and that a new downtrend has started. A three inside down candlestick formation needs have the following characteristics:
  

  1. The first candle should be found at the top of an uptrend and is characterized by a long bullish candlestick.
  2. The second candle should make it up all the way down the midpoint of the first candle.
  3. The third candlestick needs to close below the first candle’s low to confirm that sellers have overpowered the strength of the uptrend.