The Tasuki Pattern
Tasuki with Falling Window
The Tasuki pattern is a combination of a gap or window and two candlesticks. In Japanese candlesticks, a gap is called a window and occurs when there is a gap between two consecutive candlesticks, including their shadows. It is not a window if the gap is between the real bodies of the two candlesticks, but the shadows touch. The gap must be between the shadows as well. A window can be a rising window, which is bullish, or a falling window, which is bearish. Two candlestick after the window are required to complete the pattern. These candlesticks may not close the window or fill the gap. The first candlestick following a rising window should be a bullish rising candlestick followed by a dark, bearish candlestick that open within the real body of its preceding candlestick. The second candlestick should close below the real body of the first candlestick but should not close the window. If the second candlestick closes the window, then the pattern is invalid. Subsequent candlesticks may close the window but not the second candlestick. The rising window should be considered support and the failure of the following two session to close the window and violate support, is an indication of the bullish nature of the market.
The opposite is true of a tasuki with a falling window. The candlestick following the falling window should be a dark, bearish candlestick that is succeeded by a bullish rising candlestick that open within the real body of bearish candlestick. The second candlestick should close above the real body of the first candlestick without closing the window. The falling window is an indication of bearish sentiment with the window serving as resistance. This bearishness is confirmed by the failure of the following two session to close the window and violate resistance.
The Hanging Man and Hammer candlestick patterns are related trend reversal patterns that may appear at the end of an uptend or downtrend respectively. This is a single candlestick pattern that with a short real body, little or no upper shadow and a long lower shadow that must be at least twice as long as length of the real body. The color of the candle is not import, only its location in the current trend.
The Hammer pattern is called a takuri in Japanese, which means testing the water for its depth. This is the bullish version of the pattern. A bearish ...
Three Black Crows
The Three Black Crows pattern is the bearish counterpart of the Three Advancing White Soldiers pattern. It is a reversal pattern that consists of three bearish candlesticks that should come into consideration when it appears within an established uptrend, where it indicates a weakness in the uptrend and, potentially, the beginning of a down trend.
Each of the three candlesticks in the Three Black Crows pattern should be relatively long bearish candlesticks with little or no lower shadows. Each of the candlesticks in this pattern should mark a steady decline in ...
Belt Hold Lines
The Belt-Hold candlestick pattern is a minor trend reversal pattern. It is a single candlestick pattern that consists of a Marubozu candlestick that can be bullish or bearish. A bearish belt-hold line consists of a single dark candlestick that opens at or near its high and closes at or near its low, while a bullish belt-hold line consists of a single rising candlestick that also opens at or near its high and closes at or near its low.
The length of these candlesticks indicates the extent of its significance, which is further enhanced when it appears near market extremes as in an ...
The dark-cloud cover pattern is the opposite of the piercing pattern and appears at the end of an uptrend. It is a dual candlestick pattern with the first candlestick being light in color and having a large real body. The second candlestick must be dark in color, must open higher than the high of the first candlestick and must close down, well into the real body of the first candlestick. The deeper the second candlestick penetrates the first, the more reliable the pattern becomes.
The dark-cloud cover pattern is also more reliable when it appear at or near a resistance line ...
Continuation patterns indicate that there is a greater probability of the continuation of a trend than a trend reversal.. These patterns are generally formed when the price action enters a consolidation phase during a pre-existing trend. During the consolidation phase, the trend appears to change; however, the continuation of the preceding trend is more probable.
Some of the common continuation patterns include the cup and handle pattern, flags and pennants, symmetrical triangles, ascending triangle and desc...
Reversal patterns mark the turning point of an existing trend and are good indicators for taking profit or reversing your position. Generally, trend reversal patterns indicate that a support level in a downtrend or a resistance level in an uptrend will hold and that the pre-existing trend will start to reverse. These patterns allow you to enter early in the establishment of the new trend and are usually result in very profitable trades.
The common reversal patterns include the double tops and double bottoms, triple tops and triple bottoms, broadening tops and broadening bottoms, ...