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Candlestick Reversal Patterns

Candlestick Reversal Patterns

Candlestick Reversal Patterns

The overwhelming majority of candlesticks patterns are trend reversal patterns. They indicate that the current trend is either overextended or running out of momentum and will probably reverse direction in the near future. Candlestick reversal candlestick patterns have the added advantage of only requiring very few candlesticks, sometimes only one, to form the pattern. They, thus, tend to offer early opportunities to enter new, contrary position where the trader's protective stop can be relatively close to the entry price. The ability to enter a trade close to the reversal point and with a stop that is relatively close, helps the trader minimize risk while maximizing potential profits. This is why being able to identify candlestick reversal patterns is an important weapon in a trader's arsenal, especially among short-term intra-day traders.

Obviously, a trend reversal pattern must appear in a well-established trend. This can be a bullish uptrend or a bearish downtrend, but it must be an established trend. Furthermore, a reversal pattern that appears near or on a support or resistance area has a greater probability of success. Some reversal candlestick patterns can be bullish or bearish, depending on the trend that it appears in.

Bullish Trend Reversal Candlestick Patterns:

Bullish trend candlestick reversal patterns must appear in an established downtrend where it marks the probable end of the downtrend and the possible start of a bullish uptrend. Bullish trend candlestick reversal patterns that consist of a single candlestick include:

Bullish trend reversal patterns that consist of two candlesticks include:

Bullish trend reversal patterns that consist of three candlesticks include:

Bullish trend reversal patterns that consist of more than three candlesticks include:

Bearish Trend Reversal Candlestick Patterns:

Bearish trend reversal candlestick patterns must appear in an established uptrend where it marks the probable end of that uptrend and the possible start of a bearish downtrend. Bearish trend reversal candlestick patterns that consist of a single candlestick include:

Bearish trend reversal patterns that consist of two candlesticks include:

Bearish trend reversal patterns that consist of three candlesticks include:

Bearish trend reversal patterns that consist of more than three candlesticks include: