What are Candlestick Patterns?

Many candlestick patterns can help find areas of interest on a chart.

And by many, we mean over 40, ranging from simple to complex formations.

But don’t worry, we’re not going to go over each one, because we’ll be here for days if we do that. So instead, we’ll give you a simple overview of the common ones.

One popular candlestick formation is the Engulfing Pattern, which forms when the second candle engulfs the candle before it.

In engulfing patterns, you have the Bullish Engulfing Pattern and the Bearish Engulfing Pattern.

The Morning Star is a bullish three-candle pattern that forms at the bottom of the price’s downward move.

The pattern consists of a huge bearish candle indicating the down move, followed by a small candle, ideally a Doji, and a huge bullish candle closing near the top of the session.

Conversely, the Evening Star is a three-candle pattern that can be seen close to the top of a rally. It consists of a long bullish candle, a small Doji candle, and a long bearish candle signaling the end of a rally.

Lastly, the Hanging Man is a bearish, single-candle pattern that occurs at the top and bottom of the market movement.

It forms at the end of an uptrend, appearing as a candle with a tiny real body at the top, a long lower shadow, with the opening and closing near each other.

Every candle has a story to tell. So you need to watch closely because if you miss one, you might miss a significant price move.

The post What are Candlestick Patterns? appeared first on FinanceBrokerage.