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subject: 3 Best Patterns For The Candlestick Trader [print this page]

There are numerous candlestick patterns but there are just several that you unquestionably should be acquainted with.

These candlestick patterns are more advantageous when you learn what is going on in each pattern.

Candlesticks should be combined with other forms of technical analysis to actually be useful. For example, when you see one of these candlestick patterns on the daily chart, move down to the hourly chart. Will the hourly chart concur with your perspective on the daily chart? Has the MACD gone above the 0 line? If so, then the probability of a reversal increase.

Bullish Engulfing: This is stock traders darling candlestick pattern. This pattern consists of two candles. The first day is a tight range candle that closes down for the day. The sellers are still in control of the stock but since it is a narrow range candle and volatility is low, the bears are not especially aggressive. The second day is a broad range candle that "engulfs" the body of the first candle and closes near the top of the range. The buyers have inundated the sellers (demand is greater than supply).

Bullish Kicker: The "kicker" is one absolutely great candlestick pattern. The problem is that it is rarely seen but when it does form, it is one of the more reliable candlestick patterns you will find. The stock is moving down for 3 or more days and the bears are confidently in control. Then, on the next day, the stock gaps open above the previous days high and close. This completely shocks the bears and forces them to cover their shorts as new investors pile in on the long side.

The Doji: The "doji" is a middle-of-the-road pattern. It is in all probability the most popular candlestick pattern. The stock opens up and goes nowhere during the day and closes right at or near the opening price. This represents indecision and causes traders to have reservations about the current trend. This can regularly activate reversals in the opposite direction.

by: Fred Stiles..

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