The Bearish Kicker should never be overlooked. In fact, some describe Kicker patterns as the most powerful Japanese candlestick signals of all! As always, however, be sure to confirm your suspicions before you make your next move. A red candle or a gap down can give you greater confidence in the Bearish Kicker's forecast and increase your peace of mind.
History Of Japanese Candlesticks Reviewed and Rated in 2021
Tweezer Bottoms and Tops Tweezer patterns are two candlestick reversal patterns. This type of candlestick pattern is 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! The most effective Tweezers have the following characteristics: The first candlestick is the same as the overall trend.
Candlestick Construction
If price is moving up, then the first candle should be bullish. The second candlestick is opposite the overall trend. If the price is moving up, then the second candle should be bearish. The shadows of the candlesticks should be of equal length.
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Tweezer Tops should have the same highs Tweezer Bottoms should have the same lows Two Crows Pattern This pattern is a made up of three candlesticks. The black candlesticks of the second and third day represent the two crows that perched on the first white candlestick.
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Recognition Criteria 1. The market is characterized by a prevailing uptrend. A strong white candlestick appears on the first day. The second day is a black candlestick that gaps up. A black body that forms an upside body gap with the first candlestick follows. The third day is another black body that opens at or above the close of the second day.
The third day should close near the lows. The following day opens higher with a gap up. Prices fall a little bit, and a short black candlestick is formed. The bulls are not alarmed by this day, because even though a black body appears, prices fail to close below the close of the previous day. The third day opens at or above the close of the second day, but it declines throughout the day and closes well within the body of the first day.
Prices should cross below this level for confirmation. The stop loss level is defined as the last high. Following the bearish signal, if prices go up instead of going down, and close or make two consecutive daily highs above the stop loss level, while no bullish pattern is detected, then the stop loss is triggered. Rising Window A window gap is created when the low of the second candlestick is above the high of the preceding candlestick.
It is considered that the window should provide support to the selling pressure.
Falling Window A Falling Window candlestick pattern is a bearish continuation candlestick pattern. A Falling Window candlestick pattern is more commonly known as a gap-down. This sharp decrease in the stock price usually happens outside of the market's normal trading hours, like after the release of bad press or a bad earnings announcement or stock market crash.
Most gap-downs are news-driven events. Maybe it was earnings related or some other new. Maybe the share price was in a downtrend and then more bad news comes out for the company, like a top executive leaving. Either way, a gap-down is almost always the result of a news-driven event. For those investors that employ shorting stocks in their toolbox, a Falling Window candlestick pattern can provide short-sellers the most confidence when entering into a short trade. Bullish Homing Pigeon The pattern may indicate that there is a weakening of the current downward trend, which increases the likelihood of an upward reversal.
The pattern is composed of a large real body followed by a smaller real body, and both candles are black filled or red indicating the close is below the open. Bullish homing pigeon patterns don't provide profit targets, and a stop loss is typically placed below the bottom of the pattern after an upside move is confirmed. Bullish homing pigeons are bullish reversal patterns, but some research has suggested that it's a more accurate bearish continuation pattern. This is because prices don't move in straight lines. During a downtrend the price drops, then pauses or pulls back, and then proceeds lower again.
The bullish homing pigeon could just be a pause before the price continues lower. Descending hawk Descending hawk is a bearish reversal pattern, which forms in an uptrend. On the first day a long white candle evolves in the direction of the trend. On the second day, again a white body appears. The body of the first day candle completely engulfs the second candle. Shadows are not important in regard to both candles. The descending hawk resembles the harami pattern, except for the colors of the body.
Here both candles are white. It is the bearish version of the homing pigeon. The first figure of the descending hawk may be any candle with a white body, appearing as a long line, however doji or spinning top are not permitted. The second candle of the pattern must appear as a short line and again doji or spinning top is not permitted. Bullish Tasuki The Bullish Tasuki Line belongs to the tasuki patterns group, predicting a downtrend reversal.
Both candles appear on as a long line.
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The first line has a black body, whereas the second line has a white body. The length of the shadows does not matter; however, the volume if available on the given market of the second line is significant. Relation of the bodies is insignificant. The pattern requires confirmation, that is, breaking out of the nearest resistance zone or trendline. Bearish Tasuki The Bearish Tasuki Line is a two-line bearish reversal pattern, belonging to the tasuki patterns family. The first line of the pattern is a white candle appearing as a long line.
The second line also appears as a long line, but the candle is of black color. Relation of the bodies is unimportant. Triple Candlestick Patterns Planet Mercury or Morning Star The pattern got the name because just like the planet mercury , which is the star of early morning i. A morning star is a visual pattern consisting of three candlesticks that is interpreted as a bullish sign. A morning star forms following a downward trend and it indicates the start of an upward climb. It is a sign of a reversal in the previous price trend. A morning star is a visual pattern made up of a tall black candlestick, a smaller black or white candlestick with a short body and long wicks, and a third tall white candlestick.
The only difference is that the Morning Doji Star needs to have a doji Dragonfly, long legged , etc candle on the second line. The doji candle second line should not be preceded by or followed by a price gap. Some variation with small difference is allowed with Doji. Bullish Abandoned Baby The bullish abandoned baby is a three-bar pattern following a downtrend.
It consists of a strong down candle, a gapped down doji, and then a strong bullish candle that goes up. It is exactly similar to Doji Morning star except the gap between the candles. The pattern signals the potential end of a downtrend and the start of a price move higher. Some traders allow for slight variation. There may be more than one doji, or gaps may not be present after the first or second candle.
But the overall psychology of the pattern should still be present. Venus or Evening Star Evening Star patterns are associated with the top of a price uptrend, signifying that the uptrend is nearing its end. The Evening Star pattern is considered a very strong indicator of future price declines. Its pattern forms over a period of three days, in which the first day consists of a large white candle signifying a continued rise in prices; the second day consists of a smaller candle that shows a more modest increase or slight decrease in price not below starting point of first, while the third day shows a large red candle that opens at a price below the previous day and then closes near the middle or below of the first day.
Close below the first candle is strong sell signal. Bearish Abandoned Baby A bearish abandoned baby is a specialized candlestick pattern consisting of three candles, one with rising prices, a second with holding prices, and a third with falling prices. Technical analysts expect that this pattern signals at least a short-term reversal in a currently upward trending price. The only difference is that the Evening Doji Star needs to have a doji candle on the second line. This type of triple candlestick pattern is considered as one of the most potent bullish signals, especially when it occurs after an extended downtrend and a short period of consolidation.
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It either ends the downtrend or implies that the period of consolidation that followed the downtrend is over. 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. Three Line Strike Bullish When you hear the term "three strikes," you probably think of baseball.
Three strikes and you're out! Depending on which team you're rooting for and who is at bat, that third strike could be frustrating or gratifying. When it comes to Japanese candlesticks, there are two forms of Three Line Strikes, one bullish and one bearish. Bullish Three Line Strike, a rare candlestick pattern that forms during an uptrend.
Composed of four candles — three white and one black. Despite its name, the Bullish Three Line Strike actually contains four candles, three of which are considered "strikes. For help spotting this elusive signal, look for the following characteristics: First , an uptrend must be in progress. Second , a white or green candle must appear on the first day.