📚SPOT A MARKET REVERSAL WITH CANDLESTICK PATTERNS📚

13 Jun 2021

Candlestick patterns are frequently applied for the identification of early trend reversal signs.

Here are the three most common reversal formations that you may encounter trading different markets:

1️⃣ - Equal inside bar formation
Once the price reaches some important pivot point quite often it tends to form a weak candle with a long rejection wick (long in comparison to the buddy of the candle).
In case if the consequent candle's body has the same range, we call that the equal inside bar.

It can be treated as the reversal formation ONLY with additional confirmation.
Without an additional trigger, chances will be high that the market will start a sideways movement instead.

2️⃣ - Engulfing candle
Once the price reaches some important pivot point quite often it tends to form a weak candle with a long rejection wick (long in comparison to the buddy of the candle).
In case if the consequent candle's body engulfs (has a bigger range) the previous candle, we call that the engulfing candle.

By itself, it is a quite strong reversal signal and can be applied as a trigger for opening a trading position.

3️⃣ - Engulfing candle (2X)
Sometimes, the engulfing candle engulfs not only the previous candle but also one more preceding one.
We also can call such a candle a high momentum candle.

It is considered to be the strongest reversal formation (among these 3) and can be applied as a signal for a trade entry.


❗️Remember that candlestick patterns work only on strong pivots/structure levels. Being formed on random levels, the performance of these formations is relatively low.

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14 Jun 2021

Nota

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