Reblog: Candlestick patterns – 21 easy patterns (and what they mean) Part 2 of 3
In the first part of the post, we looked at Equal open and close, Doji patterns. In today’s post, we will discuss Short body candles.
Short body candles.
Long Shadow candles:
Long shadows are one of the more reliable candlestick patterns.
Candles with a long top shadow and short lower shadow show us that buyers dominate the market, these can lead to or continue a bull run in prices.
On the other end.
Candles with a long lower shadow and short upper shadow show us that sellers dominate the market and these candles can lead to or continue a bear run in prices.
Evening Star:
Similar to the doji version, except the middle candle has a short body. It is a three day pattern and is associated with a bearish reversal.
The first candle is an uptrend with a long body. The next day opens higher but trades with a short real body.
And the last day reverses lower and should close at or below the midpoint of the first candle.
Morning Star:
Again, this pattern is similar to the doji version except the middle candle has a short body.
A three day pattern and is associated with a bullish reversal.
The first candle is an downtrend with a long body. The next day opens lower but trades with a short real body. And the last day reverses higher and should close at or above the midpoint of the first candle.
Hammer:
This candle is one of those dual meaning candlestick patterns. It can be a bullish reversal pattern, happening near the low of a trend. But it can also occur during the downtrend.
The hammer candle forms when a the price moves lower after the open, and then rallies to close significantly higher than the low. The candlestick ends up looking like a like a square hammer with a long handle.
The hammer candle happens at the start or during a decline.
Inverted hammer:
This is a bullish reversal pattern.
The inverted hammer candle forms when the price moves higher after the open, it then declines to close significantly lower than the low.
Again, these candlestick patterns end up looking like a like a hammer with a long handle. The hammer candle happens at the end of a decline.
Hanging Man:
This candle is an indication of a market ready to rally! Showing a bullish impulse.
It forms when the price drops after opening to form a long shadow, then price rallies to close at the highs of the candle.The real body of the candle forms the head, and the long shadow forms the guy’s ‘hanging legs’!
Spinning Top:
Nobody knows how a spinning top will fall once it stops spinning!
And as such the spinning top candle indicates indecision in the market. After the candle closes the market will tend to move away from the spinning top quite rapidly. So it is part of the trend following group of candlestick patterns.
The candle forms with a short real body and an equal upper and lower shadow.
Shooting Star:
This is one of the particularly reliable bearish candlestick patterns. It is signalling that a top is in place and a trader should close any long positions or get ready to short the market.
The market gaps higher on opening, and then rallies to a high. Prices will then decline to close only slightly above the open.
The form of the candle looks as if a star is shooting down towards the ground.
Upside Gap with Two Crows:
This is a bearish pattern that happens over 3 daily candles.
The first candle is a long green candle, the second candle happens with an upward gap open with a small real body.
The final candle is a long red candle which engulfs the second candle, but the close of the day remains above the open of the first day.
This one is technically part of the family of bearish candlestick patterns, but, it usually indicates a corrective reversal within an uptrend, therefore it is hard to trade but can be used more as an indication the trend is set to continue.
This is the second of a 3 part series. The last part will be published next time.
The original post is by Enda Glynn, appears on humbletraders.com and is available here.