Reblog: Candlestick patterns – 21 easy patterns (and what they mean) Part 3 of 3
In the first part of the post, we looked at Equal open and close, Doji patterns and in the second part, we looked at Short body candles. In today’s post, we will discuss Long body candlestick patterns.
Long body candlestick patterns
Dark Cloud Cover:
Dark cloud cover candlestick patterns indicate an incoming bearish reversal.
A two candle pattern, the first candle is a long green bullish candle.
The next candle opens higher but reverses and declines, the candle then closes below the center of the first candle.
This is one of the strong reversal candlestick patterns.
There is both a bearish and bullish engulfing pattern.
The bearish engulfing candle happens at the end of an uptrend, and the bullish at the end of the downtrend.
The first candle has a small real body, the reversal candle is long, ideally, with short shadows, the real body of the second candle fully engulfs the first candle.
The strength of the reversal can be gauged based on how many of the previous candles that the engulfing candle swallows up!
The more ‘swallowed candles’, the more powerful the following reversal move will tend to be.
This is another of the two candle bullish reversal candlestick patterns.
The first candle is long and red bringing the market lower.
The next candle opens at new lows but rallies to close at a point which ‘pierces through the centreline of the previous candle.
The candlestick sandwich is also a bullish reversal pattern over three days action.
The pattern forms with two red candles surrounding one green candle in the middle, creating a sandwich!
The closing prices of both red candles must be very close, this action creates a support base to trade off.
Three green Soldiers:
This candlestick pattern creates a stairway for higher prices. It is a bullish reversal pattern formed with three candles.
The three candles are green, each consecutive candle opens within the real body of the previous candle.
The close of each day brings the market to new highs, signalling an uptrend is about to take off.
Like I said at the start, use this series of articles as a ‘go-to guide’ when you see some candlestick pattern price action that could be forming a reversal in the market you trade!
This guide should be a help in spotting those candle patterns as they form and, and then you can trade on what the pattern suggests will happen next.
This is the last of a 3 part series.
The original post is by Enda Glynn, appears on humbletraders.com and is available here.