Introducing Candlesticks
Candlesticks provide a convenient way of interpreting market sentiment.
Candlestick analysis is used to predict price direction.
Candlesticks are also used to confirm trading signals
Candlesticks reflect investor sentiment
Traders use one day, two day and three day candlestick signals to analyse trading over different time periods such as hourly, 4 hourly, daily and weekly.
Many automated trading solutions utilise a library of candlestick indicators to provide valuable market insight to the trading bots.
Candlestick analysis provides a quick and reliable way to analyse markets, forecast price direction and confirm other signals.
Candlestick analysis uses use multiple time intervals (minutes, hours, days, weeks etc) to provide different trading perspectives.
Any automatic trading platform that has a solid understanding of candlestick patterns has an edge in the market.
Candlestick patterns are used in conjunction with other types of indicators to provide information to the trading services.
Candlestick patters differ in their effectiveness. Optimisation can be performed by applying Artificial Intelligence.
Cybertrade
CyberTrade - Candlestick Analysis
cybertrade
Candlestick - Price Action
DOJI
The Doji candlestick indicates a session where the opening and closing prices are equal or almost equal.
The candle indicates indecision and possible price reversal.
Doji - Long Legged
Long wicks above and below the body. Even though the open and close prices are almost equal, the price moved a great deal higher and lower.
This represents a lot of indecision and indicates imminent change in the trend, especially if the market has been quiet.
DOJI - dragonfly
A long lower wick indicates that price activity occurred well below the open price before price closed near to the open price. This is usually an indication of a forthcoming reversal.
In a downtrend, price may go up. A bullish engulfing candle can act as confirmation.
DOJI - Gravestone
A long upper wick. This implies that price action occurred above the open price until price moved back down and closed near to the open price.
From an uptrend, this can indicate an imminent bearish reversal. A bearish confirmation is required, before a trade is placed.
Doji - Four price
A Four Price Doji has no wicks, because the Open, High, Low and Close prices are all the same. This us a rare event but can occur if there is very little volume.
Trades should be avoided when a Four Price Doji occurs because of possible low volume.
regular candles
Regular candles have regular wick and body lengths. Such candles have no particular attributes.
Regular candles are used as a reference point for candles with specific attributes.
cybertrade
Candlestick Patterns
hammer
The Hammer occurs when sellers pull price low, but buyers ensure that the close price is above the open price. In a downtrend this can indicate a bullish reversal. CyberTrade will look for confirmation(s) before entering a trade.
hanging man
The long lower wick indicates that sellers lowered the price but buyers caused the price to rise to near the opening price. May indicate price has reached the top and a reversal is underway
inverted hammer
The long upper wick indicates that buyers caused the price to rise before the price closed near the open price. May indicate that buyers are gaining strength and that the price could rise.
shooting star
A shooting star candle has a very long upper wick, a small body and short lower wick. A sign of a bearish reversal. Once the candle opened the price rose then fell.
spinning top
A candle with long upper and lower wicks together with a short body. Price has moved well above and below the open price. Price closed close to the open price. It often represents indecision and possible price reversal
Long Lower Shaddow
Indicates that selling dominated at the beginning of the session but buying moved the price up to finish higher than it opened. Buyers prevailed and price will probably go up.
long upper shaddow
Indicates that buying dominated at the beginning of the session but selling lowered the price the closing price was lower than the opening price.
marubozu (Bearish)
The Marubozu candle has no upper or lower wick. A Bullish Marubozu indicates the beginning of or a continuation of an uptrend.
marubozu
(Bullish)
A Bearish Marubozu has a high close to the open price and a low close to the close price. Indicates the beginning/continuation of a downtrend.
cybertrade
Candlestick Patterns
harami cross
The second candle of a two candle pair is a Doji, located within the range of the first candle. A long green candle followed by a red Doji indicates that price may go down. A long red candle followed by a green Doji indicates that the price may go up. This ami pattern.
harami bearish
A long green (bulish) candle followed by a shorter red candle that is located within the range of the green candle. Buying pressure was high during the first candle but selling pressure took over during the second candle. This indicates that price may continue to fall.
Harami Bullish
A long red (bearish) candle followed by a shorter green candle that is located within the range of the red candle. Selling pressure was high during the first candle but buying pressure took over during the second candle. This indicates that price may continue to rise.
Bearish ENGULFING
A bearish reversal pattern appearing at the end of an uptrend. The second candle engulfs the first candle. Sellers dominated the market and the long red candle may indicate the beginning of a downtrend.
Bullish engulfing
A bullish reversal pattern appearing at the end of a downtrend. The second candle engulfs the first. Buyers dominated the market and the long green candle may indicate the beginning of an uptrend.
piercing line
Two long bodied candles with little or no wick. Appearing during a downtrend is considered a bullish reversal pattern. probably go up. Selling during the first candle lowered the price. Buying during the second candle 'pierced' the midpoint price of the first candle.
dark cloud cover
Indicates that buying dominated at the beginning of the session but selling lowered the price the closing price was lower than the opening price.
morning star
A three candle pattern comprising two, opposite long candles. The middle candle is a short Doji candle. The morning star pattern may indicate a bearish reversal.
evening star
A three candle pattern comprising two, opposite long candles. The middle candle is a short Doji candle. The evening star pattern may indicate a bullish reversal.
three white soldiers
Three bullish candles appearing after a downtrend. The first candle is a reversal candle followed by a second candle longer than the first and a third at least as long as the second. May indicate a bullish reversal. A very potent reversal pattern.
three black crows
Three bearish candles appearing after an uptrend. The first candle is a reversal candle followed by a second candle longer than the first and a third at least as long as the second. May indicate a bearish reversal. A very potent reversal pattern.
abandoned baby
A rare three candle reversal pattern comprising two, opposite long candles, separated by a Doji candle. A bullish abandoned baby appears when strong buying is halted when a bearish Doji appears. The bullish Doji is the opposite.
