5 Trading Strategies with Accurate Candlestick Patterns

Trading Strategies with Candlestick Patterns

Each candlestick consists of a real body / candle bar and axis. A body that is like a candle rod reflects the difference between open and close prices in that period. Open and close prices are the prices of the first and last transactions for that period. When there is no body or very small, it means that the open is almost the same.

The bars are colored and depend on the scheme used by the charting platform. Generally white and black, green and red. White or green candles mean the price is finished higher during this period. Where the closing price is above the open price. Whereas black or red candles mean the price is finished lower during this period.

Candle bars represent the difference between open and closing prices for a certain period of time. The axis or tail is a small thin line above and below which represents high and low prices for that period. When the axis appears above the candle, shows a high price for that period. If there is no upper axis, then the top of the candle is the highest price. Similarly, what happens on the axis at the bottom of the candle shows a low price for that period. If there is no lower axis, then the bottom of the candle is the lowest price

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In general, chart platforms can make adjustments to the candlestick chart. Adjustment can be started by changing the color of the candle up or down so that it looks in contrast to the difference between up and down movements. Trading strategies with visual candlestick patterns. So it is necessary to pay attention to the pattern to analyze the continuation or reversal of the trend. Even to pay attention to future trade opportunities. And most importantly, that candlestick patterns must be used together with trend analysis.

Accurate Candlestick Pattern

There are practical ways that can be easily applied in trading strategies with candlestick patterns. Among them are strategies with Inverted Hammer pattern, Bullish Engulfing, Piercing Line. Morning Star, and Three White Soldiers. Here's a brief explanation of the five patterns:

1. Inverted Hammer

The hammer is a bullish reversal pattern, which indicates that a trade is approaching the lowest level in the downtrend. While the Inverted Hammer is formed in a downtrend and represents a reversal trend or the trend starts to rise.

2. Bullish Engulfing

Bullish Engulfing is a two-candle reversal pattern, where the second candle engulfs the first candle's original body, regardless of the axis length. This pattern usually appears in a downtrend and is a combination of one dark candle followed by a larger white candle.

3. Three White Soldiers

Well, this pattern is usually observed after a downtrend period. As the name suggests, Three White Soldiers consist of three long white candles that are getting higher and continuing in the next trade. Each candle higher than the previous opening indicates a steady increase in buying pressure. But be careful, when white candles appear too long it will create short sales which can cause landslide prices.

4. Piercing Line

Similar to the Engulfing pattern, the Piercing Line is a reversal pattern of two candles that occurs when the trend drops. The first long black candle was followed by a white candle lower than the previous close. Usually white candles appear when buying pressure pushes the price up half or two thirds of the black wax body.

5. Morning Star

Morning starr is a new start that occurs when the trend is down. Note that this pattern consists of three candles, one short candle (doji) appears between a black candle and a white candle. There is no overlap between the doji's body and the previous black candle. These signs indicate that the previous selling pressure has eased. And the third white candle shows the pressure of the new buyer and the start of the Bullish reversal.

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