Other Significant Candle Patterns
The use of candlesticks is among the most popular strategies for conducting Forex market analysis. And while most traders understand what each candle pattern means, here we’ll refresh your mind or teach you what some of them reveal.
You may want to consider including these in your notes and keeping them close by.
We’ll begin with describing an evening star. As you may not know, it’s the opposite of the morning star. It points to an upcoming reversal; if you see a candlestick that’s black or filled in, you’ll have the confirmation needed for opening a position. The star can be filled or empty, reflecting a bullish or bearish market.
A Harami is a very important pattern as it signals diminishing momentum. It appears when a small candle moves over to the adjacent space of a larger candlestick. This confirms a drop in momentum.
Next we have a gravestone Doji. No; this is not the name of an upcoming horror film. It shows up in a histogram when the opening, closing and low currency rates are the same. It also appears when the higher currency rate is much higher than the opening price or the closing and lower rates.
Tweezers are also important signal indicators as they can show you when a price movement is coming to an end. In other words when you should consider exiting your trade. Understanding indicators and patterns like the dead cat bounce, for instance will help you make better decisions.