Doji Candlestick Pattern-Something Unique And Highly Profitable!


 

Learn this powerful Fibonacci Retracement method FREE that pulls 500+ pips per trade. Download this 1 Minute Forex Trading System FREE that makes money instantly anytime. Master these Candlestick Patterns with this 82 page FREE PDF Candlestick Guide. A Doji Candlestick Pattern is formed when the opening and the closing prices are the same. So, there is no stick on the candlestick. There are some variations but essentially a Doji is almost all wicks with no body. A Doji looks more like a cross rather than a candlestick pattern.

For a Doji to be created, a trading day must begin and end with the same price. A whole lot of trading takes place during the day but when it is all said and done, the security price is right back where it had started in the morning.

What’s so special about the Doji pattern? The special thing about this pattern is that it is a signal that the market is about to turn. Doji is an indication that the battle between the bulls and the bear has been equal. The day ended with a draw between the bulls and bears but the next day one side is going to overpower the other.

A Dragonfly Doji pattern is unique in the sense that the opening, closing and the high prices are all the same or equal. A Dragonfly Doji is formed when the stocks opens, trades down during first part of the day. During some part of the day, the price starts to climb again and eventually closing on the high which is the same as the open.

When a Dragonfly Doji is formed, bears initially decide to rule the market. But at some point the bulls step in and decide to buy again. When the bulls step in, they start pushing the price up. As the bulls dominate the trading day, the security price ends up right where it had started.

The low of the Dragonfly Doji can be considered a near term support level because it is clear that the buyers stepped in at that level and turned the trend from down to up. Dragonfly Doji is a bullish candlestick pattern.

A bearish Gravestone Doji Pattern is formed when the open and close of the day is equal to the low of the day. This is the most bearish of the Doji patterns. A bearish Gravestone Doji pattern signals the start of a prolonged downtrend in the security price.

A Doji pattern is very easy to spot on the candlestick chart as there is no body just the wick. Open close and either low or high all three are equal and the candle looks more like a cross. When you spot the Doji, get ready for a trend change in the price action.


 

Candlestick Patterns- The Hanging Man, The Hammer And The Spinning Top!


 

Read this shocking 40 page FRWC Brutal Truth FREE Report that exposes everything about forex robots. Download this simple 1 Minute Forex Trading System FREE that makes money instantly anytime. Master these Candlestick Patterns with this 82 page FREE Candlestick Guide! This candlestick guide can be easily sold for $99 but you can get it free as a gift from Options University. Hanging Man and the Hammer are two different candlestick patterns. The patterns are not identical. Hanging Man is considered to be bearish and the Hammer is considered to be bullish.

How to spot the Hanging Man and the Hammer? These candlestick patterns are easy to spot on the chart. When you spot a very small candle body accompanied by a pretty long wick on the bottom, it is a Hanging Man if it appears at the top of the uptrend and it is a Hammer if it appears at the bottom of the downtrend.

In less than ideal cases, you might also find a small wick at the top of the candlestick. When the Hanging Man or the Hammer appears, you need to look for the confirmation on the next day.

If you think that you have spotted a Hanging Man appear on the top of an uptrend, wait for the next day’s opening price. If the opening day is lower than the last day’s close, you have spotted a true Hanging Man.

Similarly, if you spot a Hammer at the bottom of a downtrend, you need to confirm it with the opening price on the following day. If the opening price on the next day is higher than the closing price on the last day, the Hammer formed was a true Hammer.

When you trade candlestick patterns, you need to look for the confirmation on the following day to confirm that the candlestick pattern formed was indeed true. Once you have the confirmation signal, you can safely trade on that candlestick pattern. If you cannot get the confirmation, you should ignore that pattern considering it to be false. Most of these candlestick patterns are ideally suited for the daily charts.

A Spinning Top is another candlestick pattern that reveals a tight battle between the bulls and the bears. Whenever, the battle between the bulls and the bears ends in a draw on a trading day, the following day, one side has to give in. When this happens an explosive move in one direction is highly likely.

Spinning tops appear much more frequently and are very easy to spot with a very small body in the middle of the candlestick and almost equal wicks on the two sides. A spinning top is a nice indication that the trend is about to change direction. Knowing about a trend change early is a highly profitable trading signal.


 

Bullish Necklines, The Bearish Meeting Lines And The Bearish Piercing Line Candlestick Patterns


 

Discover Forex Magic Bullet! First practice on your Forex Demo Account and double it three times in a row before you think about trading live. Master these Candlestick Patterns with this 82 page FREE PDF Candlestick Guide! This candlestick guide is a complimentary gift from the Options University. Bullish necklines candlestick pattern is a two stick trend confirming pattern. When this pattern appears during the uptrend, it is a signal that the uptrend is still in force and is expected to continue for sometime in the future. Now, there are two type of neckline patterns, the in neck and the out neck pattern.

The candle formed on the setup day should be a long bullish candle that shows a lot of buying. On the signal day a bearish candle either long or short is formed with its closing price very near the close of the setup day.

If the closing price on the second day is very near the closing price on the first day, the neckline candlestick pattern formed is known as the on neck pattern. If the closing price on the setup day is a little lower than the closing price on the second day, it is known as in neck pattern.

Not much of a difference but you should nevertheless know this difference. Both on neck and in neck pattern tell the same story, so even if you are not able of distinguish between them, doesn’t make much of a difference. When this pattern appears in an uptrend, it means that the uptrend will continue in the future.

In case of the bearish meeting line candlestick pattern, you see a strong up day on the setup day with a long bullish candle. On the signal day, you find a gap opening which entices the sellers to step in the market. The selling continues throughout the day. As a result a long bearish candle is formed with the close of the day very near its low plus the close of the day very near to the close of the setup day. Now this a trend reversal pattern.

In case of the bearish piercing line candlestick pattern, the setup day is bullish with long bullish candle. The signal day is bearish with an opening higher than the setup days high. What this means is that on the signal day sellers came rushing in, pushing prices down through the setup days opening price and below its midpoint.

This is a trend reversal pattern that usually occurs in the last stages of an uptrend. The price is still rising but it has lost its momentum. Now as a trader, when you combine these candlestick patterns with technical indicators, you get a powerful tool in your arsenal.


 

Bullish Or Bearish Engulfing Candlestick Patterns Can Be Highly Profitable


 

Download this 1 Minute Forex Trading System FREE that makes money anytime instantly. First practice on your Forex Demo Account. Master these Candlestick Patterns with this 82 page FREE PDF Candlestick Guide! This candlestick guide can be normally sold of $99 but you can get it FREE as a gift from the Options University. Engulfing candlestick pattern is a double stick pattern. Double stick candlestick patterns do not appear frequently but when they do appear, it can mean a trend reversal is about to take place. Spotting a trend reversal before it happens is something that can be highly profitable in trading.

Double candlestick patterns are more complex than single candlestick patterns. You have to wait for two days for the pattern to shape up. It happens most of the time that you spot a double candlestick pattern developing on the first day but when you follow it the next day, you get disappointed as the pattern fizzles out.

Nevertheless, these double stick candlestick patterns do occur and if spotted correctly can be highly profitable. One of the most popular double candlestick patterns is the Engulfing Pattern. This pattern signals the end of the existing trend and the beginning of a new trend. There are two type of Engulfing Patterns, bullish and bearish.

Bullish Engulfing Candlestick Pattern is formed when the first day candle is completely covered by the body of the second day candle. The first day candle is bullish. The second day trading starts with an open lower than the previous day.

Thus indicating that the bears are still in control but soon these bears are overcome by the bulls. Selling is soon reversed by the emergence of buying. Infact so much buying takes place that both the previous days open and high both are surpassed.

On the other hand, in case of the bearish engulfing pattern on the first day, the bulls are in control of the market. However, on the second day or the signal day, the bears have had enough. Sellers or short sellers think that the price has gone too high and it is the time to take profit and exit. They start selling in large numbers.

Soon, the price of the security is pushed down lower than the open of the first day. The second day candle is bearish and completely covers the first day candle. When the bearish engulfing pattern appears, it is an indication that the uptrend has reversed and a downtrend has started now.

When trading a bullish engulfing pattern place the sell stop on the low of the setup day or the first day to be on the safe side. And when trading a bearish engulfing pattern, place your stops at the open of the second day. This is a good place to place your stops.


 

Bullish Thrusting Lines And Separating Lines Candlestick Trend Confirming Patterns


 

Download these 3 great Trading Discipline audios plus the Risk & Money Management eBook by Norman Hallet FREE. Learn this powerful Fibonacci Retracement method FREE that pulls 500+ pips per trade. Master these Candlestick Patterns with this 82 page PDF FREE Candlestick Guide. Suppose you want to sell the stock because you believe that the price is close to peaking. The appearance of a candlestick pattern showing the trend is still in place and is expected to continue my help you exit at a still more profitable price. Thrusting Lines Candlestick Pattern is one such trend confirming pattern.

There are as usual two types of thrusting lines candlestick patterns-bullish as well as bearish. Bullish thrusting lines candlestick pattern is a long bullish candle on the first day. The second day or what you call the signal day, it is a bearish candle with a gap opening price higher than the high of the setup day. However, the close of the signal day should be above the midpoint of the setup day.

What this means is that on the first day, bulls had been in charge of the market. On the second day, bulls push a security to have a gap opening. This brings in some sellers but the bears are unable to push the price above the middle of the previous day. This means is that bulls are still around and are poised to take control of the market again.

This type of a candlestick pattern is a great help if you are thinking of riding the trend, this is a signal that you can get on board as the trend is expected to continue and price will continue to go up.

The second important candlestick trend confirming pattern is the bullish separating lines pattern. This pattern is formed when on the setup day, you find a long bearish candle meaning that the bears have been in total control throughout the days.

The second day candle is a bullish one with the open equal or almost equal to the open of the previous day. This is the distinguishing feature of this pattern. The bullish separating lines confirm an uptrend. The setup day is bearish. The bears decide that the price is right to start selling.

However, on the signal day, the bulls come into play and start buying. There is so much bullishness in the market that the opening price of the signal day is equal to the opening price of the set up day. From that point on the bulls dominate the market and the uptrend continues.

Now both these candlestick patterns are rare and do not appear frequently. But when they appear during an uptrend, it means that the uptrend is going to continue. In the same way, bearish thrusting lines and bearish separating lines are formed in an opposite manner and confirm the continuation of the downtrend.


 

Candlestick Charting Potential Risks


 

Read this shocking 40 page FRWC Brutal Truth FREE Report that exposes everything about forex robots. Learn this powerful Fibonacci Retracement method FREE that pulls 500+ pips per trade. Master these Candlestick Patterns with this 82 page FREE PDF Candlestick Guide. Candlestick charts is a visual representation of the battle between the bulls and the bears that takes place in the market. It takes time for this battle to take shape. Candlestick patterns on the very short timeframes used for scalping and some other day trading strategies may not give signals that can be properly interpreted and traded.

In the last decade electronic trading has become highly popular. What this means is that significant volume of the trading takes place outside of the regular market hours. This trading can cause patterns that don’t reflect the full picture to appear on a candlestick chart.

For example, stock ABC trades on NYSE. NYSE officially opens at 9:30 AM EST for trading. Stock ABC open price is $60 per share. However, this stock had been trading on the electronic network in the pre-market hours as low as $59. Now the open on the NYSE may not be a true reflection of where the stock had been trading initially on that day.

What this means is that the open recorded on the candlestick chart is not accurate. Now, suppose the stock ABC never trades down to $59 during the day. So, the low on the candlestick chart may not be an accurate depiction of the day’s price action.

So candlestick charts on very short time frame may not be able to produce accurate trading signals. Couple this with the fact that most of the trading now also takes place on the electronic networks makes them somewhat inaccurate sometimes. These are the two risks or what you may call limitations that you need to keep in your mind.

Apart from that candlestick chart is a powerful tool in the hands of an experienced trader. When an experienced trader combines these charts with technical indicators, this combination can produce highly accurate trading signals.

There are many candlestick patterns that can be used to produce buy and sell signals. Some of these candlestick patterns are simple while others are complex. Single stick candlestick patterns can be easily spotted while double stick and three stick candlestick patterns can take two to three days to develop. Mastering these candlestick patterns is what you need to do as a serious trader.

Now Yahoo Finance is an excellent free resource that you can use to create candlestick charts for any stock by just entering the stock ticker symbol. You should play around with the options available for Yahoo Finance. This will help you to learn a lot of new things about candlestick charts.


 

Buying With The RSI And Bullish Reversal Candlestick Patterns


 

Discover Forex Brilliance and download your powerful Multi-Timeframe Trend Dash Board FREE. This Trend Dash Board will cut your learning curve. It uses 4 Trend Identification Sensors that pull massive pips each and every month. Get this Forex Swing Trading FOREX-4 PACK End of Day Trading Kit FREE plus download a simple 1 Minute Forex Trading System that makes money instantly FREE just now!. The Relative Strength Index (RSI) is a fairly popular indicator that can tell you whether a stock or a currency pair is overbought or oversold. RSI value ranges between 0 and 100. Values below 30 indicate that the market is oversold and above 70 means that the market is overbought.

The good thing is that you can combine RSI reading with candlestick reversal patterns to further confirm that a reversal is imminent and you can take a long position. You can also use the RSI to select your exit level.

Suppose you are trading a stock with the RSI indicator value under 30 meaning that the market is oversold. You spot a three inside up reversal candlestick pattern appears after many bearish days. This is a signal that the market is changing gear and turning bullish from bearish with more buyers are stepping in. This is the best time to go long on this stock.

The beauty of this three inside up candlestick pattern lies in the fact that it takes three days for this candlestick pattern to form. When you spot the first two candles formed with the candle on the first day bearish, the candle on the second day bullish but small get anxious for the candle on the third day to be bullish and higher than the open of the first candle. This gives you plenty of time to plan your swing trade.

The appearance of this candlestick reversal pattern indicates that the market is going to see an uptrend for sometime in the future. You can go long close to the level where the candlestick pattern appeared placing a stop loss close to that position. Now, as long as the RSI indicator is below 70, it means that the market is not overbought. But as a caution, you should become alert when RSI indicator reading goes above 50. Suppose you have a long position with the RSI indicator reading close to 30 and you are sitting on what could turn out to be a nice profit.

Suddenly RSI indicator changes course and soon it is in the overbought range 70. Start looking for a candlestick bearish reversal patterns like the three outside up candlestick pattern or the hanging man to appear to confirm that the reversal is about to begin. When this happens make your exit making a nice profit. Combining candlestick patterns with technical indicators such as RSI or Stochastics indicator is a powerful tool.


 

How To Use Trendlines And Bullish Trending Candlestick Patterns For Buy Signals!


 

Learn this powerful Fibonacci Retracement method FREE that pulls 500+ pips per trade. Download this 1 Minute Forex Trading System FREE that makes money anytime instantly. Master these Candlestick Patterns with this FREE 82 page FREE PDF Candlestick Guide. Trendlines are one of the most basic and easiest technical analysis tools that any trader learns to use from the very start of his or her trading career. A trendline with a positive slope indicates an uptrend and a trendline with a negative slope indicates a down trend.

Now, you can draw the trendline yourself. However, most of the trading software can draw the trendlines for you automatically so you don’t need to do much. Drawing trendlines is always a subjective matter. It looks obvious but sometimes, you can question the placement of the trendline. But don’t worry too much about it when you use this method.

One of the most powerful methods of trading trends is combining trendlines one of the most basic tools in technical with trending candlestick patterns that signal that a trend in place will continue. You can use this combination to decide when to buy and enter a long position or when you should stick with the trend to realize additional profits.

Because trendlines are so useful for trend confirmation, you can trade with confidence when you use the combination of bullish trendlines with bullish candlestick trending patterns. This combination can tell you when to stick with an existing position and when to initiate a new position.

For example, the trendline has a positive slope meaning there is an uptrend. If you spot a trend confirmation candlestick pattern, it means that you can continue in that position for additional profits. When you spot the trend reversal candlestick pattern, you should take it as a signal that the trend is about to reverse itself and this is the best time to get out of the trend. You can use two stick candlestick patterns and even three stick candlestick patterns for example the bullish neckline pattern or the bullish thrusting line pattern and others.

Now as said before, in addition to confirming trends and letting you know when to get in on a long trade, this combination of trendlines and candlestick patterns can also help you to decide when it is the best time to get out of a trade.

How to exit with a trendline? Trendlines keep changing everyday! The first way to go about it is to draw a support trendline daily and place an appropriate stop loss that is good for that trade. This is a good stop loss exit strategy as the trendlines move with the trend, your stop loss exit also moves daily. The second method is to exit if the closing price is lower than the trendline. However, the first method is far more superior.