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Forex candlestick chart patterns
This article provides insight into Candlestick patterns that
can be extracted from Foreign exchange charts. A candlestick
chart is a style of bar-chart used primarily to demonstrate
price movements over a certain time period. |
Doji
A name for candlesticks that provide information on their own and
feature in a number of important patterns. Dojis form when the body
of the candle is minimal as market's open and close are virtually
equal.
Hammer
A price pattern in candlestick charting that occurs when the market
trades significantly lower than its opening, but rallies later in
the day to close either above or close to its opening price. This
pattern forms a hammer-shaped candlestick.
Inverted hammer
A price pattern in candlestick charting that occurs when a security
trades significantly higher after its opening, but gives up most
of all of its intraday gain to close well off of its high. Gravestone
- The market gaps open above the previous day's close in an uptrend.
It rallies to a new high, then loses strength and closes near its
low: a bearish change of momentum. Confirmation of the trend reversal
would be an opening below the body of the Shooting Star on the next
trading day. If the open and the close are identical, the indicator
is considered a Gravestone Doji. The Gravestone Doji has a higher
reliability associated with it than a Shooting Star.
Shooting star
A candlestick indicating a reversal. The previous day's candle has
a very large body. On the day the shooting star occurs, the price
(generally) opens higher than the previous day's close, then jumps
well above the opening price during the day, but closes lower than
the opening price.
Three white soldiers
Three white soldiers is a bullish reversal pattern that forms with
three consecutive long white candlesticks. After a decline, the
three white soldiers pattern signals a change in sentiment and reversal
of trend from bearish to bullish. Further bullish confirmation is
not required, but there is sometimes a test of support established
by the reversal.
Three black crows
A bearish reversal pattern consisting of three consecutive black
bodies where each day opens higher than the previous day's low,
and closes near, but below, the previous low.
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