Forex Candlestick Patterns
The candlesticks pattern is based on a candlestick chart and is a repeating chart pattern consisting of only a few candles. It usually consists of one to four candles. Because candlesticks give strong indications and weakness of current price movements, candlestick patterns tend to give an indication of a trend reversal opportunity better than other types of charts. This gives a tendency to increase trading opportunities with chart patterns and is one of the main reasons why candlestick charts are becoming more popular in recent years, especially among short-term traders.
The candlestick pattern can provide a bullish and bearish tendency, depending on where they are on the chart and where they appear in the trend. This emerging pattern can also be a trend reversal pattern (continuous).
The level of reliability of the candlestick pattern depends on the location of the pattern in the price graph, ie where it appears in the existing trend. Also to support and resistance lines, or trend lines, or other pivot levels. Graph timeframes are also important because the candlestick patterns that appear on short timeframes, intraday charts tend to be less reliable than the candle patterns that appear on graphics with longer timeframes. Another possible consideration in determining the reliability of the candlestick pattern is the volume traded when the candlestick pattern is formed. If the candlestick pattern is formed at a low volume, the pattern tends to be less reliable.
There are hundreds of candlestick patterns but not all of these patterns come with good regularity, and not all of them have high levels of reliability and profitability.
More common candlestick patterns include engulfing, harami, hanging man and hammer patterns, Doji or stars, and tweezers patterns. We will focus more on this common candlestick pattern with a high level of lucrative opportunities although there are still many less obvious and less profitable candlestick patterns.