Single Japanese Pattern Candlestick

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Single Japanese Pattern Candlestick

Single Pattern Candlestick Japan is a signal reversal that can be used to predict the next price movement and the name “single pattern” which means a single pattern without any other candlestick combination. Well here are the four basic Japanese candlestick patterns in question.

Hammer and Hanging Man

These two forms are physically almost the same but have different meanings when viewed from the process of formation at each last price in a trading session. Both have the characteristics of a short body shape (either black or white) with a long tail below and a short upper tail.

 


And here is an example of its formation in a trading session.

The hammer is a bullish reversal signal formed at the end of a trading session that has a downtrend . And it’s called a hammer because its function is to hit the market to get out of its trend towards the opposite trend, in this case an uptrend .

So when the price falls and there is no power to continue to sell then the hammer signal will be quickly found and the price will begin to reverse direction. A long tail will form and indicate that the seller is trying to push the price to move away from the opening price but the buyer trader suddenly comes and opposes the move to return past the opening price.

Even though we have seen a hammer candlestick which is a signal reversal it does not mean we have to open a Buy Order position immediately but we have to wait for the confirmation signal that assures us that the candlestick is indeed a signal reversal .

One example of the confirmation signal is the formation of a white bullish candlestick with the opening price above the closing price of the hammer signal as shown above.

Hammer Criteria

  •  The length of the tail under his body has a length of about 2 to 3 times the length of his body
  •  Little or no tail is formed on his body
  •  His body position is above the previous candlestick range
  •  Body color is not so important
Hanging Man is a bearish reversal signal formed at the end of a trading session that experiences an uptrend and can be said to be a strong resistance area. When prices peak, the hanging manformation indicates that the number of seller traders starts to exceed the number of buyers.
The long tail below his body indicates that the seller’s trader pushed the price lower during the trading session. And the buying trader is able to push the price back up only to get close to the opening price.
This condition can be an alarm for us that the number of buyer traders has begun to decrease to be able to push the price to continue the uptrend and the opportunity for the seller to sell the merchandise is very large so the price is ready to start falling.

Hanging Man Criteria

  •  The length of the tail under his body has a length of about 2 to 3 times the length of his body
  •  Little or no tail on his body
  •  His body position is above the previous candlestick range
  •  For the color of his body is not important, it’s just that the black color is more bearish than white

Inverted Hammer and Shooting Star

Inverted hammer and star shooting are physically similar. The only difference is that the position is in the direction of the uptrend or downtrend. These two candlesticks have a short body shape in black or white, the tail is over a long body, and the tail is short or has nothing.

 

 


An inverted hammer is
 formed after the price falls and the long tail above the body indicates that the buyer is trying to bid at a higher price.
 And even though the seller sees this condition still selling at a low price so the price returns close to the opening price.And the following is the formation position in the direction of the downtrend and uptrend movement.

Because merchant sellers are no longer able to sell at a low price and / or are allowed a lot of the amount has been reduced because they do not have merchandise then we can ensure that what is left is only the buyer traders.

Shooting star is a bearish reversal signal which is almost similar to an inverted hammer but is formed when the price is moving up. In this condition the number of buyer traders is not much so that they are not able to move prices higher and seller traders start to come and fight it so the price starts falling.

Warning: when we encounter all of the reversal signals above it does not mean that we have to open a position directly at the trading session but wait for a confirmation signal to confirm the signals.

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