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Forex Candlestick Patterns - 2021 [Part 1]

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sgtmarkets
Business
2021-03-20 14:12
101
Description : Forex candlestick patterns are the most valuable patterns to analyze price charts and market trends. Before making their way to the forex market, candlestick patterns had been in use for hundreds of years by Japanese rice farmers. Developed in the 17th century, farmers developed the idea in order to track and speculate on the price of rice in the market. Today, the method of candlestick pattern analysis has evolved to become one of the most commonly used technical analysis tools in the forex market.

The most eye-catching technical analysis has two types of patterns.

1. Bullish
2. Bearish

In this article, we will talk about only Bullish. So, without further ado let's begin the show--

Bullish Candlestick Patterns

In bullish candlestick patterns, you will find lots of category of it. So, let bring them out--

Hammer

As the name suggests, this candlestick resembles a hammer in shape. One of the simplest candlestick patterns, the hammer is made up of one candle with a long lower wick connected to a short body at the top of the candle. A hammer has little to no upper wick. Most traders consider the hammer to be valid once the lower wick is twice as long as the upper part of the candlestick body. The body of the candle must be at the top end of the trading range.

Inverse Hammer

While the hammer candle pattern occurs when a price trades lower than it opened at, the inverted hammer almost always occurs at the bottom of a downtrend. These candles are generally warnings of coming price changes.

Bullish Engulfing

The first pattern on this list involves more than one candle, the bullish engulfing pattern is a two candle reversal pattern. After the first dark candle appears, a second larger and hollow one forms and engulfs the body of the first one. This pattern appears in a downward trend and on the second day of the pattern’s appearance, the price opens lower than the day before. However, buying pressure pushes the price up past the previous high which makes the price an eventual win for buyers.

Piercing Line

Another price pattern similar to the bullish engulfing candle, the piercing line is an indication of a potential short-term reversal from a downward trend to an upward trend. The piercing line pattern takes into account a first-day opener close to the high and a closing near the low. In between, there is an average trading range. To confirm this pattern, the close must be a candlestick covering at least half of the previous day’s body.

Morning Star

Moving on from two candles to three, the morning star pattern is three candles that follow a downward trend and it is used to indicate the beginning of an upward ascent. This pattern is a precursor to the reversal of the previous price movement.

Three White Soldiers

The three white soldiers is another 3 candlestick pattern that is usually found at the end of a trend. The pattern is formed when 3 long bullish candles appear after a downtrend. This is a signal that a reversal has occurred. This is regarded as one of the most blatant bullish signals you can find in the market.

The Bottom

That's enough for now! I will discuss bearish candlestick patterns in the next article. But, whatever, we use it. In candlestick patterns, the neediest thing to do is forex market analysis. So, if someone utilizing the chart patterns properly, he will surely gain profits.

Gratitude!

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