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Candlestick Formations

The document describes various candlestick patterns and their meanings: - Marabuzo candles show strong buyer or seller control over a period. Bullish Marabuzo have high closes, bearish have low closes. - Spinning tops and Dojis indicate market indecision and consolidation. - Hammers and inverted hammers during downtrends, and hanging men during uptrends, may signal an upcoming reversal. - Shooting stars and bearish engulfing patterns may also signal short-term trend reversals. - Morning star and evening star patterns consist of three candles and can indicate trend changes. Three white soldiers and three black crows are very strong reversal signals.

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1K views

Candlestick Formations

The document describes various candlestick patterns and their meanings: - Marabuzo candles show strong buyer or seller control over a period. Bullish Marabuzo have high closes, bearish have low closes. - Spinning tops and Dojis indicate market indecision and consolidation. - Hammers and inverted hammers during downtrends, and hanging men during uptrends, may signal an upcoming reversal. - Shooting stars and bearish engulfing patterns may also signal short-term trend reversals. - Morning star and evening star patterns consist of three candles and can indicate trend changes. Three white soldiers and three black crows are very strong reversal signals.

Uploaded by

m_animal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Marabuzo (bullish)

Large body, very little or no wick. This candle shows that the buyers have pushed the price
up significantly from open to close.

Marabuzo (bearish)
A very bearish candle, showing the sellers are completely in control.

Spinning top
These have small bodies and wicks that are roughly the same length above and below. They
tend to indicate indecision in the market, and are often seen during periods of consolidation
following an uptrend or downtrend
Doji

Also frequently signifying indecision, these have almost no body at-all - meaning the opening
and closing prices for that candle are identical (or at least very close to each other). The wicks
can be any length in either direction. A doji is typically seen during consolidation and market
tops or bottoms. It can also indicate that a trend is about to reverse, as the convictions of
buyers or sellers driving the market weaken.

Hammer
When seen during a downtrend, this candle can signify the market is about to go up. For a
particularly strong signal, the lower wick of the hammer must be at least twice as long as the
body and there should be little or no upper wick. The colour of the body is not especially
important, but green hammers tend to be more bullish than red ones.
Inverted hammer

A similarly bullish candle which when seen in a downtrend can signal that the market is
about to move higher. The only difference to a standard hammer is the upper wick is long
while the lower wick is very short (or non-existent).

Hanging man

The same shape as a hammer, also signifying a reversal, but this time formed during an
uptrend. Again the colour isn't particularly important, but a red candle tends to be more
bearish.
Shooting star

Another reversal candle occurring during an uptrend. Same shape as the inverted hammer.

Just like chart patterns, multiple candlesticks can also form recognisable patterns that often
signify the market will move in one way or another.

Bullish engulfing

A red candle immediately followed by a larger green candle, suggesting a strong move
upwards. The second candle's body is so large it engulfs the former candle.
Bearish engulfing

This time a smaller green candle is engulfed by a larger red one - signifying a strong move
lower.

Tweezer bottoms

A reversal pattern occurring during a downtrend. A tweezer occurs when two candles find
support at the same level and begin to reverse. The first candle is red, while the second candle
is green.
Tweezer tops

The opposite of tweezer bottoms, indicating the reversal of an uptrend. Here two candles hit
resistance at the same level, the first being green and the second red.

Morning star

A three-candle pattern indicating a reversal in a downtrend. The first candle is red, the second
a spinning top or a doji, and the third is green. Traditionally the 'star' should gap lower on
entry and then gap higher on exit into the third candle. However, 24-hour markets typically
have few gaps so traders tend to ignore this requirement.
Evening star

The bearish version of the morning star, beginning with a green candle and ending with red.
This indicates the reversal of an uptrend.

Three white soldiers

A very strong bullish signal occurring after a downtrend reversal. Consists of three green (or
white) candles with large bodies and small wicks.
Three black crows

The bearish version of three white soldiers, seen after an uptrend reverses. Three consecutive
red (or black) candles with large bodies and small wicks appear.

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