Japanese candlestick patterns are a popular tool used in technical analysis to analyze and predict price movements in financial markets, particularly in trading stocks, forex, and commodities. Here are some basic Japanese candlestick patterns: Doji: The Doji is a candlestick with the opening and closing prices at or near the same level. It indicates indecision in the market and can signal a potential reversal.
Hammer: The Hammer has a small real body at the top and a long lower shadow. It resembles a hammer. It suggests that sellers were in control during the trading session, but buyers managed to push the price back up.
Shooting Star: The Shooting Star has a small real body at the bottom and a long upper shadow. It looks like an inverted hammer. It indicates that buyers were initially in control, but sellers took over by the end of the session.
Bullish Engulfing: The Bullish Engulfing pattern occurs when a small bearish candle is followed by a larger bullish candle that completely engulfs the previous candle. It suggests a potential reversal from a downtrend to an uptrend.
Bearish Engulfing: The Bearish Engulfing pattern is the opposite of the Bullish Engulfing. It occurs after an uptrend and signals a potential reversal to a downtrend.
Morning Star: The Morning Star is a three-candle pattern that includes a large bearish candle, a small bullish or bearish candle with a gap down, and a large bullish candle. It indicates a potential reversal from a downtrend to an uptrend.
Evening Star: The Evening Star is the opposite of the Morning Star. It signals a potential reversal from an uptrend to a downtrend.
Hanging Man: The Hanging Man has a small real body and a long lower shadow. It appears after an uptrend and suggests a potential reversal.
Inverted Hammer: The Inverted Hammer has a small real body and a long upper shadow. It appears after a downtrend and signals a potential reversal.
Dark Cloud Cover: The Dark Cloud Cover is a two-candle pattern where a bullish candle is followed by a bearish candle that opens above the high of the previous candle and closes below its midpoint. These are just a few basic Japanese candlestick patterns. Traders often use them in combination with other technical analysis tools to make more informed trading decisions. It's important to note that while candlestick patterns can be useful, they should be used in conjunction with other forms of analysis for a comprehensive view of the market.
These are just a few basic Japanese candlestick patterns. Traders often use them in combination with other technical analysis tools to make more informed trading decisions. It's important to note that while candlestick patterns can be useful, they should be used in conjunction with other forms of analysis for a comprehensive view of the market.