Ultimate candlestick reversal pattern - Ultimate candlestick reversal pattern download - Candlestick Patterns That Reveal Trend Reversal

Candlestick Patterns That Reveal Trend Reversal

by Ahmad Hassam on September 24, 2010

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You need to master a few profitable candlestick patterns that can reveal a lot about trend reversals. In recent years, candlestick charting has become highly popular among traders. Othese candlestick charts you can spot a nmber of candlestick patterns that can reveal a lot about the market sentiment and can be highly profitable if interpreted correctly. A Candlestick is formed of a body and two wicks one above and the other below the body. The Candlestick Body is made by the Opening and the closing price. The wicks are formed with the high and low price in the session.

Do you know about Hammers? Hammers have infact long lower shadow and a small upper shadow. What a hammer reveals is that after the price of the security opened on the market, sellers drove it down further. By the end of the day, buyers have recouped much of their losses to end the day near or at the high. No Hammer is complete without confirmation. If the price action directly after the Hammer is down, no hammer has taken place. A true Hammer cannot have its low violated by subsequent price action. Volume should also be taken into account. If the volume is heavy, the Hammer formed is genuine.

Now, the second important candlestick pattern that reveals a trend reversal is the Hanging Man. Yes, this candlestick pattern is called the Hanging Man as it looks like a man being hanged. Now, a Hanging Man is formed at the very top of the Price Action. If the price action continues to rise, it means that there was no Hanging Man. Hanging Man should be confirmed by the subsequent price action and volume information. If confirmed, it is signal that the uptrend is about to turn into a downtrend.

Similarly Bullish and Bearish Engulfing Candlestick Patterns occurs at the end of a downtrend or an uptrend and marks important reversals. They are characterized by two bar formations.

The first candlestick represents a small body. The second candlestick opens higher than the previous candlestick close and closes lower than the previous candlestick open, thus engulfing the previous candlestick body.

Candlestick charting is something you must master. These trend reversal candlestick patterns can be highly profitable. Many traders are now using candlestick patterns in their daily trading. There are many candlestick patterns. You must download the FREE 82 page Candlestick Guide after reading this article. This Candlestick Guide is a gift from Options University and comes with full strategy flash cards.

Now, combining these trend reversal candlestick patterns with technical indicators can be a powerful combination.

Mr. Ahmad Hassam has done Masters from Harvard University. Get these 3 Swing Trading Systems FREE. Master these highly profitable Candlestick Patterns with this FREE 82 Page PDF Candlestick Guide.

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