Five Candlestick/OHLC Patterns to Look For
Doji – A Doji is a candlestick where the open price and close price are virtually equal. This is often taken to represent short-term uncertainty in the market, with participants unsure of the direction of the next movement. Therefore, in conjunction with other indicators, the Doji can be useful in helping to identify reversals of the current trend.
Morning Star – The morning star is a candlestick pattern, characterised by a large bearish candle, followed by a reversal “Doji”, followed by a large bullish candle. Such a pattern is often associated with a reversal in a short-term downtrend. In this way, identifying this pattern can lead to recognising a bullish trading opportunity.
Evening Star – The evening star is the direct opposite of the “Morning Star” pattern. It is characterised by a large bullish candle, followed by a “Doji”, followed by a large bearish candle. Contrasting the “Morning Star”, the Evening Star can be used to identify a reversal in a short-term uptrend. In this way, identifying this pattern can lead to recognising a bearish trading opportunity.
Engulfing Patterns – An engulfing pattern can occur when there is a price reversal from the short-term trend. It is characterised by a candlestick with a range between the day’s open and close prices that completely encapsulates the previous day’s price range. The pattern, when occurring at the extremes of a trend, is seen as a reversal pattern and can be either bullish or bearish.
Windows – A window is where the high of the day’s price range is below the previous day’s low (falling window) or the low of the day’s range is above the previous day’s high (rising window). In this way, a gap or “window” is created between the two days’ price movements. The gap can often become resistance in the case of a falling window, or support in the case of a rising window.
When the experts at Next Investors have a stock pick, it may pay to listen.
The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.
They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.
Click the link below to see what they are currently investing in.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.