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Candlestick Patterns Cheat Sheet (95% Of Traders Don’t Know)

Anyone who has dabbled in Forex trading understands how tough it is to master the numerous approaches and tactics available rapidly. Most people are unaware that learning candlestick patterns is the simplest approach to getting started in Forex.

While this may appear to be a simple assignment, you should be aware that there are more than 30 different candlestick patterns to remember. All aside, recognizing them in real-time can be a genuine bother — especially for novices!

So, we’ve put together a handy candlestick pattern cheat sheet to help you save more money. It’s ideal since you may use it to help spot different patterns while trading in real-time.

Before downloading the candlestick pattern cheat sheet, continue reading to discover everything you need to know about Forex candlesticks.

What are Candlestick Patterns and How Do They Work?

What Are Candlestick Patterns and How Do They Work?

Traders frequently employ a variety of charts to aid in the discovery of profitable trading opportunities. Candlestick charts, line charts, point and figure charts, OHLC charts, and Renko charts are examples.

As you can see, there are other chart patterns to master for Forex trading, but most traders feel that candlesticks are the finest.

So, what exactly are candlestick patterns? They are a charting analysis used by Forex traders to assess the market and identify profitable trading chances.

Candlestick patterns, based on past price trends and data, provide Forex traders with important insight into possible reversal, trend breakouts, and continuation in the market when combined with other forms of fundamental and technical analysis.

Candlesticks were invented in the 18th century in Japan and have been an excellent means of assessing financial markets in the Western world for over a century.

Even though they were not designed to assess foreign currency transactions, they are now predominantly utilized. Traders love them because they provide information on low, high, open, and close prices and are more visible than other more technical forms of analysis.

Candlestick Fundamentals

Candlesticks are popular because of their simplicity and convenience in analyzing the market at one glimpse. Here are some examples of how candlesticks might help:

  • They make it easier to spot highs and lows.
  • Candlesticks make it simple to determine if a candle was a sell or buy, and they also make it simple to discern market strengths.
  • They reveal various forms and patterns that exhibit leading indicators of the market’s potential upward movement.

Candlestick Structure

Let’s look at the most important points in terms of structure:

Close — This indicates when the session ended. The close of a bullish candle is at the top, whereas the close of a bearish candle is at the bottom.

Open — This indicates when the session started. The opening of a bullish candle is at the bottom, whereas the opening of a bearish candle is at the top of the body.

Low – During trading sessions, this illustrates where the market stood at the lowest price. This data is used to indicate how low markets dropped in a particular trading period.

High – During trading sessions, displays where the market stood at its highest price. This data is used to demonstrate how much the market has changed within a single trade session.

Reading Candlestick Patterns in Forex

Understanding the structure we just described is only the start. Now that you’ve got the basics down let’s talk about reading candlestick patterns in Forex.

The candlestick body represents the difference between each trading session’s beginning and closing prices. You’ll also note that most candlesticks are colored to make it easier to determine whether they are bearish or bullish. The candlestick’s body is hollow, and the portions beneath and above it are called the shadow.

The color black or red on candlesticks indicates that the initial price remained more than the closing price. If you observe a candlestick with a translucent body (which can also be green or white), it signifies the day’s opening price was lower than the closing price.

Candlestick Pattern Strategy for Forex

When comparing currency pairs, candlestick reversal patterns help traders spot continuations, breakouts, and reversals. By placing support lines on candlestick graphs, technical analysis can identify downtrends and uptrends in the Forex market. This information alerts traders that it’s time to adjust their position by adding additional stop-losses or shorting to avoid losing money.

Let’s look at the different sections of the candlestick pattern cheat sheet now that you know a bit about what candlestick patterns are in Forex, how they are read, and how they may help.

Patterns of Bullish Candlesticks

These candlestick patterns represent the presence of a buyer’s market. Bullish candlestick patterns come in various shapes and sizes, with some being more popular than others.

While we won’t go through each one today, here are a few examples:

  • Three White Soldiers
  • Three Line Strike
  • Dragonfly Doji
  • Bullish Spinning Top
  • Piercing Line
  • Tweezer Bottom

Inverted Hammer and Hammer

The hammer is a single-candle pattern that appears at the end of a downward trend. The reversal pattern is positive since it implies that, owing to the bulls in the market, the examined instrument will shortly set off in an upward trend. The shape of the candlesticks representing hammers is one of the simpler Forex candlestick patterns to spot.

Bears are forcing prices down on that particular trading day, as seen by the tail (which is generally longer than the body).

A hammer pattern indicates that there will be a lot of purchasing pressure after the current low pricing, leading to higher closing prices.

Although you can use Hammer candlesticks as a useful signal, traders who rely primarily on them are likely disappointed. So, if you’re going to use this pattern, double-check it by watching the market for another few days after you observe it. This will determine whether or not bullish trends are formed.

Morning Star

The Morning Star is another classic bullish candlestick pattern. It is made up of three unique candlesticks, the first of which is a long red/black candle, the second a Doji (candle with a short body), and finally, a long white/green candle to complete the design.

The Doji candle’s body color can be red/black or green/white, but it does not touch the candlestick before it. Traders love the Morning Star candlestick pattern because it always gives them optimism in a bleak environment.

The star suggests that the selling pressure is easing, and the pattern’s last candle indicates that traders are resuming their buying interest. When this pattern appears, it usually signals the start of a bullish reversal trend.

Basic/Neutral Patterns in Candlesticks

A basic/neutral pattern or a continuation in the candlesticks occurs when candlestick patterns don’t show a change in market direction.

When the market becomes indecisive, or price movements are neutral, the appearance of such patterns usually indicates a duration of market rest. The Star and Marubozu are two examples of neutral/basic candlestick patterns.

Here’s a closer look at the Doji as well as the Spinning Top, two more:

Doji

When an instrument’s starting and closing prices are nearly identical, you’ll see a candlestick that appears like a cross or a plus sign. Looking for a nonexistent or short body with varying length wicks is an easy method to spot this pattern.

The Doji pattern depicts a battle between buyers and sellers with no net benefit. The Doji can occur on its own as a neutral sign. However, it’s also found in a reversal pattern with the te bullish Morning Star and the Bearish Evening Star.

Spinning Top

Spinning top is a Forex candlestick pattern with a short body sandwiched between two wicks of similar length. This pattern, experienced traders know, shows market indecision, resulting in no meaningful price moves. Essentially, the bulls pushed the price higher while the bears pushed it lower.

Many traders view Spinning Tops as a signal that it’s time to take a break and consolidate. When this pattern develops on its own, it is usually benign, but it can be seen as a portent of things to come because it indicates a loss of control to market pressure.

Bearish Candlestick Patterns

Finally, we have bearish candlestick patterns appearing after an upward trend indicating resistance points. Because of their pessimism about market prices, Forex traders frequently close long-term bets to take shorter positions and profit from declining prices. There are other bearish candlestick patterns we are not covering here.

Here are a few examples:

  • Three Black Crows
  • Hanging Man
  • Gravestone Doji
  • Dark Cloud Cover
  • Tweezer Top
  • Three Black Crows

Evening Star

The Evening Star is a fictional character. The bearish analog of the Morning Star is the evening star, which is a three candle pattern. This pattern is generated when a short candle is placed between a long green candle and a huge red one.

When the third candle erases all of the gains made by the first candle, it indicates that an uptrend is starting to reverse.

Shooting Star

The inverted hammer is the best comparison for the shooting star because Shooting Stars form upwards while they both are the same in shape. The appearance of a long upper wick and a little lower body distinguishes this candlestick type.

The market gaps are higher at the open, then rally to an intra-day high before actually closing slightly above open, much like a star plummeting to Earth.

Abschließende Gedanken

Reap the benefits of this ultimate cheat sheet for candlestick patterns, whether you’re trading for years or entirely new to Forex. Hopefully, this guide has been able to clarify the concepts for you.

Häufig gestellte Fragen

What is Candlestick Pattern?

They are a charting analysis used by Forex traders to assess the market and identify profitable trading chances. Candlestick patterns, based on past price trends and data, provide Forex traders with important insight into possible reversal, trend breakouts, and continuation in the market when combined with other forms of fundamental and technical analysis.

How Do You Remember Candlestick Patterns?

The color black or red on candlesticks indicates that the initial price remained more than the closing price. If you observe a candlestick with a translucent body (which can also be green or white), it signifies the day's opening price was lower than the closing price.

Which Minute Candle is Best for Intraday Trading?

Five minutes charts bar indicates high and low and opening and closing of five minutes duration. These are the most commonly used day trading charts. This Time frame is the best time frame for Intraday trading stocks

How Do You Read a Candle Pattern?

The candlestick body represents the difference between each trading session's beginning and closing prices. You'll also note that most candlesticks are colored to make it easier to determine whether they are bearish or bullish. The candlestick's body is hollow, and the portions beneath and above it are called the shadow.

Which Candlestick Pattern is Most Reliable?

Some of the most reliable candlestick chart patterns are evening stars, three-line strikes, two black gapping, etc.

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