5
Continuation Patterns
Continuation patterns suggest the market will maintain an established trend. Often the direction of the candlesticks themselves are in the opposite direction of trend in
continuance. Continuation patterns help traders differentiate between a price action that is in full reversal and those merely taking a pause. Most traders will tell you there
is a time to trade and a time to rest. The formation of continuation candlestick patterns
imply consolidation, a time to rest and watch.
Rising Three Methods
Three
Line Strike
Falling Three Methods
Three Line Strike
In-Neck
On Neck
6
C
Reversal Chart Patterns
Head and Shoulders
Bottom
Double - Triple Bottom
Head and Shoulders Top
Double - Triple Bottom
Wedges
Bump
and Run Reversal Bottom
Wedges
Bump and Run Reversal Top
Rounding Bottom
Diamond Top
Diamond Bottom
9
Candlesticks in more detail
One candlelit evening in the 17th century, a Japanese rice trader Munehisa Homma was feeling quite creative, probably under the influence of some rice ouzo came up with
an idea that somehow he can translate rice market prices into candlestick shapes. After all looking and trying to memorize all price moves in numbers wasn't that practical,
especially when he was creative.
All those years in the west they stick with line and bar charts, until guy named Steve Nison introduced to the rest of the world. He made a career out of it. I hear sometimes
some people calling him as candlestick guy.
I intend to put together few articles going through most of the useful candle patterns over the coming days and weeks. Lets start with the basics for the benefits of those who
are new to all this candle patterns stuff.
How candles are formed. Anatomy of candlesticks. Lets the pictures do the talking.
As in everything in this life, not all candles come in same shapes and sizes. It's a good idea to familiarize ourselves with some noticeable ones.
10
Doji:
When opening and closing prices are almost the same we have a doji candle. However, as you can see on above Doji candles opening and closing
prices npt always
may be virtually the same. On the other hand wick [shadow] length can be at different sizes on different occasions. Doji tells us there are some dog fight is going on the
market. Neither buyers or sellers were
able to take charge, as a result we end up in bit of uncertainty. Indecision. However, we can decide on making a coffee for ourselves
while PA resolves itself.
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