Candle Patterns. Graphic Guide Part 3
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Guide Candles Patterns
Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend.
Basic Candles
1- Black Candle
Description:
The black candle often appears on the candlestick charts.
In a downtrend, it should be primarily treated as a signal of the strength of a trend that we can expect to continue.
Such a candle can also be part of a bullish reversal pattern (for example, Latest Engulfing Bottom, Piercing, Bullish Harami).
The Black Candle can also appear during an uptrend and then it is important to analyze the broader context of the market.
First of all, as with White Candles, attention must be paid to the liquidity of the market. With low liquidity, the series of black candles in an uptrend can indicate that market participants use the last phase of the trading session to consistently sell assets, which in turn can cause a major collapse.
This, however, is an extreme situation in markets with low liquidity. More often, the Black Candle in an uptrend can be part of a bearish reversal pattern.
Building:
• Black body
• Upper and lower shadows are required
• None of the shadows can be longer than the body
• Appears as a long line
Example:
LTC,21 Dec, 2020. Black Candle. Chart 1d.
2- Gravestone Doji
Description:
The basic Gravestone Doji candle is similar to that of a tombstone. Its appearance in a downtrend may suggest its continuation or a move towards a sideways trend. All the main authors emphasize the importance of the candle after the uptrend.
Tohbo (or tohba) is a wooden symbol of a Buddhist stupa placed behind a tombstone. It also includes the tombstones of those brave men who fought in the war. According to Shimizu, the appearance of a Doji tombstone at the top indicates the announcement of the end of the uptrend. In some cases, the basic Gravestone Doji candle may resemble the One-Candle Shooting Star pattern when a small doji body is allowed (for example, 1-3% of the candle).
Building:
• The opening, closing and minimum prices are the same or very similar
• Long top shadow
• Appears as a long line
• Maximum 3% of the body of the candle.
Example:
Nasdaq,27 Feb, 2019. Gravestone Doji. Chart 1d.
3- Long White Candle
Description:
When analyzing the situation on the chart, it is always more important to observe what is happening at that moment. Therefore, in order to determine whether the candle appeared as a long or a short line, the last appointments are crucial.
If market volatility is low for a long time, even a small breakout may be enough to form a long white candle. However, in the same chart below, when market volatility is much higher, a candle has to be appropriately larger to recognize it as a valid long white candle
Many analysts make a mistake when determining whether the candle is a long or a short line, position on historical charts. They forget that by the time a candle is forming, it is not clear what the market will look like in the future. In other words, if we have a candle on the chart today that meets the requirement of a valid long line, it does not mean that the same requirement will be met in the future. What appears to be extremely long today may not be at a later time, when market volatility will grow rapidly.
Some authors (eg Bulkowski) classify Long White Candle as a continuation (bullish) pattern. Let us think for a moment whether this should be regarded as a correct interpretation. First, the candle should appear only in an uptrend; otherwise, we could not call this pattern a bullish continuation. But this is not true, as we can find this candle in an uptrend or a downtrend. Second, Long White Candle is not a pattern in itself, it is a basic candle and can be part of both bullish and bearish patterns. Some people choose to think of this candle as bullish, but in fact it may appear as part of, for example, bearish engulfing patterns or dark clouds. Third, if this candle is formed with a low trading volume, it is recommended to be very suspicious as far as its bullish meaning is respected.
According to Nison, the appearance of a long white candle body (that is, no shadows) after a series of dips, may indicate a change in the current trend. Especially if the closing price is higher than the close of several previous candles. Nison also adds that when the long white candle appears during an uptrend and breaks some major recent resistance level, there is a good indication of the continuation of the trend. The higher the volume when the Long White Candle is forming, the louder the signal will be.
Long white candles, accompanied by a large volume of trades, should also be considered as a support zone. The support level appears within the average and low price of that candle. Others are treating the entire Long White Candle as a support zone.
Building:
• White paste
• Upper and lower shade required
• None of the shadows can be bigger than the body
• The body of the candle is three times higher than the average body of the last 5 or 10 candles.
• Appears as a long row
Example:
Nasdaq,26 Mar, 2021. Long White Candle. Chart 1d.
4- Short Black Candle
Description:
The short black candle, as it is a basic candle, can be part of bullish and bearish patterns, both reversal and continuation.
As highlighted in other articles, it is important to consider the market context in which the Short Black Candle appears.
Building:
• Black body
• Requires upper and lower shadow
• None of the shadows can be bigger than the body
• Appears as a short line
Example:
Nasdaq,17 Jul, 2019. Short Black Candle. Chart 1d.
5- High Wave
Description:
The High Wave is a special type of basic spinning top candle with one or two very long shadows. The opening and closing price are not the same, but slightly different from each other. In this case, the body color does not matter. The high wave is similar to the long-legged Doji.
Like many other candles with very long shadows, High Wave indicates that market fluctuations are very fast, which can pose a threat to the current trend. The importance of the candle, as in so many cases, depends a lot on the market context.
Nison in the first edition of his book writes that high waves are sails whose two shadows, lower and upper, are long. However, in the next edition, he considers that it is enough that only one of the shadows is very long.
As in the case of the spinning top, the importance of a high wave depends on what is happening on the chart. Morris notes that it may indicate a change in trend. Its importance will be stronger when it occurs after an explicit trend (downtrend or uptrend) and will be accompanied by higher volume.
Several consecutive high wave candles are known as a high wave pattern. It seems that any accumulation of candles indicating significant market volatility (i.e. very long shadows) after a strong trend (especially an uptrend) will indicate the possibility of a reversal.
Building:
• A white or black body
• Very small body
• At least one shade is required
• Appears as a long line
• The length of at least one shadow is at least 3 times greater than the body
Example:
Nasdaq,16 Dec, 2013. High Wave. Chart 1d.
6- Short White Candle
Description:
The Short White Candle belongs to the group of basic candles. Very often it can be seen on the charts, although not as often as a normal White Candle. As highlighted in other articles, during the analysis it is very important to consider the market context. Short candles that occur after a strong trend made up of long candles can indicate only a temporary correction, especially if there are some of them in series (alternating black and white). The short white candle can also be part of the candlestick patterns, indicating a change in trend (e.g. latest engulfing bottom, morning star, descending hawk).
Its appearance in an uptrend can suggest a continuation of the trend, but it can also be part of a pattern that heralds its reversal. When this type of candle occurs in a downtrend, it can be part of the bullish reversal pattern.
Building:
• White body
• Requires upper and lower shadow
• None of the shadows can be bigger than the body
• looks like a short line
Example:
Nasdaq,20 Dec, 2013. Short White Candle. Chart 1d.
7- Black Spinning Top
Description:
The interpretation of this candle is the same as that of the White Spinning Top
Building:
• Black body
• At least one shade is required
• The body cannot be bigger than any of the shadows
• Appears as a short line
• If none of the shadows exceed three times the body, it is allowed to appear as a long line
Example:
Nasdaq,10 Jan, 2014. Black Spinning Top. Chart 1d.
8- Long Black Candle
Description:
A long black candle is often thought of as a continuation pattern. However, its correct valuation should depend on the particular market situation.
When a long black candle occurs in a downtrend, it hints at a continuation of the trend, but it can also be part of a reversal pattern.
Its occurrence in an uptrend can be a precursor to the trend reversal, especially if its close is lower than the closing prices of previous candles. Aside from a single occurrence after the price rises, the long black candle can also be part of other reversal patterns (i.e. all patterns that contain the white candle).
As with the long white candle, this candle can form a significant resistance area (especially when trading volume is also increasing on that candle). The resistance level appears within the medium and high price of that candle. Others treat it as a hardiness zone for the entire Long Black Candle.
When a long black candle breaks some previous support region, it should be considered as a significant fact indicating the strength of the downtrend and its continuation.
Building:
• Black body
• Upper and lower shade required
• None of the shadows can be bigger than the body
• The body of the candle three times higher than the average body of the last 5 or 10 candles
• Appears as a long line
Example:
Nasdaq,2 Jan, 2014. Long Black Candle. Chart 1d.
9- White Candle
Description:
White Candle is very important when it comes to showing the direction of the trend and its strength. Many white candles, one after another in an uptrend, confirm the importance of this trend and represent its continuation. White Candle can also be part of another pattern, including bearish reversal patterns (eg Bearish Harami, Bearish Harami Cross, Dark Cloud Cover).
A single appearance of the White Candle in a downtrend indicates its weakness and heralds a possible problem with its continuation. It can also be part of bullish reversal patterns (eg Bullish Engulfing, Piercing, Morning Doji Star).
Building:
• White body
• Upper and lower shadows are required
• None of the shadows can be longer than the body
• Appears as a long line
Example:
Nasdaq,04 Dec, 2013. White Candle. Chart 1d.
10- White Candle
Description:
Close Black Marubozu is a candle where the closing price and the low price are at the same level (there is no lower shadow). She must have a body that covers at least 51 percent of the overall height of the sail.
According to Morris, Closing Black Marubozu and Closing White Marubozu are more powerful than Opening Black Marubozu and Opening White Marubozu.
Close Black Marubozu indicates the strength of the bears because the closing price and the low price are at the same level. Depending on the position in which such a candle is formed, it can be a reversal or continuation candle. When the Black Marubozu close occurs in a downtrend, along with other black candles, that candle confirms the power of the trend. The appearance of the Black Marubozu close in an uptrend can be a sign of a trend reversal.
Building:
• Black body
• No upper shadow
• Upper shadow smaller than the body
• Appears as a short or long line
Example:
Nasdaq,06 May, 2014. Closing Black Marubozu. Chart 1d.
You liked?, this has just started, and we will not only see candles, patterns, we will see all kinds of Graphic charts and all the tradingview tools in this Thread. Follow him.
Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend.
Basic Candles
1- Black Candle
Description:
The black candle often appears on the candlestick charts.
In a downtrend, it should be primarily treated as a signal of the strength of a trend that we can expect to continue.
Such a candle can also be part of a bullish reversal pattern (for example, Latest Engulfing Bottom, Piercing, Bullish Harami).
The Black Candle can also appear during an uptrend and then it is important to analyze the broader context of the market.
First of all, as with White Candles, attention must be paid to the liquidity of the market. With low liquidity, the series of black candles in an uptrend can indicate that market participants use the last phase of the trading session to consistently sell assets, which in turn can cause a major collapse.
This, however, is an extreme situation in markets with low liquidity. More often, the Black Candle in an uptrend can be part of a bearish reversal pattern.
Building:
• Black body
• Upper and lower shadows are required
• None of the shadows can be longer than the body
• Appears as a long line
Example:
LTC,21 Dec, 2020. Black Candle. Chart 1d.
2- Gravestone Doji
Description:
The basic Gravestone Doji candle is similar to that of a tombstone. Its appearance in a downtrend may suggest its continuation or a move towards a sideways trend. All the main authors emphasize the importance of the candle after the uptrend.
Tohbo (or tohba) is a wooden symbol of a Buddhist stupa placed behind a tombstone. It also includes the tombstones of those brave men who fought in the war. According to Shimizu, the appearance of a Doji tombstone at the top indicates the announcement of the end of the uptrend. In some cases, the basic Gravestone Doji candle may resemble the One-Candle Shooting Star pattern when a small doji body is allowed (for example, 1-3% of the candle).
Building:
• The opening, closing and minimum prices are the same or very similar
• Long top shadow
• Appears as a long line
• Maximum 3% of the body of the candle.
Example:
Nasdaq,27 Feb, 2019. Gravestone Doji. Chart 1d.
3- Long White Candle
Description:
When analyzing the situation on the chart, it is always more important to observe what is happening at that moment. Therefore, in order to determine whether the candle appeared as a long or a short line, the last appointments are crucial.
If market volatility is low for a long time, even a small breakout may be enough to form a long white candle. However, in the same chart below, when market volatility is much higher, a candle has to be appropriately larger to recognize it as a valid long white candle
Many analysts make a mistake when determining whether the candle is a long or a short line, position on historical charts. They forget that by the time a candle is forming, it is not clear what the market will look like in the future. In other words, if we have a candle on the chart today that meets the requirement of a valid long line, it does not mean that the same requirement will be met in the future. What appears to be extremely long today may not be at a later time, when market volatility will grow rapidly.
Some authors (eg Bulkowski) classify Long White Candle as a continuation (bullish) pattern. Let us think for a moment whether this should be regarded as a correct interpretation. First, the candle should appear only in an uptrend; otherwise, we could not call this pattern a bullish continuation. But this is not true, as we can find this candle in an uptrend or a downtrend. Second, Long White Candle is not a pattern in itself, it is a basic candle and can be part of both bullish and bearish patterns. Some people choose to think of this candle as bullish, but in fact it may appear as part of, for example, bearish engulfing patterns or dark clouds. Third, if this candle is formed with a low trading volume, it is recommended to be very suspicious as far as its bullish meaning is respected.
According to Nison, the appearance of a long white candle body (that is, no shadows) after a series of dips, may indicate a change in the current trend. Especially if the closing price is higher than the close of several previous candles. Nison also adds that when the long white candle appears during an uptrend and breaks some major recent resistance level, there is a good indication of the continuation of the trend. The higher the volume when the Long White Candle is forming, the louder the signal will be.
Long white candles, accompanied by a large volume of trades, should also be considered as a support zone. The support level appears within the average and low price of that candle. Others are treating the entire Long White Candle as a support zone.
Building:
• White paste
• Upper and lower shade required
• None of the shadows can be bigger than the body
• The body of the candle is three times higher than the average body of the last 5 or 10 candles.
• Appears as a long row
Example:
Nasdaq,26 Mar, 2021. Long White Candle. Chart 1d.
4- Short Black Candle
Description:
The short black candle, as it is a basic candle, can be part of bullish and bearish patterns, both reversal and continuation.
As highlighted in other articles, it is important to consider the market context in which the Short Black Candle appears.
Building:
• Black body
• Requires upper and lower shadow
• None of the shadows can be bigger than the body
• Appears as a short line
Example:
Nasdaq,17 Jul, 2019. Short Black Candle. Chart 1d.
5- High Wave
Description:
The High Wave is a special type of basic spinning top candle with one or two very long shadows. The opening and closing price are not the same, but slightly different from each other. In this case, the body color does not matter. The high wave is similar to the long-legged Doji.
Like many other candles with very long shadows, High Wave indicates that market fluctuations are very fast, which can pose a threat to the current trend. The importance of the candle, as in so many cases, depends a lot on the market context.
Nison in the first edition of his book writes that high waves are sails whose two shadows, lower and upper, are long. However, in the next edition, he considers that it is enough that only one of the shadows is very long.
As in the case of the spinning top, the importance of a high wave depends on what is happening on the chart. Morris notes that it may indicate a change in trend. Its importance will be stronger when it occurs after an explicit trend (downtrend or uptrend) and will be accompanied by higher volume.
Several consecutive high wave candles are known as a high wave pattern. It seems that any accumulation of candles indicating significant market volatility (i.e. very long shadows) after a strong trend (especially an uptrend) will indicate the possibility of a reversal.
Building:
• A white or black body
• Very small body
• At least one shade is required
• Appears as a long line
• The length of at least one shadow is at least 3 times greater than the body
Example:
Nasdaq,16 Dec, 2013. High Wave. Chart 1d.
6- Short White Candle
Description:
The Short White Candle belongs to the group of basic candles. Very often it can be seen on the charts, although not as often as a normal White Candle. As highlighted in other articles, during the analysis it is very important to consider the market context. Short candles that occur after a strong trend made up of long candles can indicate only a temporary correction, especially if there are some of them in series (alternating black and white). The short white candle can also be part of the candlestick patterns, indicating a change in trend (e.g. latest engulfing bottom, morning star, descending hawk).
Its appearance in an uptrend can suggest a continuation of the trend, but it can also be part of a pattern that heralds its reversal. When this type of candle occurs in a downtrend, it can be part of the bullish reversal pattern.
Building:
• White body
• Requires upper and lower shadow
• None of the shadows can be bigger than the body
• looks like a short line
Example:
Nasdaq,20 Dec, 2013. Short White Candle. Chart 1d.
7- Black Spinning Top
Description:
The interpretation of this candle is the same as that of the White Spinning Top
Building:
• Black body
• At least one shade is required
• The body cannot be bigger than any of the shadows
• Appears as a short line
• If none of the shadows exceed three times the body, it is allowed to appear as a long line
Example:
Nasdaq,10 Jan, 2014. Black Spinning Top. Chart 1d.
8- Long Black Candle
Description:
A long black candle is often thought of as a continuation pattern. However, its correct valuation should depend on the particular market situation.
When a long black candle occurs in a downtrend, it hints at a continuation of the trend, but it can also be part of a reversal pattern.
Its occurrence in an uptrend can be a precursor to the trend reversal, especially if its close is lower than the closing prices of previous candles. Aside from a single occurrence after the price rises, the long black candle can also be part of other reversal patterns (i.e. all patterns that contain the white candle).
As with the long white candle, this candle can form a significant resistance area (especially when trading volume is also increasing on that candle). The resistance level appears within the medium and high price of that candle. Others treat it as a hardiness zone for the entire Long Black Candle.
When a long black candle breaks some previous support region, it should be considered as a significant fact indicating the strength of the downtrend and its continuation.
Building:
• Black body
• Upper and lower shade required
• None of the shadows can be bigger than the body
• The body of the candle three times higher than the average body of the last 5 or 10 candles
• Appears as a long line
Example:
Nasdaq,2 Jan, 2014. Long Black Candle. Chart 1d.
9- White Candle
Description:
White Candle is very important when it comes to showing the direction of the trend and its strength. Many white candles, one after another in an uptrend, confirm the importance of this trend and represent its continuation. White Candle can also be part of another pattern, including bearish reversal patterns (eg Bearish Harami, Bearish Harami Cross, Dark Cloud Cover).
A single appearance of the White Candle in a downtrend indicates its weakness and heralds a possible problem with its continuation. It can also be part of bullish reversal patterns (eg Bullish Engulfing, Piercing, Morning Doji Star).
Building:
• White body
• Upper and lower shadows are required
• None of the shadows can be longer than the body
• Appears as a long line
Example:
Nasdaq,04 Dec, 2013. White Candle. Chart 1d.
10- White Candle
Description:
Close Black Marubozu is a candle where the closing price and the low price are at the same level (there is no lower shadow). She must have a body that covers at least 51 percent of the overall height of the sail.
According to Morris, Closing Black Marubozu and Closing White Marubozu are more powerful than Opening Black Marubozu and Opening White Marubozu.
Close Black Marubozu indicates the strength of the bears because the closing price and the low price are at the same level. Depending on the position in which such a candle is formed, it can be a reversal or continuation candle. When the Black Marubozu close occurs in a downtrend, along with other black candles, that candle confirms the power of the trend. The appearance of the Black Marubozu close in an uptrend can be a sign of a trend reversal.
Building:
• Black body
• No upper shadow
• Upper shadow smaller than the body
• Appears as a short or long line
Example:
Nasdaq,06 May, 2014. Closing Black Marubozu. Chart 1d.
You liked?, this has just started, and we will not only see candles, patterns, we will see all kinds of Graphic charts and all the tradingview tools in this Thread. Follow him.
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Here will be all the parts.ノート
Forgive the mistakes, it is handling several images and not really being able to see the chart when you make the post it complicates me a lot, I will try to avoid them in the next post.
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