How I Turned $125 Into $9K+ In 45 Days Using 5 Candlestick Patterns
A simple and friendly guide to my strategy:
Candlestick patterns are powerful tools for understanding price action and making better trading decisions. Here are 5 common and powerful patterns I have used in my trading and simple ways to use them effectively:
1️⃣. Engulfing candle pattern
Bullish Engulfing: A large green candle completely engulfs the previous red candle.
Bearish Engulfing: A large red candle completely engulfs the previous green candle.
What does it mean:
Bullish: Buyers are taking control, indicating a potential reversal to the upside.
Bearish: Sellers are taking control, indicating a potential reversal to the downside.
How to use it:
Look for bullish engulfing patterns at support levels or after a downtrend for a potential long entry.
Look for bearish engulfing patterns at resistance levels or after an uptrend for a potential short entry.
Confirmation of the pattern by trading volume (higher volume strengthens the signal).
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2️⃣. Hammer and inverted hammer
Hammer: A small body with a long lower wick; found at the bottom of a downtrend.
Inverted Hammer: Small body with a long upper wick; found at the bottom of a downtrend.
What does it mean:
Indicates a possible reversal. A long wick shows rejection of low prices (hammer) or high prices (inverted hammer).
How to use it:
Spotting the hammer in support areas during a downtrend for long trades.
Wait for confirmation (such as the next candle closing higher).
Use the bottom of the wick as a stop loss area.
3️⃣. The flying star and the hanging man
Flying Star: A small body with a long upper wick; found at the top of an uptrend.
Hanging Man: A small body with a long lower wick; found at the top of an uptrend.
What does it mean:
Flying Star: Sellers are rejecting higher prices, indicating a potential reversal to the downside.
Hanging Man: Weakness in the uptrend, possible reversal.
How to use it:
Spotting flying stars in resistance areas during an uptrend for short trades.
Confirm the pattern with a bearish close on the next candle.
Use the highest wick as a stop loss area.
4️⃣. Yogurt
Small body with long wicks on the sides, indicating uncertainty in the market.
Types:
Dragon Fly Doge: Long lower wick, no upper wick - mostly bullish.
Tombstone Dougie: Long upper wick, no lower wick - mostly bearish.
Standard Doge: Equal upper and lower wicks - uncertainty.
What does it mean:
Potential reversal or continuation point, depending on the context (support/resistance, trend direction).
How to use it:
At support: The Dragon Fly Dogi may indicate a reversal of long trades.
At resistance: The Tombstone Dogi may indicate a reversal for short trades.
Wait for the next candle to confirm the trend.
5️⃣. Morning Star and Evening Star
Morning Star: A three-candle pattern at the end of a downtrend.
1. First candle: Big red candle.
2. Second candle: A small-bodied candle (doji or spinning top) showing uncertainty.
3. Third candle: A large green candle closes above the middle of the first candle.
Evening Star: Reversal pattern at the end of an uptrend.
What does it mean:
Morning Star: Bullish Reversal.
Evening Star: Bearish Reflection.
How to use it:
Morning Star: Look for it near support levels for long trades.
Evening Star: Look for it near resistance levels for short trades.
Confirm the reversal with the next candle and trading volume.
6️⃣ Tips for using candlestick patterns
1. Context is key: Use patterns in conjunction with support/resistance levels, trend lines, or indicators like RSI for better accuracy.
2. Look for compatibility: Combine candlestick patterns with other signals (e.g. trend line break, Fibonacci retracement).
3. Wait for confirmation: Avoid entering a trade based solely on the pattern. Wait for the next candle to confirm the trend.
4. Use Stop Loss: Place your stop loss below/above the wick of the candle pattern to limit risk.
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. Combining time frames: Spot patterns on higher time frames (4 hours, daily) and enter trades on lower time frames (1 hour, 15 minutes) for accurate entry.
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