MAIN BEARISH CANDLESTICK PATTERNS YOU SHOULD MASTER AS A TRADER Bearish candlestick patterns usually form after an uptrend and signal a resistance point. High pessimism about the market price often causes traders to close their long positions and open a short position to profit from falling prices. Hanged man The hanged man is the bearish equivalent of a hammer; it has the same shape but forms at the end of an uptrend. This indicates that there was a sell-off during the day, but buyers were able to push the price up again. The sell-off is often seen as an indication that bulls are losing control of the market.
Shooting star The shooting star has the same shape as the inverted hammer, but is formed in an uptrend: it has a small lower body and a long upper wick. Usually, the market widens slightly at the open and rises to an intraday high before closing at a price just above the open – like a star falling to the ground.
Bearish engulfing An engulfing downtrend occurs at the end of an uptrend. The first candle has a small green body which is engulfed by a following long red candle. This means a spike or slowdown in price movement and a sign of an impending market slowdown. The further the second candle goes down, the more significant the trend is likely to be.
Evening Star The Evening Star is a three-candlestick pattern that is the equivalent of the bullish Morning Star. It consists of a short candle sandwiched between a long green candle and a large red candlestick. It indicates the reversal of an uptrend, and is particularly strong when the third candlestick erases the gains of the first candle.
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