Learning these essential candlestick patterns can help you make informed trading decisions and avoid losses. Here are the patterns to focus on:
1. Upward Swallow: A small red candle followed by a larger green candle, indicating strong buying interest and a potential bullish reversal.
2. Downward Scavenging: A small green candle engulfed by a larger red candle, reflecting prevailing selling pressure and a potential bearish reversal.
3. Dark Cloud Cover: A green candle followed by a red candle that opens above its midpoint and closes below it, indicating selling pressure and a possible downward reversal.
4. Cloud Penetration (Ichimoku): Price breaks above or below the Ichimoku cloud, indicating an upward or downward trend.
5. Top of the Clips: Two candles with similar highs form after an uptrend, indicating resistance and weak buying momentum.
6. Bottom of the Clamps: Two candles with similar lows appear after a downtrend, indicating strong support and a possible trend reversal.
7. Rising Harami: A large red candle followed by a smaller green candle, showing a decline in selling pressure and a possible trend reversal.
8. Falling Harami: A large green candle followed by a small red candle, reflecting a decline in buying interest and a possible downward reversal.
9. Partition Pattern: Candles appear divided or indecisive, indicating a transition in the market.
10. Rising Counterattack: The second candle opens below the previous close and closes near its open, indicating the entry of buyers and a possible trend reversal.
11. Downward Counterattack: The second candle opens higher but closes near the previous close, showing selling pressure at resistance.
12. Flying Stocks: Two consecutive candles moving in the same direction, representing strong momentum and a continuation of the current trend.
Mastering these candlestick patterns can help you identify trend reversals, momentum, and potential entry or exit points in trades.