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Candlestick Patterns

Candlestick chart pattern recognition was made famous recently by Steve Nison's book "Japanese Candlestick Charting Techniques" in the 1980's.  Candlestick charts are one of the most popular chart styles used among technical traders today.

Many candlestick chart readers see recurring chart patterns with candlestick charts.  Here are some of the simple and most popular candlestick chart patterns.

 

White or "Open" candlestick - signals uptrend movement (those occur in different lengths, the longer the more significant the price change)
Black or "Closed" candlestick - signals downtrend movement (those occur in different lengths, the longer the more significant the price change)
Hammer - a bullish pattern during a downtrend (long lower wick & no or only small body);
Shaven head - a bullish pattern during a downtrend and a bearish pattern during an uptrend (no upper wick);
Hanging man - bearish pattern during an uptrend (long lower wick, no or only small body, wick has the multiple length of the body.
Inverted hammer - signals bottom reversal, however confirmation must be obtained from next trade (may be either a white or black body).
Shaven bottom - signaling bottom reversal, however confirmation must be obtained from next trade (no lower wick).
Shooting star - a bearish pattern during an uptrend (small body, long upper wick, small or no lower wick).

 

See Also

Candlestick Charts

Technical Indicator Overview