IV. 13 CANDLESTICK PATTERNS
IV. 13 CANDLESTICK PATTERNS
1. Fake reversal pattern
1. Fake reversal pattern: a local maximum/minimum formed on the market, but something went wrong and the price turned in the opposite direction.
· The local maximum is a combination of three candlesticks. The first candlestick is growing, the second and third are falling. The signal for price movement upward occurs when the price breaks the high of the second candlestick.
· The local minimum is a combination of three candlesticks. The first candlestick is falling, the second and third are growing. A downward price movement signal occurs when the price breaks through the low of the second candlestick.
2. Exit from the expanding range
2. Exit from the expanding range: the range of the penultimate candlestick is completely within the range of the last one and the price moves up or down out of this range.
· The signal for price movement upward occurs when the price breaks through the high of the last candlestick.
· The signal for price movement downward occurs when the price breaks through the low of the last candle.
3. Exit from a narrowing range
3. Exit from a narrowing range: the range of the last candle is completely inside the range of the penultimate one and the price moves up or down out of this range.
· A signal for price movement upward occurs when the price breaks the high of the penultimate candlestick.
· A signal for price movement downward occurs when the price breaks the low of the penultimate candlestick.
4. The price has broken the maximum value for the last month
4. The price has broken the maximum value for the last month
· A signal for price movement upward occurs when the maximum price for the last month (22 working days) is broken.
· A signal for price movement downward occurs when the minimum price for the last month (22 working days) is broken.
5. Short ema(14) crossed the long ema(22) from bottom to top
5. Short ema(14) crossed the long ema(22) from bottom to top
· A signal for price movement upward occurs when the short exponential moving average (with 14 days time window) crosses the long exponential moving average (with 22 days time window) from bottom to top.
· A signal for price movement downward occurs when the short exponential moving average (time window 14 days) crosses the long exponential moving average (time window 22 days) from top to bottom.
6. Opening with a gap up and then closing the gap
6. Opening with a gap up and then closing the gap
· A signal of price movement upward occurs when the market opens with a gap down and then closes this gap (crossing the minimum of the last formed candle from bottom to top)
· A signal of price movement downward occurs when the market opens with a gap up and then closes this gap (crossing of the maximum of the last formed candlestick from top to bottom)
7. Fake pin bar
7. Fake pin bar: a pin bar was formed, but something went wrong and the price turned in the opposite direction.
· A signal of price movement upward occurs when a downward pin-bar is formed and the next candlestick breaks the maximum value of the price of the last formed candlestick (pin-bar).
· A signal of price movement downward occurs when an upward pin-bar is formed and the next candlestick breaks the minimum value of the price of the last formed candlestick (pin-bar).
8. Reversal pattern
8. Reversal pattern: a local minimum/maximum formed on the market.
· An up signal occurs when the close price of the last formed candlestick is below the low price of the penultimate candlestick and the last formed candlestick is falling. But then the price breaks the high of the last formed candle upward.
· A down signal occurs when the close price of the last formed candle is higher than the high of the penultimate candle and the last formed candle is growing. But then the price breaks the low of the last formed candle down.
9. The stochastic indicator signal line has entered a range of 20-80%
9. The stochastic indicator signal line has entered a range of 20-80%.
· An up signal occurs when the Stochastic indicator signal line crosses the 20% level from bottom to top.
· A down signal occurs when the Stochastic indicator signal line crosses the 80% level from top to bottom.
10. The last candlestick crossed the EMA moving average from bottom to top or top to bottom
10. The last candlestick crossed the EMA moving average from bottom to top or top to bottom
· An up signal occurs when the last formed candlestick crosses the exponential moving average up.
· A down signal occurs when the last formed candlestick crosses the exponential moving average down.
11. Uptrend/ Downtrend range (2 consecutive growing/ falling candles)
11. Uptrend/ Downtrend range (2 consecutive growing/ falling candles)
· An up signal occurs when two consecutive growing candles are formed.
· A down signal occurs when two consecutive falling candlesticks are formed.
12. "Pin-bar"
12. "Pin-bar" (Pin - from the word Pinocchio), aka "needle turn", aka "kangaroo tail". The last candlestick resembles the shape of a needle (usually this is a signal for a price rebound against the tip of the "needle").
· An up signal occurs when a growing candlestick is formed such that the distance from the candlestick's high to its opening is at least 2 times less than the candlestick's opening distance to its minimum.
· A down signal occurs when a falling candlestick is formed such that the distance from the candlestick's high to its opening is at least 2 times the distance from the candlestick's opening to its minimum.
13. Naked maximum/minimum
13. Naked maximum/minimum: the last candlestick closes at its high or low.
· An up signal occurs when a rising candlestick is formed such that its close coincides with the high of that candlestick.
· A down signal occurs when a falling candlestick is formed such that its close coincides with the low of that candlestick.
