Some of these opportunities are bullish, or buying opportunities, while others are bearish, representing selling opportunities.
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Volume gives performance clues -- page
Money Flows Money Flows use volume-based indicators to access buying and selling pressure. Strength in any of these would increase the robustness of a reversal. For those that want to take it one step further, all three aspects could be combined for the ultimate signal. Look for bullish candlestick reversal in securities trading near support with positive divergences and signs of buying pressure. A number of signals came together for IBM in early October.
After a steep decline since August, the stock formed a bullish engulfing pattern red oval , which was confirmed three days later with a strong advance. The day Slow Stochastic Oscillator formed a positive divergence and moved above its trigger line just before the stock advanced. Although not in the green yet, CMF showed constant improvement and moved into positive territory a week later.
Bullish Engulfing The bullish engulfing pattern consists of two candlesticks, the first black and the second white. The size of the black candlestick is not that important, but it should not be a doji which would be relatively easy to engulf.
The second should be a long white candlestick — the bigger it is, the more bullish. The white body must totally engulf the body of the first black candlestick. Ideally, though not necessarily, the white body would engulf the shadows as well. Although shadows are permitted, they are usually small or nonexistent on both candlesticks. After a decline, the second white candlestick begins to form when selling pressure causes the security to open below the previous close.
Buyers step in after the open and push prices above the previous open for a strong finish and potential short-term reversal.
Generally, the larger the white candlestick and the greater the engulfing, the more bullish the reversal. Further strength is required to provide bullish confirmation of this reversal pattern. The first formed in early January after a sharp decline that took the stock well below its day exponential moving average EMA. An immediate gap up confirmed the pattern as bullish and the stock raced ahead to the mid-forties. After correcting to support , the second bullish engulfing pattern formed in late January.
The stock declined below its day EMA and found support from its earlier gap up. A bullish engulfing pattern formed and was confirmed the next day with a strong follow-up advance. The Bullish Engulfing candlestick pattern is similar to the outside reversal chart pattern , but does not require the entire range high and low to be engulfed, just the open and close. Piercing Pattern The piercing pattern is made up of two candlesticks, the first black and the second white.
Both candlesticks should have fairly large bodies and the shadows are usually, but not necessarily, small or nonexistent. The white candlestick must open below the previous close and close above the midpoint of the black candlestick's body.
A close below the midpoint might qualify as a reversal, but would not be considered as bullish. Just as with the bullish engulfing pattern, selling pressure forces the security to open below the previous close, indicating that sellers still have the upper hand on the open.
However, buyers step in after the open to push the security higher and it closes above the midpoint of the previous black candlestick's body.
The stock first touched 40 in early April with a long lower shadow. After a bounce, the stock tested support around 40 again in mid-April and formed a piercing pattern. The piercing pattern was confirmed the very next day with a strong advance above Even though there was a setback after confirmation, the stock remained above support and advanced above Also notice the morning doji star in late May.
Bullish Harami The bullish harami is made up of two candlesticks. The first has a large body and the second a small body that is totally encompassed by the first. There are four possible combinations: Whether they are bullish reversal or bearish reversal patterns, all harami look the same. Their bullish or bearish nature depends on the preceding trend. Harami are considered potential bullish reversals after a decline and potential bearish reversals after an advance.
No matter what the color of the first candlestick, the smaller the body of the second candlestick is, the more likely the reversal. If the small candlestick is a doji, the chances of a reversal increase. Because the first candlestick has a large body, it implies that the bullish reversal pattern would be stronger if this body were white. The long white candlestick shows a sudden and sustained resurgence of buying pressure.
The small candlestick afterwards indicates consolidation. The first long black candlestick signals that significant selling pressure remains and could indicate capitulation. The small candlestick immediately following forms with a gap up on the open, indicating a sudden increase in buying pressure and potential reversal.
Micromuse MUSE declined to the mid-sixties in Apr and began to trade in a range bound by 33 and 50 over the next few weeks. After a 6-day decline back to support in late May, a bullish harami red oval formed. The first day formed a long white candlestick, and the second a small black candlestick that could be classified as a doji.
The next day's advance provided bullish confirmation and the stock subsequently rose to around Hammer The hammer is made up of one candlestick, white or black, with a small body, long lower shadow and small or nonexistent upper shadow.
After a decline, the hammer's intraday low indicates that selling pressure remains. However, the strong close shows that buyers are starting to become active again. Nike NKE declined from the low fifties to the mid-thirties before starting to find support in late February.
After a small reaction rally, the stock declined back to support in mid-March and formed a hammer. Manage your Investment Club. The indicator can then be used to execute trades, provide an Email or SMS text message notification when your Candlestick chart patterns have been met or backtest trading strategies. A Morning Doji Star consists of a long bearish candle, followed by a small bullish or bearish candle that has gapped below it, then a third bearish candle that closes well within the body of the first candle and in doing so confirming the reversal.
It is considered a bullish price reversal candlestick pattern. The bearish equivalent candlestick pattern is called an Evening Star. The pattern is similar to the Morning Doji Star , which is considered a stronger bullish reversal signal. An overview of Candlesticks A candle represents the changes in price over an interval of time such as 1 day or 1 minute. The main body of the candle illustrates the opening price at the start of the time interval and the price when the market closed at the end of the interval.
The head and tail represent the highest and lowest prices during the interval. The length of the 'Head' is the difference between the highest price during the interval and the greater of the Open or Close price.
The length of the 'Tail' is the difference between the lowest price and the difference between lesser of the Open or Close price. The length of the 'Body' if the difference between the Open and Close price. The full length of the candle is referred to as the 'Shadow'.
If the price closed at a price above the opening price, then the candle is referred to as a 'bullish' candle and if the price closed below the opening price, then the candle is referred to as a 'bearish' candle. On the TimeToTrade charts the bullish candles are coloured green and the bearish candles are coloured red as illustrated: It can be used to identify Evening Star chart patterns, where by the indicator will rise above 0 to 1 when the Evening Star chart pattern has been identified: Click on the search box and type the name of the Candlestick indicator that you are looking for, or for example type 'candle' and scroll through the results: After adding the Evening Star indicator, within the chart settings, click on it to set the colour and tolerance: The tolerance is used to 'soften' the Candlestick rules.
For example, if there are two candles in a sequence, and the requirement is for the second candle high and low to be fully engulfed by the body of the first candle, adding a tolerance value, will allow the high or low of the second candle to be outside the body of the first candle, by the specified tolerance amount.
A morning star is a bullish candlestick pattern in a stock's price chart, which consists of three candles. A morning star is a bullish candlestick .
Morning Star is a bullish candlesticks reversal pattern occuring at the bottom of downtrends. Opposite is the Evening Star candlesticks pattern. This candlestick can also be a doji, in which case the pattern would be a morning doji star. A long white candlestick. The black candlestick confirms that the decline remains in force and selling dominates.
The Morning Star candlestick pattern is the opposite of the Evening Star, which is a top reversal signal that indicates bad things are on the horizon. Meaning The Morning Star candlestick pattern brings good tidings! The morning star is a bullish, bottom reversal pattern that is the opposite of the evening lokersumbagut.ga warns of weakness in a downtrend that could potentially lead to a trend reversal.
The Morning Star - A Powerful Candlestick Reversal Signal, Stocks & Commodities Magazine The major Candlestick reversal signals are very illuminating. They are hundreds of years of visual observations revealing high . The Morning Star is a three-line. bullish reversal pattern appearing in a downtrend. The first line is any black candle appearing as a long line in a downtrend: Long Black Candle, Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.