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Candlestick charts in detail - Part 3

Check out Part 1 and Part 2 of the Candlestick patterns before reading further.

Bullish Engulfing Pattern

Usually indicates reversal pattern when formed in a downtrend. A small red candle (body) followed by a large Green (body) candle. Usually, the large green candle opens below the close or the low of the red candle and closes above the high or open of the red candle.


Bearish Engulfing pattern

Usually indicates reversal pattern when formed in a uptrend. A small green candle (body) followed by a large red (body) candle. Usually, the large red candle opens above the close or the high of the green candle and closes below the low or close of the green candle.


Tweezers Bottom and Tops

If two or more candles have the same bottom, especially in the downward pattern, it is a sign of reversal. - Tweezer Bottoms


If two or more candles have the same tops, especially in the upward pattern, it is a sign of reversal. - Tweezer Tops



Bullish Harami

If a large red candle is followed by a small green candle and if the green cande is entirely contained within the red candle then it is called bullish harami and indicates and possible bullish reversal if in downtrend or a continuation if in uptrend.

Bearish Harami

If a large green candle is followed by a small red candle and if the red candle is entirely contained within the green candle then it is called bearish harami and indicates and possible bearish reversal if in uptrend or a continuation if in downtrend.


Piercing lines

When a long red candle is followed by a long green candle, and the green candles open is below the red candles close, then it indicates a strong reversal signal to the upside.


Dark cloud cover

When a long green candle is followed by a long red candle, and the red candles opens is above the green candles close, then it indicates a strong reversal signal to the downside.

Morning star pattern

A long red candle followed by a small wider candle then a long green candle which closes above at least 50% of the first red candle's body. This indicates a strong bullish reversal if found in a down trend.

Evening star Pattern

A long green candle followed by a small wider candle then a long red candle which closes below at least 50% of the first green candle's body. This indicates a strong bearish reversal if found in an up trend.

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What are Support and Resistance lines?

Support and Resistance are key players in Forex trading. Identifying support and resistance would be our first step towards our Technical analysis. There are different ways a support and resistance line could be placed. Each trader may differ in their own analysis but the basic concept is the same.



Support lines:

Support lines are horizontal lines drawn in a chart where the market has been at its lowest. It is believed that if the market again reaches the support line, a reversal in trend would happen.

There are times when the market has broken the support lines. We must be careful at these times as they might mislead sometimes. If a support line is broken for sure, then the trend will continue the same way.


Resistance Lines:

Resistance lines are horizontal lines drawn in a chart where the market has been at its highest. It is believed that if the market again reaches the resistance line, a reversal in trend would happen.

Similarly, resistance lines could be broken and if they are then the trend will continue.

Learn More about Support and resistance






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