By Melvin Pasternak

During this booklet i've got chosen 21 candles that i feel each dealer should still recognize by way of identify. those are the candles that during my adventure happen most often and feature the best relevance for making buying and selling judgements. simply as realizing the

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Extra resources for 21 Candlesticks Every Trader Should Know

Example text

36 of mid-April, backed off and then soared. 60 in early June. The evening star pattern is circled on the chart below. On the first day, there is a reasonably large white candle. The second session see a gap higher, indicated by the top of the black candle being somewhat higher than the white candle before it. Note the large upper shadow on this candle, indicating that CAL was not able to sustain prices above $15. The upper shadow occurred entirely above the top Bollinger band indicating that CAL was substantially overbought.

From that time onward, throughout the entire month of May, Nasdaq was off to the races. The Composite rallied roughly 200 points, from below 1900 to nearly 2100. The hammer candle was the technical signal that it was time to be long not short Nasdaq. The candle opposite of the hammer is called hangman. When I have taught candlesticks in college stock market classes, students have easily become confused between the two. This is because they look exactly alike. The key difference is where they occur in a chart.

Many times, only one candle is necessary to put a trader on high alert that a reversal may be happening. A doji candlestick, whether it occurs after a long uptrend or downtrend, indicates that supply and demand are in equilibrium and that the recent trend may be coming to a conclusion. Several major reversal patterns consist of two candlesticks. A bullish or bearish engulfing candle often signals a trend's conclusion. This two-candle pattern is also relatively easy to spot. The evening star and morning star are, in my experience, harder patterns for the eye to pick out.

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21 Candlesticks Every Trader Should Know by Melvin Pasternak
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