Summary: Japanese Candlesticks and Favorable Patterns

Wow! We have learned the basics of Japanese Candlesticks and also gone through the advanced methods as how to use them as candlestick chart patterns while trading forex.

Let’s have a quick recap of all the lessons, we learned about Japanese candlesticks and all basic, single, double and triple candlestick chart patterns

List of All Important Japanese Candlestick Patterns
Single Candlestick Chart Patterns

Bullish Marubozu

A Bullish Marubozu is a white or green color candlestick with a long real body without any shadows. The opening price is the lowest price, and the closing price is the highest price of the candlestick. A bullish marubozu reflects a great demand in the market resulting into an intense buying pressure even at a continuous increasing price. A bullish marubozu is often seen at the start and/or continuation of a bullish trend and also at times of immediate bullish reversals.

Bearish Marubozu

A Bearish Marubozu is a black or red color candlestick with a long real body without any shadows. The opening price is the highest price, and the closing price is the lowest price of the candlestick. A bearish marubozu reflects a great supply in the market resulting into an intense selling pressure even at a continuous declining price. A bearish marubozu is often seen at the start and/or continuation of a bearish trend and also at times of immediate bearish reversals.

Spinning Tops

A spinning top is a cautionary candlestick, which is formed after the huge fight between the bulls and bears with nobody having the upper hand, as a result, market indecision might result the prices to move in an opposite or sideways direction.

Doji

A Doji candlestick is the result of an intense fight between the bulls and bears with nobody having the upper hand and finally resulting into a tie, as a result, market indecision might result the prices to move in an opposite or sideways direction.

Hammer

The Hammer is a bottom reversal candlestick pattern and has a small real body at the top, or the real body is just a little lower from the high of a candlestick, and the size of the lower shadow is approximately more than the double size of the real body; the more is the length of lower shadow, the more is the hammer candlestick pattern powerful. The color of a Hammer is not important because a hammer reflects the bullish market sentiment i.e. a long lower shadow provides the market information that the bulls are now becoming stronger and are getting ready to take the lead.

Hanging Man

The hanging man is a top reversal candlestick pattern and has a small real body at the top, or the real body is just a little lower from the high of a candlestick, and the size of the lower shadow is approximately more than the double size of the real body; the more is the length of lower shadow, the more is the hanging man candlestick pattern powerful. The color of Hanging Man is not important because a hanging man reflects the bearish market sentiment i.e. a long lower shadow provides the market information that the bears are now becoming stronger and are getting ready to take the lead.

Inverted Hammer

The inverted hammer is a bottom reversal candlestick pattern and has a small real body at the bottom, or the real body is just a little higher from the low of a candlestick, and the size of the upper shadow is approximately more than the double size of the real body, the more is the length of upper shadow, the more is the inverted hammer candlestick pattern powerful. The color of Inverted Hammer is not important because an inverted hammer reflects the bullish market sentiment i.e. a long upper shadow provides the market information that the bulls are now becoming stronger and are getting ready to take the lead.

Shooting Star

The shooting star is a top reversal candlestick pattern and has a small real body at the bottom, or the real body is just a little higher from the low of a candlestick, and the size of the upper shadow is approximately more than the double size of the real body, the more is the length of upper shadow, the more is the shooting star candlestick pattern powerful. The color of a Shooting Star is not important because a shooting star reflects the bearish market sentiment i.e. a long upper shadow provides the market information that the bears are now becoming stronger and are getting ready to take the lead.

Double Candlestick Chart Patterns

Piercing Pattern

A piercing pattern is a bullish reversal pattern formed at the trough of a price swing. In a Bearish trend, when the price is declining continuously and at the lower price level, if a bullish candlestick is formed and pierces deeply up to a minimum of 50% into the price levels of a previous strong bearish candlestick, as a result, we get a piercing candlestick pattern, the deeper it pierces into the immediate previous bearish candlestick, the more is the piercing candlestick pattern powerful and provides the market information that the bulls are now becoming stronger and are getting ready to take the lead.

Dark Cloud Cover

A dark cloud cover candlestick pattern is a bearish reversal pattern formed at the peak of a price swing. In a Bullish trend, when the price is advancing continuously and at the higher price level, if a bearish candlestick is formed and pierces deeply up to a minimum of 50% into the price levels of a previous strong bullish candlestick, as a result, we get a dark cloud cover candlestick pattern, the deeper it pierces into the immediate previous bullish candlestick, the more is the dark cloud cover candlestick pattern powerful and provides the market information that the bears are now becoming stronger and are getting ready to take the lead.

Bullish Engulfing

A Bullish Engulfing Pattern is a bottom reversal pattern. In a bearish trend, when the price is declining continuously and at the lower price level, if a strong and large bullish candlestick is formed immediately after the bearish candlestick and it is outweighing completely to the previous bearish candlestick, as a result, we get a bullish engulfing candlestick pattern. The more is the second bullish candlestick bigger and stronger than the first bearish one; the more is the bullish engulfing candlestick pattern powerful and provides the market information that now the bulls are powerful and are ready to push the prices.

Bearish Engulfing

A Bearish Engulfing Pattern is a top reversal pattern. In a bullish trend, when the price is advancing continuously and at the higher price level, if a strong and large bearish candlestick is formed immediately after the bullish candlestick and it is outweighing completely to the previous bullish candlestick, as a result, we get a bearish engulfing candlestick pattern. The more is the second bearish candlestick bigger and stronger than the first bullish one; the more is the bearish engulfing candlestick pattern powerful and provides the market information that now the bears are powerful and are ready to pull the prices.

Bullish Harami

A Bullish Harami is a bottom reversal pattern. In a bearish trend, when the price is declining continuously and at the lower price level, if a small real body bullish candlestick (like a spinning top or doji) is formed after a strong and large bearish candlestick, as a result, we get a bullish harami cross. The more deeply is the second bullish candlestick closing in to the price levels of the first strong and large bearish candlestick; the more is the bullish harami cross powerful and provides the market information that the bulls are now becoming stronger and are getting ready to take the lead.

Bearish Harami

A Bearish Harami is a top reversal pattern. In a bullish trend, when the price is advancing continuously and at the higher price level, if a small real body bearish candlestick (like a spinning top or doji) is formed after a strong and large bullish candlestick, as a result, we get a bearish harami cross. The more deeply is the second bearish candlestick closing in to the price levels of the first strong and large bullish candlestick, the more is the bearish harami cross powerful and provides the market information that the bears are now becoming stronger and are getting ready to take the lead.

Triple Candlestick Chart Patterns

Morning Star

A morning star candlestick pattern is a bottom reversal pattern formed by the combination of 3 candlesticks in a bearish trend if a small candlestick like a spinning top or a doji is formed after a strong bearish candlestick and then followed by a strong bullish candlestick, as a result, we get a tiny twinkling morning star reflecting the market information that the night is coming to an end and get ready for a fresh new morning because a small candlestick reflects the indecision in the market and the bullish candlestick reflect the increase in the buying pressure.

Evening Star

An evening star candlestick pattern is a top reversal pattern formed by the combination of 3 candlesticks in a bullish trend if a small candlestick like a spinning top or a doji is formed after a strong bullish candlestick and then followed by a strong bearish candlestick, as a result, we get a tiny twinkling evening star reflecting the market information that the day is coming to an end and get ready to enjoy the beautiful evening because a small candlestick reflects the indecision in the market and the bearish candlestick reflect the increase in the selling pressure.

Three Inside Up

Three Inside Up is a bullish reversal pattern. In a bearish trend, if a bullish candlestick of good size is formed after a strong bearish candlestick and then followed by another strong bullish candlestick, as a result, we get a three inside up candlestick pattern reflecting the market information that the bears have tried their best in pulling the prices lower, but due to some reason bulls have reacted very strongly and built two consecutive bullish candlesticks of good sizes breaking the high of the last strong bearish candlestick and due to the increase of momentum in buying pressure, a potential reversal and/or market indecision might result the prices to move in an opposite or sideways direction.

Three Inside Down

Three Inside Down is a bearish reversal pattern. In a bullish trend, if a bearish candlestick of good size is formed after a strong bullish candlestick and then followed by another strong bearish candlestick, as a result, we get a three inside down candlestick pattern reflecting the market information that the bulls have tried their best in pushing the prices higher, but due to some reason bears have reacted very strongly and built two consecutive bearish candlesticks of good sizes breaking the low of the last strong bullish candlestick and due to the increase of momentum in selling pressure, a potential reversal and/or market indecision might result the prices to move in an opposite or sideways direction. Yup! the Japanese candlesticks lesson has completed, go ahead, grab some charts, enjoy and explore your creative talent to benefit from all these beautiful candlestick chart patterns

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