Candlestick Patterns For Trading Cryptos & Stocks Part 3
Trading is not rocket science.
Three stars in the south
It’s a bullish reversal pattern including three bearish candles. Pay attention to the decreasing size of bodies. The logical interpretation of this pattern is that each candle has a smaller body than the previous candle and it signals a reversal might be on the horizon since this fact indicates buying pressure is getting stronger and selling pressure is getting weaker.
This pattern happens when the price is going down and indicates a possible reversal is highly probable.
The range of these three candles might not be always exactly like the image. Each candle might cover part of the range of the previous candle, in that case, the pattern would be more bullish.
Advance Block
It’s a bearish reversal pattern including three bullish candles. Pay attention to the increasing size of bodies. The logical interpretation of this pattern is that each candle has a smaller body than the previous candle and it signals a reversal might be on the horizon and selling pressure is getting stronger and buying pressure is getting weaker.
This pattern happens when the price is going up and indicates a possible reversal is highly probable.
The range of these three candles might not be always exactly like the image. Each candle might cover part of the range of the previous candle, in that case, the pattern would be more bearish.
Bullish Breakaway
A downtrend of four red candles is preceded by a green candle, so this pattern includes four candlesticks totally. This is a bullish reversal pattern. The first candle is relatively big. Candles one, two, and three are small. The fourth candle is green, relatively big, and closes above the opening price of the second candle. The candles can have tails but I didn’t draw in this image.
Bearish Breakaway
It is the mirror image of the bullish breakaway and signals possible reversal to the downside. The candles can have tails but I didn’t draw in this image.
The fourth candle is red, relatively big, and closes under the opening price of the second candle
Tower Bottom
It is a bullish reversal pattern.
The decrease in the body size of the second candle denotes a decrease in selling pressure. The third candle in the pattern is a small bullish candle and opens with a gap up which means a sudden buying pressure. The important thing here is that a sudden burst of buying pressure appeared after the third candle and the sellers tried to overcome that but failed to do so because the fourth candlestick is bullish.
Tower bottom appears when the price is going down in order to signal a reversal to the upside.
Tower Top
It is a bearish reversal pattern.
Ok, we are done with the reversal patterns finally.
In the next part, I will cover continuation patterns.
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