Trading Bullish One-Candle Patterns
How To Trade
- Identify a downtrend on the chart.
- Look for a candle pattern.
- Wait for the next candle to close higher.
- If confirmed, consider entering a long position for an expected trend shift.
Hammer
The Hammer has a short body at the top and a long shadow at the bottom. The shadow should be twice the size of the body.
The hammer hints at a possible change from a downtrend to an uptrend, because even with strong selling, buyers managed to push the price back up.
Inverted Hammer
The Inverted Hammer is like a regular hammer, but its long shadow is above the body. The shadow should be at least twice the size of the body.
The lengthy upper shadow means buyers initially raised the price, but faced selling pressure that pushed it down.
Dragonfly Doji
The Dragonfly Doji looks like a dragonfly or a “T” with a small body on top and a long bottom shadow.
The extended lower shadow implies intense selling, but since the price closed near the open, buyers could counter the selling and push the price up.
Spinning Top
The Spinning Top has a small body and long upper and lower shadows.
It forms when buyers and sellers push the price in opposite directions, resulting in a close near the open. This signals market indecision, a balance between buyers and sellers.
Wait for the next candle to confirm the market’s direction. A clear trend in the follow-up candle may indicate a potential reversal.
