Japanese Candlesticks

Doji

The final and last kind of Japanese candlestick formation is the doji or sometimes called doji star.  Dojis fall into a group all of their own and offer the least more powerful confirmation of a potential change in trend.  They can be used at both tops and bottoms of price swings. They typically consist of [...]

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Bearish Engulfing Pattern

Like bullish engulfing patterns, bearish engulfing patterns fall into what is possibly the third most powerful kind of Japanese candlestick patterns.  Again, these patterns offer less confirmation of a potential change in trend and should be used with caution.  They typically have the following characteristics: Their real body must engulf the previous candles real body. [...]

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Bullish Engulfing Pattern

The third kind of Japanese candlestick formations are bullish engulfing patterns.  These patterns offer much less strength than the pin bar, hanging man and inverted hammer, but they can still offer some insight into potential future market movement.   Typically have the following characteristics: Their real body must engulf the previous candles real body. The real [...]

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Inverted Hammer

Similar to the hanging man, the inverted hammer is a bottom reversal pattern and is best played at swing lows.  This formation is second only to the pin bar in the potential strength and setup of a possible change in trend.  They typically have the following characteristics: The upper shadow should be twice the length [...]

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Hanging Man

This Japanese candlestick formation would possibly be the second most important setup.  It is similar to the pin bar formation but does not offer as strong a signal as a possible change in trend.  The hanging man is a top reversal pattern and as such is best played at swing highs. They typically have the [...]

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Pin Bars

This probably the number one Japanese candlestick formation used by swing traders.  This an extremely powerful setup and if you only learn one price action formation, this should be it.  Pin bars typically have the following characteristics: One shadow will extend out while the other should be very small or non‐existent. The extended shadow should [...]

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