Candlestick Patterns

I learn candlestick pattern from e-book Steve Nison. i just want share my favorite candle in my trading.

1.Hammer and Hanging Man

The hammer and hanging man can be recognized by the criteria : a. The real body is at upper end of the trading range. The color of the body not important b. A long lower shadow should be twice the height of the real body c. It should have no, or very short, upper shadow Although the real body of the hammer or hanging man can be white or black. The hammer is a popular candlestick if only for its name. The single candle line appears in a downtrend with a small body and long lower shadow. During the trading day, the bears force price much lower, but by day’s end, the bulls have managed a recovery by pushing price back up. Since the hammer acts as a reversal of the downtrend, you would expect a white hammer to be more bullish and result in better performance than a black one.


2. Dark Cloud Cover

it is a two candlestick pattern that is a top reversal after a uptrend or, at times, at the top of a congestion band. Dark cloud cover begins in an upward price trend with bulls forcing the stock higher. A tall white candle appears, suggesting additional gains, and the next day cooperates when price gaps open higher than the prior day’s peak. However, the bears take over and selling pressure pushes price to close near the day’s low, completing the candle.

3. Piercing

Just as a dark cloud cover is a top reversal, its opposite, the piercing pattern is a bottom reversal. the first candlestick is a real black body day and the second is a long, white a real body day. Price trends downward leading to the start of the piercing candle, so the bears are in control. Then a black candle prints on the chart, reinforcing the bearish pressure. The next day opens with price gapping lower, below the low of yesterday’s black candle. Then the bulls burst onto the scene and begin pressuring price upward. At day’s end, a white candle remains and price closes above the midpoint of the prior black candle but below the top of the black candle’s body. This endpoint is an arbitrary one to distinguish the piercing pattern from similar candles.