Candlestick Charting For Dummies, 2nd Edition

Chapter 5

Working with Straightforward Single-Stick Patterns

IN THIS CHAPTER

Identifying uptrends through long white candles

Finding bullish signals in flat trading Understanding the start of downtrends with long black candles

Trading with the ultimate bearish signal

It’s time to begin diving into individual- and multiperiod candlestick patterns. Many patterns give buy and sell signals, and some serve as a heads-up that a big move is on the horizon (although it’s not always clear just what that big move will be!).

Most candlestick patterns are valid based only on the market activity of the previous few days. Some patterns indicate a change in trend, for example, and using one of them without knowing about the previous trend wouldn’t be very useful. Usually, the context in which you find a pattern tells you a great deal about what you should do based on that pattern. Some single-stick patterns, however, are considered to be either bullish or bearish regardless of the context, and those patterns are what I focus on in this chapter.

This chapter explores the signals that single-stick candlestick patterns may send, some bearish and some bullish. (The constructions of these patterns ...