Learn Forex – Dual Candlestick

Dual Candlestick Patterns

Morning star

This is basically a three steps bullish reversal pattern at the bottom of a downtrend consisting of three candlesticks, starting with a long real body black candlestick after an extended downtrend, a small body candlestick (could be white or black but a white body tend to have stronger indication) that gapped down on the open and closed below the low price of the previous candlestick (which make that candlestick appears isolated from prior bar), finally a long real body white candle which gapped up on the open and closed near the bar high or at least well above the mid-point of the previous black candle.

If the star itself is a hammer or doji, this normally suggests a stronger reversal signal and the subsequent impact is more likely to be bigger.

Harami

This is s two candlesticks pattern which could be either bullish or bearish depending on the combination of the prior and subsequent candlesticks development. In a downtrend, after a long black-bodied candlestick hitting a new low, the second candlestick has a small white body and is completely confined within the range of the previous candle. The Japanese word ‘Harami’ means pregnant, the pattern itself looks like a woman carrying a baby (needs some imaginations). The subsequent development is also important in order to provide confirmation, the candlesticks after the ‘Harami’ should start turning upwards, which means it should be followed by series of white candles.

The second candlestick could appear in different forms such as doji:

Bullish Engulfing Pattern

This is a reversal pattern which can be bearish or bullish, when it appears at the end of a downtrend, it would be a bullish engulfing pattern. The pattern starts with a small body candlestick, then followed by a candlestick whose body completely engulfs the previous candle’s body as buyers outnumber the sellers, this would reflect in the chart by a long white real body candlestick.

Again this pattern needs confirmation and the long white candle should be followed by series of white candlesticks to confirm a low formation.

Shooting Star

This is a single candlestick reversal pattern made up of a small real body, ideally to be black but could be white, with a long upper shadow but a very short or even non-existent lower shadow. This candlestick should be formed after an uptrend, the top of the shadow marks a new high and then followed by black candlesticks. Therefore it is grouped under bearish reversal patterns.

Evening Star

This is a three steps bearish reversal pattern at the top of an uptrend, just like the Morning star pattern, consisting of three candlesticks, starting with a long real body white candlestick after an upmove, a small body candlestick (could be black or white but a black body tend to have stronger indication) that gapped up on the open and closed above the high price of the previous candlestick (which make that candlestick appears isolated from prior bar), finally a long real body black candle which gapped down on the open and closed near the low or at least well below the mid-point of the previous white candle.

If the star itself is a shooting star or doji, this normally suggests a stronger reversal signal and the subsequent impact is more likely to be bigger.

Bearish Engulfing Pattern

This is a reversal pattern appears at the end of an uptrend, which starts with a small body candlestick, then followed by a candlestick whose body completely engulfs the previous candle’s body as sellers outpace the buyers, this would reflect in the chart by a long black real body candlestick.

Again this pattern needs confirmation and the long black candle should be followed by series of black candlesticks to confirm a top formation.

There are actually more bullish and bearish candlestick patterns, some are reversal (e.g. Hanging Man, Abandoned Baby and Dark Cloud Cover) and some are continuation (e.g. Rising/Falling Three Methods and Tasuki Gap), we are going to cover them in details in next pages.

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