As you know, we emphasize on using the strong candlestick patterns a lot because we believe that they are the only real time technical indicators that reflect the markets’ participants mentality.
Candlestick patterns reflect the psychology of the markets’ participants that make the price move and take a special direction. They tell you whether the major markets’ participants want to buy, sell or do nothing.
Therefore, it is crucial to learn the candlestick patterns if you want to have a higher success rate as a trader.
Many of the professional traders use nothing but the candlesticks. Many of them have no indicators on their charts, but candlesticks. The reason is that candlestick patterns work, and if you learn to follow the strong candlestick patterns, you will have a high success rate.
Here, I am showing you some good examples of the strong candlestick patterns that are formed on the markets recently.
If you are new to candlesticks, you can follow the below articles to learn what candlesticks are and how they work: The Language of Japanese Candlesticks
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Strong Bearish Engulfing on NZD/USD Daily Chart
Bearish Engulfing candlestick pattern is the strongest bearish pattern that candlesticks form. Of course the strength of the patterns that form depends on a few important factors.
First, the size of the bearish candlestick’s body that has engulfed the previous candlestick(s) is very important. The bigger the bearish candlestick body, the stronger the signal and the higher probability of a strong down movement.
The second factor which is not related to the candlesticks directly, but is the factor that we always consider, is the Bollinger Upper Band breakout. Therefore, both the bearish and also the previous candlesticks, have to break out of the upper band. The stronger the Bollinger Upper Band breakout, the stronger the signal and the higher probability of a strong down move.
If candlesticks’ bodies break above the Bollinger Upper Band, not just the shadows, then the pattern is much stronger.
This factor emphasizes on the bulls (buyers) exhaustion and their decision in selling their positions to collect their profit. It is an important factor that boosts your success rate.
Here is three strong Bearish Engulfing patterns that have formed on NZD/USD daily chart:
Click on the image to see the larger size.
And this is a relatively strong Bearish Engulfing pattern formed on Google’s stock daily chart:
Bullish Engulfing Candlestick Pattern
Bullish Engulfing is the bullish form of Bearish Engulfing candlestick pattern. The same rules and factors that strengthen the Bearish Engulfing pattern are important for Bullish Engulfing pattern as well.
Below, is the example of a too strong Bullish Engulfing pattern on USD/CAD daily chart. Although this candlestick pattern is too strong by itself, still an important factor which is the Bollinger Lower Band breakout is missing here:
Check the charts and find some more examples from the above strong candlestick patterns. Check whether they are strong enough or not and why.
i learn a lot from you and the community of luckscout i really love your work, thanks for all.
good remionder
thank you
Hey,
it is a really pleasure to read you analysis after a while.
I have also notice that setups, and make some pips.
The market was really generous with setups these days .
I must say, the candlesticks are really great indicator for trading, and we are really happy here,
because you taught us how to use it properly.
Thanks
Hi Ben,
Thank you.
We are having our markets analysis back.
It is great news.
What do you think, should we avoid setups formed these days,
because of upcoming holidays ?
Thank you
If a too strong setup forms, you can take it. It is a long time that holidays liketmas have no impact on the markets.
These articles evoke found memories of the early keys days. I knew absolutely nothing about candlesticks. In fact I was on the fast track to the trail of tears trading binary options.
In that sense I am very lucky indeed to have been on the vibratory wave length was sending out into the universe to manifest in the form of saving me alot of money and frustration.
Thanks Brother GOD bless you
I cannot thank you enough. I have started seeing improvements in my trading.
for japans candles language and psychology, the luckscout is the best in the net for it guys.
Dear is below statement correct about Bullish Engulfing Pattern as well?
“In Bearish Engulfing pattern,…….. It doesn’t matter where the second candlestick opens. It can open above the close price of the first candlestick or below it……”
Yes, it is correct. If it opens below the close price of the first candle and closes below its open price, then the bullish engulfing pattern is called Piercing Line.
Hey,
do you see specific person when someone is “Vote up” your posts?
I am asking this, because when you answer me on one particular question, and I am satisfied, I don’t have any additionally question, I do not want to be rude and to say nothing. I’m just click on Vote up, and that is all.
Thanks
Hey Ben 🙂
Yes, I do.
But don’t worry. When you don’t follow up, I know that my answer was enough and you have no more questions.