Use of Support and Resistance in trading is most important and widely used in technical analysis. Price Action trading is based on the price movement of securities such as stocks, commodities, Forex which uses support and resistance levels for analyzing future price of securities.
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The word Harami in Harami Pattern means ‘pregnant’ in Japanese, and the word defines this pattern. This pattern consist of two candlesticks which shows sign of trend reversal. The first candle is long candle which shows strong trend while second candle has a small body which opens higher than first candle’s close and closes lower than first candle’s open which shows trend reversal.
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Evening Star Pattern is a multiple candlestick pattern which consists of three candlestick which occurs during uptrend. Evening Star is a bearish reversal pattern which signals the trend reversal from bullish to bearish.
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Morning Star Pattern is a multiple candlestick pattern which consist of three candlesticks which occurs during the downtrend. Morning Star pattern is a bullish reversal pattern which gives sign of trend reversal from bearish to bullish.
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Dark Cloud Cover is a bearish reversal pattern which appears in the uptrend. This pattern is reverse of Piercing Pattern and similar to Bearish Engulfing Pattern with minor variation. This pattern is a combination of two candles. The first candle is strong green candle which shows strong uptrend followed by strong bearish candle which shows reversal.
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Piercing Pattern is similar pattern like a bullish engulfing pattern with little difference. The difference in piercing pattern is that the second green candle doesn’t engulf the previous red candle completely, it engulfs more than 50% of the previous red candle but not more than 100%.
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Engulfing Pattern is a very strong multiple candlestick pattern that helps to identify trend reversal. This pattern involves two candlesticks in which one candle entirely engulfs the body of other candle, that’s why it is called engulfing pattern. Both the candles should be opposite in color.
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Hanging Man is a single candlestick bearish reversal pattern which helps to identify reversal pattern from bullish to bearish. This pattern forms during the uptrend but there is no assurance of that. Hanging man and hammer are similar in pattern the only difference is that hanging man forms during uptrend and give sign of bearish trend and hammer forms during downtrend and gives sign of bullish trend.
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Shooting Star is a single bearish candlestick pattern which appears during the uptrend. It signals the reversal of trend but there is no assurance of that so bett
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Inverted Hammer is one of the most important single candlestick pattern which appears at the downtrend which gives us reversal signal of a trend. It signals the reversal of trend but no assurance of that so the better way to trade these kind of pattern is to use stop loss.
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