Identifying Candlestick Patterns

If at first you need assistance with identifying candlestick patterns, use the link for American Bulls.

This service is excellent for novices that are beginning to learn candlestick patterns. However, AmericanBulls.com uses some Westernized candlestick patterns mixed in with Japanese candlestick patterns.

AmericanBulls.com provides a free candlestick pattern identification service that is decent for beginners. However its patterns are based on Westernized candlesticks. I personally prefer adhering to the rules and guidelines for Japanese candlestick patterns.

Therefore, I suggest that after you use American Bulls service to identify a candlestick, come back to Trendy Stock Charts and double check its requirements. The requirements I’ve listed for all candlestick patterns are based on the Japanese candlestick history.

Trend of One Larger Degree

Since most candlestick patterns represent trend reversal signals, shorter-term traders should act very quickly after any type of reversal candlestick pattern. Longer-term traders should also act quickly, but their first course of action should be to pause rather than buying or selling. Longer-term traders should take a moment and analyze the “trend of one larger degree” to determine the longer-term view and appropriate course of action to take. What is the “trend of one larger degree“?

If you want to read more about the trend of 1 larger degree, follow the link. It can also be accessed from the Advanced Elliott wave members page.

So in summary, shorter-term traders should act quickly after the development of reversal candlestick patterns. Longer-term traders should consider analyzing the trend of one larger degree before making their trading decision. If it is estimated that the trend reversal will be shorter-term in nature, longer-term traders may want to refrain from making any trade other than possibly adding to their position on the pullback.

The least risky course of action to take, either buying or selling, is to take necessary actions immediately after a reversal candlestick pattern develops. Longer-term traders may want to take necessary actions on capitulating volume spikes. Either way though, always keep the “trend of one larger degree” in mind when making your trading decisions.

Bullish Reversal Candlestick Patterns

The best place to watch for a bullish reversal candlestick pattern is at the end of a long, distinguishable downtrend. The longer the downtrend is that precedes the bullish reversal candlestick, the better the chances are that the downtrend will reverse course into an uptrend.

You should be looking for these candlestick patterns when you think the stock’s share price may be at or near the bottom of its downtrend.

Bearish Reversal Candlestick Patterns

Bearish reversal candlestick patterns are an early signal that the current uptrend has ended or is near the end. The best place to watch for a bearish reversal candlestick pattern is at the end of a long, distinguishable uptrend.

You should be looking for these candlestick patterns when you think the stock’s share price may be at or near the top of its uptrend.