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Bearish Counter-Attack Candlestick Pattern

The bearish counterattack candlestick pattern is a bearish reversal candlestick pattern. A bearish counterattack candlestick pattern can lead to a quick price reversal to the downside.

An uptrend has been underway for some time, and bullish investors are comfortable with the momentum in the stock price. A bearish counterattack candlestick pattern starts with too much of the same, maybe even too much of an anniversary, as price opens with a gap from the close of the previous candlestick pattern. Bullish investors feel good about the gap this morning.

But somewhere in the middle of the trading period, things change. Investors sell shares, and at the end of the trading period, the closing price of the candle is equal to or even slightly lower than the closing price of the previous candle. Hence the naming convention "counterattack".

How to Use the Counterattack Candlestick Pattern?

Recognizing the pattern is one thing. Entering a trade using the identified pattern is a completely different ball game. So, here are some important points to consider before entering a trade based on the Counter Line candlestick pattern.

– Watch out for a hard trend first. It can be an uptrend or downtrend.

– Once you have identified the trend, look for a candle that opens with a gap up or down. The openings must be consistent with the current trend.

– Observe the movement of this candle. The movement of the candle must be in a direction opposite to the prevailing trend.

– Once this condition is met, make sure that the candle moving in the opposite direction closes close to the previous day's close.

– A pattern can only be called a counter lines candle if it meets all the above conditions.

– Once the pattern has been accurately identified, it is advisable to wait for a confirmation candlestick before entering a position. For example, in the case of a bullish counterattack pattern, you should only consider taking a trade if the candle that appears after the pattern is bullish. Otherwise, the bullish reversal is said to have failed.

See how the candlestick that appears after the bearish counterattack candlestick pattern is also bearish? This candle essentially confirms the trend reversal and should ideally be the entry point.

What does the Bullish Pattern tell Traders?

The bullish counterattack candle predicts that the reversal of the current downtrend in the market is imminent. The appearance of the first black candlestick with a long real body indicates that the downward trend of the market will continue. The close of the first candle well below the open lifts the morale of the bears at the expense of the confidence of the bulls. The second candle opens and creates a gap below the close of the previous session. However, the opening of the second candlestick also indicates that the selling pressures and the overall downtrend are easing and the bullish reversal is near. The third or fourth day candles confirm the change in trend.

Difference Between Counterattack Lines and an Engulfing Pattern

Both patterns are created by candlesticks of the opposite color/direction. The engulfing pattern differs in that the candles are side by side with the true body of the second candle fully engulfing the true body of the first. It is also a reversal pattern.

Limitations of Using Counterattack Lines

Contour lines may not be reliable. They generally require confirmation candlesticks and are best used in conjunction with other confirmation technical analysis.

Candlestick patterns also do not offer profit targets, so there is no indication of the magnitude of the reversal. The pattern may initiate a long-term reversal, or the reversal may be very short-lived.

Although the pattern does occur, it is not common. The ways to use this candlestick pattern are limited  Read More...

What is in The Neck Candlestick Pattern?

The pattern at the neckline occurs when a long real-body bearish candle is followed by a smaller real-body rising candle that widens at the open but then closes near the close of the previous candle. The pattern is called a cleavage because the two closes are the same (or nearly the same) on both candles, forming a horizontal cleavage.

In theory, the pattern is considered a continuation pattern, which indicates that the price will continue to fall following the pattern. In reality, this only happens half the time. As such, the pattern often suggests at least a short-term bullish reversal.

What Does the Neckline Candlestick Pattern tell Traders?

The candlestick pattern at the neckline informs traders of the possibility of the current trend in the market continuing. If the study is exhaustive, it also sheds light on the general behavior of the market in which it occurs. The appearance of the first bearish candle indicates the strength of the bears in the market. The second candlestick is bullish and shows that the bulls are trying to rally to turn the tide. However, the second candle does not close above the close of the bearish candle.

Theoretically, the appearance of the pattern at the neckline predicts the continuation of the current downtrend in the market, as the bulls simply cannot outperform the bears. What is unique about the neckline pattern is that it can predict the continuation despite the bull's best efforts to push the market higher through significant buying pressure. The market goes its own way after being sold off by the once-long bulls hoping for a brief pullback. This continues the current downward trend in the market.

How is a Neck Candlestick Pattern different from a hump pattern?

– A push pattern is considered both a bearish continuation pattern and a reversal indicating an uptrend. It is similar to the neckline candlestick pattern or the neckline pattern as it is two candlesticks where the first candlestick is high and bearish while the second candlestick is bullish and short.

– The difference between the stock pattern and the neck and neck pattern is in the closing point. In the push pattern, the second candlestick closes above the close of the first candlestick, but closes at or near the middle of the body of the first candlestick.

– However, a push pattern does not produce any clear results and sometimes shows a reversal and sometimes resumes the downtrend.

- A trader should be careful when following this pattern as it is not a strong pattern to confirm the trend. It is ideal to be on the lookout for other signals that may indicate a downtrend before trading. A trader should look carefully and take the time to identify a neckline pattern to trade as there are close similarities to the other two candlestick patterns.

On the Psychology of the Neck Trader

To increase their chances of success, traders can use this neck-in approach in combination with other types of technical analysis, including technical factors and chart structures. The Psychology Behind the Neck The traded value is either in a major downtrend or a significant pullback that is within a major uptrend. There is a small daily high on the first candle that reverses into an extended blackbody and creates a whole new low. Such weak or low price activity increases the value of the declining market and forces weak bulls to retreat altogether. The second candle deviates a few ticks and sells the stock to a new low. However, it lowers both the buyers and the other bulls to take control before the closing bell, causing the price to rise from the bottom in a quick uptrend that outweighs the opening pressure. This strong pricing strategy builds confidence among bullish investors, causing complacent bears to scrutinize positions and worry about a trend reversal. A limited amount of bullish power sizzles before the close when the long tick fails to penetrate the true body of the first candle. The bears analyze the waning power of the bulls and push lower in the continuation of the current downtrend. This low price approach drops the value to a new low on the third or fourth candle  Read More...

How to Trade the Tweezer Bottom and Top Candlestick Patterns.

The depth of the lower shadows of this signal indicates a support zone. The bears were unwilling to sell below that low price, so the bulls came back with great force, driving the price higher. The fact that two or more shadow candles have formed at the same level confirms the strength of the support and shows that the downtrend is likely to continue or turn into an uptrend.

Like the high tweezers, this signal is considered a short-term minor reversal pattern. To better understand its meaning, pay attention to these characteristics:

1When this model appears at the bottom of the market, it is more reliable.

2If the first candle has a high body and the second one has a short body, then the reversal will be more reliable.

3If the bottom of the tweezer is followed by another reversal pattern, such as B. an engulfing or bullish piercing pattern, with identical lows, this is even more reliable.

The Tweezers Top and Tweezers Bottom Patterns.

Tweezers Top

The Tweezers Top pattern appears in an uptrend. The first candle of this pattern should be a bullish candle with a large real body, followed by a bearish candle with a short real body. Both candlesticks must have the same high or their real bodies must be at the same high. The pattern is most reliable when viewed in the context of the larger price chart, with the pattern appearing at market highs or near resistance or trend lines.

tweezers Bottom

The Tweezers Bottom pattern appears in a downtrend, with the first candle being a dark bearish candle with a large real body, followed by a bullish candle with a short real body. Both candlesticks must have the same low or their actual body lows must be at the same level. The pattern is most reliable when it appears at market lows or near support levels or lower trend lines.

Advantages and Disadvantages: Using Tweezer Patterns at the Top and Bottom

Let's see the advantages of the upper and lower gripper models:

1Tweezer patterns are reliable price reversal patterns that put traders at the forefront of a new trend.

2The tweezers pattern can reliably indicate the mood of the buyer and seller.

3Tweezers of a necessary support and resistance level increase the trading accuracy of other indicators and methods.

4This trading strategy integrates well with other indicators.

5 There are also some drawbacks to using the top and bottom clamp models:

1It can be difficult to count on a trend reversal just by looking at two candles. The addition of high volatility suggests a very likely price reversal.

2When the tweezers pattern forms against a major trend, it may not work as well.

3Tweezer patterns occur regardless of market volatility and uncertainty.

4Investors should use indicators other than the tweezer pattern to increase accuracy.

conclusion

The candlestick patterns at the top and bottom of the caliper generally take on different appearances, but they do share some common characteristics that typically occur in market turns Read More...

What is a Marubozu candlestick pattern?

A Marubozu candlestick pattern is a stock chart pattern that can help investors gain insight into market sentiment at any time. Although Marubozu's model performs quite well when spotted, it remains relatively unpopular with investors. We take a look at the basics and key features of the model so you can start harnessing the power of this little-known stock market predictor. Marubozus are full-bodied bullish or bearish candlesticks with no upper wicks or lower shadows. Marubozus are usually green or white when they are bullish and red or black when they are bearish on stock charts.

What are the pros and cons of using the Marubozu candlestick pattern?

An important point to keep in mind when researching Marubozu candles is that while you should never trade in the same direction as the candles, you should definitely trade against them. Given the trading activity that is driving this pattern, if the market continues to move in this direction, you may feel crushed. History has shown that price rarely reverses immediately, consuming the movement of the candle. In this sense, the Marubozu model is excellent for demonstrating the market sentiment behind a currency pair. As these patterns develop, they can help traders gauge how forex traders view this pair overall, which plays a critical role in determining the price action of this pair in the near future.

However, sentiment is only one of the factors that influence exchange rates. For this reason, the Marubozu can be a frustrating source of false signals that incur costs for forex traders, deflecting potential price moves and setting up their trades for huge losses. For this reason, Marubozu models should be combined with indicators and models that assess trading opportunities based on other key metrics such as trading volume and/or resistance levels.

Why use charts to track stocks

Stock market charting activity is not a new idea. Analysts were charting long before the New York Stock Exchange (NYSE) was created, albeit in a more rudimentary form than it is today. Charts are used to create an easy-to-understand visual representation of stock market activity. Regardless of the reasons for decline or growth, graphs track changes and show activity over time. Even a casual investor can read charts once he understands the basics of what he is tracking. This gives the investor the information that he may need to make decisions based on what is happening in the market. Using charts, they can see what is overbought or oversold and decide whether to follow those trends or try to take advantage of less popular assets or dump high-demand assets.

Keep in mind, however, that the charts can track many different features. So be very careful with the information you see broken down. Some charts cover daily activity, while others may track weeks or months. To get a bigger, more complete picture, a trader may want to look at many different charts to see short-term and long-term changes before making decisions.

What does a Marubozu pattern tell you?

The Marubozu sends a strong message: the market is moving in one direction. If you break out the candle, you can see that the price of the asset is trading in one direction throughout the session.

This feature applies to both open and closed Marubozu candles, despite the small wicks on both sides, as the buying or selling interest was so strong that it overwhelmed the other side of the market. For bearish Marubozu candles, the pattern indicates that sellers are in full control as they dominate the session in the desired direction, and vice versa for bullish Marubozu candles. Marubozu is especially important when the candlestick is near resistance or support levels, as it can open on one side and close on the other, further amplifying the current trend  Read More...

Three White Soldiers Definition

The Three White Soldiers candlestick pattern is unusual in that its meaning depends on its context. However, the pattern itself is easy to spot. This training is simply three days in a row with a white candle, each higher than the last. The apparition is of three white soldiers standing in a row, hence the name. The bullish significance of this formation is easy to guess. But how reliable is this indicator?

This indicator is quite strong and very reliable in most situations, indicating an accumulation of bullish strength. For example, when a market is flat or moving mostly sideways, the three white soldiers indicate that the bulls are gaining ground. When the market has entered a downtrend, this candlestick pattern indicates a reversal. However, when the market is constantly progressing, the three white soldiers are considered less important. That's because they fit the current blueprint and aren't even really considered a sequel.

How to identify the Three White Soldiers Candlestick Pattern?

A three-soldier white candlestick consists of three long white royal bodies separated by two black royal bodies. The third long white body should be wider than the first two.

It is formed when three consecutive long candles are formed:

1The first candle must be black, which means that it opens above the opening price of its previous candle but closes below it.

2A second white candlestick should open above the close of the previous one and also close above your open position.

3A third white candle should form with a long body that should stay within or slightly above the range of your previous two candles for the day.

A three white soldier’s candlestick pattern indicates that prices have reached a temporary low after a prolonged decline. A break above the resistance level will confirm the uptrend reversal and suggest that prices will continue to rise. Therefore, the Three White Soldiers candlestick is most effective when used with other technical indicators. This is significant as it suggests a continuation of the uptrend despite several small pullbacks. Therefore, traders can use Three White Soldiers as a signal to enter long positions.

What does the pattern tell traders?

The Three White Soldiers candlestick pattern is a bullish reversal pattern. This indicates that the bears are losing control and a market reversal is very likely. In this pattern, each candle must be above the close of the previous candle, creating a ladder where each step is higher than the previous one. This upward movement of the pattern is actually an indication of the start of an uptrend.

As we have already mentioned, the model of the three white soldiers is a very solid and reliable model. This is especially true when used in conjunction with other indicators like the relative strength index. Therefore, it is also an excellent tool for trading strategies. However, traders must also consider other factors such as volume.

The Three White Soldiers pattern helps start or exit existing operations. For example, a trader may enter a long position when the Three White Soldiers candlestick appears on the chart and the next candlestick shows an open gap (the opening price is higher than the previous day's closing price). It is also useful for day trading where traders can also look for the three white soldiers on 5 minute, 15 minute or hourly charts. After initiating a long position, it is always advisable to set a stop loss at the last low and take profit whenever there are more signs of a trend reversal. Although it is quite rare to spot the Three White Soldiers candlestick pattern, it is a very useful pattern that traders should never ignore.

Difference between three white soldiers and three black crows:

The opposite of the three white soldiers is the candlestick pattern with the three black crows. Three Black Crows consists of three consecutive long-bodied candles that open at the real body of the previous candle and close lower than the previous candle. As three white soldiers capture the bears passing the bulls, three black crows show the bears taking control of the bulls. The same caveats regarding volume and additional confirmation apply to both samples.

The three black crows candlestick pattern is the opposite of the three white soldiers.

Three black crows consist of three consecutive bearish candlesticks.

On the other hand, three white soldiers indicate a change from bearish to bullish and consist of three consecutive bullish candlesticks Read More...

What is a Bullish Engulfing Pattern?

A bullish engulfing pattern is a white candlestick that closes above the previous day's open after opening below the previous day's close. It can be recognized when a small black candlestick indicating a downtrend is followed the next day by a large white candlestick indicating an uptrend, the body of which completely covers or engulfs the body of the previous day's candlestick. A bullish engulfing pattern can be contrasted with a bearish engulfing pattern. With a single candlestick pattern, the trader only needed one candlestick to spot a trading opportunity. However, when analyzing multiple candlestick patterns, the trader needs 2 or sometimes 3 candlesticks to identify a trading opportunity. This means that the trading opportunity develops for at least 2 trading sessions.

What Is a Bullish Engulfing Pattern?

To find bullish engulfing patterns, look for these two candlesticks side by side:

A small red candlestick, usually at the end of a downtrend.

A much larger green candle completely flooded the previous one.

There should be a gap between the close of the first candle and the open of the second candle. If not, then it's not a devour. What's happening? Essentially, the bearish run continues until the beginning of the second period of the pattern. The gap between the time frames shows that the selling sentiment is still quite strong. But then, mid-session, the buyers take over. They send the market sky high well past the red candle opening and hopefully start a new bull run. The longer the green body, the stronger the signal. Although they usually occur after downtrends, you can also see a bullish engulfment when a market is rising. This bullish continuation pattern is taken as a sign that the move still has strong momentum.

Understanding Bullish Engulfing Candlesticks

When a security closes at a higher price than the opening price, the body of the candle is colored green or left hollow and is referred to as a green or hollow candle. On the other hand, if the closing price is lower than the opening price, the candle is colored red or black and is called a red or black candle. A red candle indicates a downtrend and represents a bearish market phase. Sometimes a red candle is followed by a green candle, so the second day's open price is lower than the first day's close and the second day's close is higher than the first day's close.

Graphically we see that the green candlestick is engulfing the red one. This is a bullish engulfing candlestick pattern.

Example of a bearish engulfing pattern

If we look at the USD/JPY chart below, we can see an example of a bearish reversal. The green candle indicates the last bullish day of a slow market rally, while the red candle indicates the start of a significant decline.

The second candle opens at a similar level, but falls as the day progresses to close significantly lower.

Trading Scenario for Bullish Engulfing

Here are the general considerations and scenarios for trading the bullish engulfing candle.

Trade Entry – The formation of a bullish swallow during a downtrend is considered a reversal signal, meaning the market is expected to go higher in the near future. Traders therefore look to enter a long position at or around the price low of the bullish engulfing candlestick. However, since many traders like to wait for the confirmation candle to form, the buy price may be higher as the trend has already started to drive prices higher. This is the compensation you have to make.

Stop Loss Limit – The stop loss limit varies from trader to trader depending on their individual trading preferences, but they generally set the stop loss on long positions at 2-3 units below the lower price of the bullish engulfing candle. Others entering at a higher price may wish to adjust the stop loss accordingly.

Profit Levels – While actively trading short ranges, traders should follow a risk/reward ratio to determine the potential profit level of their bullish engulfing trading pattern. For example, if the stop-loss limit is set at $1 (the maximum loss one is willing to take on a trade) and the risk-reward ratio one is following is 1/2, then take profit when it reaches $2. If the risk/reward ratio being tracked is 1/3, aim to take profit when the price reaches a level that generates $3 for every $1 stop loss set.

Market Conditions – More volatile stocks with high beta values   often tend to exhibit frequent bullish engulfing patterns. Therefore, the proper selection of stocks/ETFs/Indices is important when making bullish engulfing trades. In addition to the requirement of a bullish engulfing pattern mentioned above, traders should ensure that the chosen price range, band or trendline boundary is breached on significant moves of the second (and following) bullish candle. This guarantees a higher success rate of profitability. Although it should be noted that trading using technical analysis such as candlestick patterns has a limited success rate, it is advisable to adhere to strict stop-loss rules, disciplined trading and efficient capital management  read more.

WHAT IS A PIERCING PATTERN?

The piercing line pattern is considered a bullish reversal candlestick pattern at the bottom of a downtrend. This often results in a trend reversal when bulls enter the market and push prices higher. The piercing pattern features two candles, with the second bullish candle opening lower than the previous bearish candle. This is followed by buyers pushing prices past the 50% bearish candlestick body.

How a Piercing Pattern Works

A piercing pattern has two days where the first day is decidedly influenced by sellers and the second day is answered by enthusiastic buyers. This may indicate that the supply of shares that market participants are looking to sell has dried up a bit and the price has fallen to a level where the demand to buy shares has increased and increased. This momentum appears to be a reasonably reliable indicator of a short-term bullish outlook.

How to identify Piercing Patterns?

First of all, it should be considered that the pattern formulation should consist of 2 candlesticks. The second candle must be such that it starts below the low of the day 1 candle (which is inherently bearish). At the same time, it should close at the top of the middle part of the bearish candlestick. When the bullish candle of day 2 closes above the middle of the bearish candle of day 1, it forms a triangle. Also, it only appears during a downtrend, and price gaps at the beginning of day 2 are necessary. The formation of this pattern is unique in that it shows the reverse trend of the market when its appearance has not been accepted.

It also includes a lower spread after the first trading day, with the second trading day starting around the low and ending near the high. The close must also be a candle that covers at least half the length of the previous day's red candle.

Advantages of using piercing pattern

This method is easy to use and implement. Any investor or trader can implement this technique. This method generally offers its investors a better risk/return ratio. By paying attention and understanding this technique, investors can easily find entry points into the stock or index.

Disadvantages of using piercing pattern

The main disadvantage of this method is that it can only be used for a bullish reversal pattern. And to confirm the reversal pattern, this technique should be combined with oscillators and other technical indicators. One cannot fully rely on this model when making trading decisions. This involves analyzing the entire market movement and not just the candlestick pattern itself read more.

The 3 Most Powerful Candlestick Chart Patterns

Candlestick charts are a technical tool that groups data from multiple timeframes into individual price bars. This makes them more useful than traditional open-high, low-close bars or simple lines connecting closing price points. Candlesticks form patterns that predict the direction of prices when they end. Proper color coding adds depth to this colorful technical tool, which dates back to 18th-century Japanese rice traders. Steve Nison introduced Japanese candlestick patterns to the Western world in his popular 1991 book, Candlestick Charting Techniques.1 Many traders today can identify dozens of these patterns, which have colorful names like bearish cloud cover, evening star, and bearish cloud cover. three black ravens. Additionally, single bar patterns including Doji and Hammer have been incorporated into dozens of long and short trading strategies.

1. Spinning Top

When trading stock markets or other liquid and risky asset classes, profits can be maximized by spotting a change in trend and then moving it in the right direction. This is exactly what a gyro candlestick pattern does: it helps spot trend changes for the underlying asset. Highs are simple candlestick lines that have small real bodies with upper and lower bodies that are longer than the real bodies. In general, this is a small candlestick pattern (single candlesticks) where stock prices open and close together. The pattern forms at the top of an uptrend or at the end of a downtrend.

Unlike many other candles, a gyro can be a bearish or a bullish candle, which means that the color of the candle doesn't matter and therefore shouldn't be too important. It is important for the trader to wait once the gyro pattern has formed and see the next price move to bet on the direction of the market. Assuming an uptrend prevails and a trader sees a bearish candlestick shape following the gyro pattern at a resistance level, the exit point would be there. The interpretation, structure and logic of spins and doji are more or less the same. However, a gyroscope shows a larger candle body, highlighting the fact that there has been significant price movement during the candle's time frame. As shown in the photo to the side, shares of Tasty Bite Eatables Ltd. formed a gyroscope pattern and then saw a nearly 41% correction over 19 trading sessions.

2. The Piercing Pattern

A piercing pattern is a candlestick pattern that gives us potential bullish reversal signals and forms near support levels at the end of a downtrend. This pattern consists of two candlesticks, the first one is a bearish candlestick and the second one is a bullish candlestick.

The bearish candlestick should have a large real body and the second bullish candlestick should move below the low of the previous candlestick and close above the midpoint of the real body of the first candlestick. Investors should be aware of a few features when trading this bullish candlestick pattern – the ubiquitous pattern:

First of all, the trend should be down, as the penetrating pattern is a bullish reversal pattern.

Second, the length of the candlestick plays an important role in determining the strength of the reversal.

The gap between the bearish and bullish candles indicates the strength of the trend reversal.

Fourth, the bullish candlestick should close higher than the midpoint of the previous bearish candlestick.

Finally, the bearish and bullish candle should have larger bodies.

3 The Doji Candlestick Pattern

There are times when the forex candlestick is neither bullish nor bearish. Instead, it is a candlestick with short wicks and an insignificant body. It is shaped like a "plus" sign. The candlestick formed is called a Doji.

The best Japanese candlestick patterns for intraday trading

The doji appears on the charts when the market is temporarily undecided on which direction to go, up or down. In other words, it is neutral and cannot be used to trade a reversal or continuation.

So what makes this unbiased candle so powerful?

Its power lies in the positioning of the doji. You can find a doji almost anywhere on the charts, and each position says something important about the currency pair read more.