You’ve probably read the book many where successful investor in mentioning their favorite patterns. Most authors don’t want to reveal their favorite patterns. The truth is, their patterns are not anything special, they are common patterns with which they had the most successful trade.
In fact it is enough to choose only a few basic patterns that will help you in your decisions and all other indicators.
Before you count some of the most popular Candlestick Patterns I’ll show you my favorite pattern that I use in my day trading strategies. On the next picture you can see how it looks.
If the example is not clear, enlarge example, it is a GBP / USD H4 time frame chart. This pattern I have called superb pattern or trend reversal. Much like the Piercing pattern, but a lot simpler. This pattern suggests a possible change in trend. The examples 1,2,3,4,5 are buy superb pattern, which consists of sell and buy candles, the trend suggests a possible buy. Candlesticks body sizes (sell and buy) should be the approximate size. If you are trying to read a this logical “phenomenon” in the Market, a logical explanation is the following, after a bearish trend there was a sudden change because it appeared after the sell candles buy candles the same size, which means that there are sudden changes in trend. That is reason enough to pay attention to this pattern.
In Example 6 we have a potential bearish trend, this is identical to the bullish superb pattern just the opposite compared to the previous bullish superb pattern examples (1,2,3,4,5). The first candle is buy and second is sell.
As you’ve noticed patterns are not a miracle, it’s just another in a series of indicators that will help us in making better trading plan.
Here’s an example of how this pattern is combined with technical analysis. Suppose that our technical analysis based on important areas. After the analysis we get the trendline connecting two important areas. This analysis has enabled us simply determining the rate of stop. We are not sure whether the analysis is correct, wait several hours and then we get further confirmation superb bullish patterns, which is an additional argument for a trend reversal. After these two arguments are quite sure that there will be a trend reversal, which is a great opportunity to open a buy position. See the image below
After several hours we see that the price set off in determined direction, which leads to a large profit.
I hope you understand how use patterns, one of the best indicators that you can find on the internet, an indicator that will help you to easily identify your favorite patterns is the Candlestick Patterns MT4 indicator. This is one of the most accurate indicator that I had the opportunity to use. This indicator we used for detecting patterns in my favorite pivot points, day trading strategy and all the day trading strategies you use every day.
Bearish Candlesticks Patterns
2. Shooting Star
4. Dark Cloud Cover
Bullish Candlesticks Patterns