๐ฏ๏ธ DAY 20/30: Candlestick Patterns - The Language of Price
Before the complex indicators, there are candlesticks. Today we decipher 3 basic patterns that are the cornerstone of analysis.
๐ WHAT DOES A CANDLE SAY?
Each candle tells a small battle between buyers (bulls) and sellers (bears) over a period of time.
๐ฏ 3 BASIC PATTERNS YOU SHOULD KNOW:
1. Hammer - BULLISH Signal:
ยท Looks like: Small body on top, long shadow below.
ยท Means: Strong selling pressure during the session, but buyers managed to regain ground at the close. It is a signal of strength after a decline.
2. Hanging Man - BEARISH Signal:
ยท Looks like: Same shape as the hammer, but appears after a rise.
ยท Means: Buyers are exhausted. Sellers begin to show strength. Possible reversal to the downside.
3. Doji - INDECISION:
ยท Looks like: Opening and closing almost at the same level. Looks like a cross or a plus sign (+).
ยท Means: Total tie between buyers and sellers. The market pauses to decide its next move. It often precedes a change.
โ ๏ธ CRUCIAL WARNING:
These patterns are NOT magical. Their power lies in the context:
ยท A Hammer on a strong support is a much more reliable signal.
ยท A Doji at a key resistance increases the probability of reversal.
๐ก Conclusion: Learning to read candles is like learning the market's alphabet. It is the first step to writing your own strategy.
๐ Do you recognize any of these patterns in the charts you look at?
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