Highly accurate candlestick patterns for profitable trading in options and forex

Candlestick patterns play crucial role in understanding and forecasting the price action in trading once you know the basics of candlestick chart. There are several patterns that indicate and helps you understand the upcoming trend of market better. In this article we will discuss about candlestick patterns that provide very high accuracy of signals. So that whenever you spot them in the trading chart, you can trade with confidence. So without any further ado, let's begin.

How to apply candle patterns with high signal accuracy

Patterns of three candlesticks give the most accurate signals compared to combinations of one or two candlesticks. For this reason, traders often use this type of candlestick combinations. Patterns of three candles indicate the continuation of the trend or reversal of the asset price. They can be used both independently and in combination with other tools of technical analysis.

Three Inside Up:

The Three Inside Up pattern is an extended version of the Bullish Harami pattern. In this pattern the first candle is red. It is followed by a shorter green candle, and its body does not go beyond the body of the red candle. The third candle is also green, and its closing price is higher than the previous green candle. It is a down trend candlestick pattern and as a rule, the three Inside Up pattern confirms that the trend turned around, and the price began to rise after the fall.

The Morning star:

The Morning star begins with a long red candle. It is followed by a short candle of red or green color. It has a small body because it closed next to the price at which it was opened. The third candle is green, and its body covers most of the body of the first, long red candle. Morning star is a down trend candlestick pattern and usually indicates a bullish trend reversal. If this pattern is formed on the chart, the price is likely to rise after the fall.

Please note: the larger the body of the third green candle, the stronger the signal.

Morning Doji Star:

The Morning Doji Star consisting of three candlesticks is a down trend candlestick pattern that indicates bullish or upward reversal. The first candlestick (red) is the final candlestick on a downtrend. The second candlestick is a star. This is a candlestick with a small body and longer shadows. It can be any color. The third candlestick is green. This candlestick indicates the end of the pattern and the start of a bullish trend. In the Morning Doji Star pattern, the second candlestick is the doji candlestick. It has no (or practically no) body, and the shadows above and below are long. The Morning Doji Star gives a stronger signal thanks to the doji. It indicates that the price is likely to reverse upward and will rise after a fall.

Three Outside Up:

The Three Outside Up pattern is an extended version of the Bullish Engulfing pattern. In a Three Outside Up pattern the first candle is red. It is followed by a green, and its body is larger than the body of the previous candle, that is, the second candle absorbs the first. The third candle is also green. Its closing price is higher than the previous candle. It is a down trend candlestick pattern  and as a rule, the Three Outside Up pattern indicates a bullish trend reversal and the beginning of price growth after the fall.

Three White Soldiers:

The Three White Soldiers pattern consists of three green candles. The opening price of each subsequent candlestick is within the boundaries of the body of the previous candlestick. The closing price steadily increases from one candlestick to the next. The Three White Soldiers is a up trend candlestick pattern and usually indicates a continuation of the uptrend.

Tri-Star Bullish:

The Tri-Star Bullish pattern is the reverse version of the Tri-Star Bearish pattern. A Tri-Star Bullish is a down trend candlestick pattern. It consists of three doji candles. The first and third candlesticks are approximately on the same level, with the second — below them. This pattern indicates a weakening of the downtrend. Most likely, the price will make a bullish reversal and begin to rise after the fall. Due to the three-candles doji, a Tri-Star Bullish gives a strong signal. If this pattern appears on the chart, you should definitely pay attention to it.

The Evening Star:

This pattern is the opposite of the Morning star pattern. The Evening Star begins with a long green candle. The next candle is short, it can be both red and green. The third candle is red, and its body covers most of the body of the first, green candle. The Evening Star is a up trend candlestick pattern and most often, indicates a bearish trend reversal. If this pattern appears on the chart, the price may start to fall after growth. Pay attention to 2 points.

1. The larger the body of the third red candle, the stronger the signal.

2. The Evening Star pattern becomes a signal to enter the market only if it is formed after an uptrend.

Evening Doji Star:

This up trend candlestick pattern is similar to the Evening Star. Evening the Doji Star differs with the the second candle in it — a short candle doji, after which most often the trend unfolds. Thanks to the doji, the Evening Doji Star pattern gives a stronger signal. It usually indicates that the price turned down and will fall after growth.

Three Outside Down:

This pattern is reverse, the opposite of the three Outside Up pattern. In a Three Outside Down pattern the first candle is green. The average candle is red, and its body is larger than the body of the previous one, that is, the second candle absorbs the first one. The third candle is also red, and its closing price is lower than the average. The Three Outside Down pattern is an extended version of the Bearish Engulfing pattern. It is an up trend candlestick pattern and as a rule, Three Outside Down gives a signal that the trend has made a bearish turn, and the price begins to fall after growth.

Falling Three Methods:

The Falling Three Methods is a down trend candlestick pattern and gives a signal that the downtrend will continue. Despite the name, it consists of five candlesticks, not three. The Falling Three Methods starts with a long red candlestick. It is followed by a series of three short green candlesticks that rise one after another. These three candlesticks, including their shadows, must be within the boundaries of the first red candlestick. After the series of green candlesticks, there is a large red candlestick whose closing price is below the closing price of the first red candlestick. If this pattern appears on the chart, as a rule, the downtrend is continuing.

Three Inside Down:

This pattern is the reverse version of the three Inside Up pattern. The Three Inside Down pattern starts with a green candle. It is followed by a short red candle, and its body does not go beyond the body of the first green. The third candle is also red, and its closing price is lower than the previous red one. The Three Inside Down pattern is an extended version of the Bearish Harami pattern. It is an up trend candlestick pattern and as a rule, Three Inside Down confirms a bearish trend reversal, and the price begins to decline after growth.

Three Black Crows:

The three Black Crows pattern is the opposite of the Three White Soldiers pattern. The Three Black Crows pattern consists of three red candles, which are consistently reduced. The opening price of each next candle is within the body of the previous candle. If the body of the first red candle in the pattern is below the high of the green candle that precedes the Three Black Crows, this amplifies the signal. Three Black Crows is an up trend candlestick pattern  and indicates that the trend has reversed and the price will fall after rising.

Please note: you can enter the market using this pattern only if Three Black Crows formed after an uptrend.

Tri-Star Bearish:

The Tri-Star Bearish pattern consists of three doji candles. The first and third candlesticks are approximately on the same level, and the central one is above them. This pattern indicates that the uptrend has become weaker and a bearish reversal is likely to occur. It is an up trend candlestick pattern and the price will start to fall after growth. Thanks to just a three-candles doji, Tri-Star Bearish gives a very strong signal. If such a pattern is formed on the chart, it is necessary to pay attention to it.

Hopefully this article helps you to understand better. If you have not checked out basics of candlestick chart yet then go check it now.  And if you are a beginner in trading, you need to follow 4 secret steps to earn profit in trading.

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