Once you know the basics of candlestick chart, candlestick patterns that play crucial role in understanding and forecasting the price action in trading forex and options. Some of those patterns appear in an uptrend and indicate a possible trend reversal to downwards or trend continuation to up. Again some candlestick patterns are found in a down trend and they indicate possible trend reversal to upwards or trend continuation to down. In this article we will discuss about important up trend candlestick patterns.
How to trade using up trend candlestick patterns?
While looking at a candlestick chart we can spot some specific pattern model that indicate a signal to forecast the trading market. In an uptrend we can find these following candlestick patterns that help us improve our trading quality in forex and options trading.
Hanging Man:
The Hanging Man pattern is a trend reversal indicator. Visually, this candlestick looks like a hammer with a small body of any color and a long lower shadow. There is practically no upper shadow. At the same time, the lower shadow is usually twice as long as the body. It is a single candlestick pattern. The Hanging Man pattern is same as Hammer pattern. Only difference is that it is an up trend candlestick pattern. Open a Down trade if the price rose before this.
Shooting Star:
The Shooting Star pattern is a trend reversal indicator. It is a single candlestick pattern. Visually, this candlestick looks like an inverted hammer, with a small body of any color and a long upper shadow. There is practically no lower shadow. At the same time, the upper shadow is usually more than twice as long as the real body. It is an up trend candlestick pattern. Open a Down trade if the price rose before this.
Bearish Engulfing:
Bearish Engulfing is a double candlestick pattern where the boundaries of the red candle body are larger than the boundaries of the green candle body. The red candle follows the green one and completely covers it. This means that the price of the asset fell more than it had grown before. It is a up trend candlestick pattern. As a rule, this pattern gives a signal about the end of an uptrend and the beginning of a downtrend.
Dark Cloud Cover:
Dark Cloud Cover is a double candlestick pattern where the red candle opens above the prior bullish green candle. The red candle follows the green one, while the closing price of the red candle is in the area of the lower part of the green candle body. It is a up trend candlestick pattern. As a rule, this pattern gives a signal about the beginning of a downtrend. Dark Cloud Cover works similarly to Bearish Engulfing, but it is not as strong. To confirm the signal, analyze other patterns as well.
Bearish Harami:
Bearish harami is a double candlestick pattern where a long green candle is followed by a shorter red candle. In this case, the body of the red candle does not exceed the body boundaries of the green candle. It is a up trend candlestick pattern. As a rule, this pattern gives a signal about the beginning of a downtrend. To determine the trend more accurately, analyze the pattern together with the resistance line.
Bearish Deliberation:
The Bearish Deliberation pattern is a triple candlestick pattern. It is the reverse of the three Stars in the South pattern. Bearish Deliberation is an up trend candlestick pattern. It consists of three doji candles. The first and the second candle is approximately the same size and the third much shorter than them. Opening and closing prices rise from candle to candle. The Bearish Deliberation pattern indicates that the uptrend is weakening and the price may turn down. If this pattern is formed on the chart, it is likely that the price will fall after growth.
Three White Soldiers:
The Three White Soldiers pattern is a triple candlestick pattern. 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.
The Evening Star:
This pattern is the opposite of the Morning star pattern. It is a triple candlestick 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 is a triple candlestick pattern. 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. It is a triple candlestick 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.
Three Inside Down:
This pattern is the reverse version of the three Inside Up pattern. It is a triple candlestick 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 is a triple candlestick pattern. It 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 is a triple candlestick pattern. It 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. In our previous article we have covered important down trend candlestick pattern. 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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