The Top 10 Best Candlestick Patterns

The Top 10 Best Candlestick Patterns

When you see one of these patterns on the daily chart, move down to the hourly chart. Does the hourly chart agree with your expectations on the daily chart? If so, then the odds of a reversal increase.

Bullish Candlestick Patterns

Engulfing: This is my all time favorite candlestick pattern.

Hammer: Hammers can develop after a cluster of stop loss orders are hit. That's when professional traders come in to grab shares at a lower price.

Harami: Note: Do not confuse this pattern with the engulfing pattern. The candles are opposite!

Piercing: Those that shorted the stock on first day are now sitting at a loss on the rally that happens on the second day. This can set up a powerful reversal.

Doji: The doji is probably the most popular candlestick pattern. This can often trigger reversals in the opposite direction.

Bearish Candlestick Patterns

Kickers

There is one more pattern worthy of mention. A "kicker" is sometimes referred to as the most powerful candlestick pattern of all.

 

This "shock event" forces short sellers to cover and brings in new traders on the long side.

Wait For Confirmation?

Most traders are taught to "wait for confirmation" with candlestick patterns. This means that they are supposed to wait until the following day to see if the stock reverses afterward. This is absolutely ridiculous!

As a swing trader I have to get in before the crowd piles in, not when they get in! In other words, I want to be one of the traders that make up the pattern itself! That is the low risk, high odds play.