Candlestick Patterns: Part 3

Hey friends, welcome to Stock’s Knows. This is 3^rd and final part of candlestick patterns. In this part, we will understand candlestick patterns formed by more than two candles.

   

  1)Morningstar:

  Morningstar pattern is strong bullish reversal pattern having three candles in it. The 1^st candle is always a long bearish candle .2^nd candle is like spinning Top or doji (Shows indecision). The 3^rd candle is long bullish candle need to close above the midpoint of a 1^st candle. Generally forms at the end of a downtrend and after that uptrend will start.

  2)Evening Star:

The evening star is strong bearish reversal pattern and also made of three candles. The 1^st candle is always a long bullish candle. 2^nd candle shows indecision (small body and long shadows). The 3^rd candle is a long bearish candle and needs to close below the midpoint of the 1^st candle. It generally forms at the end of an uptrend and indicates the upcoming downtrend.

  3)Three white soldiers:

Three white soldiers pattern is a strong bullish reversal pattern if forms after consolidation or downtrend. The 1^st candle is bullish, close near high. 2^nd candle opens within the range of 1^st candle and close above high of the 1^st candle and need to have a longer body than the 1^st candle. 3^rd candle opens within the range of 2^nd candle and closes above the high of the 2^nd candle.

  4)Three Black crows:

Three black crows pattern is a strong bearish reversal pattern if forms after consolidation or uptrend. The 1^st candle is bearish, close near low. 2^nd candle open within the range of 1^st candle and close below low of a 1^st candle. The 3^rd candle must be big bearish, which opens within the range of 2^nd candle and close below the low of the 2^nd candle. All the three candles have no or small shadow.

  5)Three inside up:

Three inside up is also a strong bullish reversal pattern. The 1^st candle is the bearish candle, shows that market is still bearish. The 2^nd candle is bullish and shorter and closes above the midpoint of the 1^st candle. The 3^rd candle is long bullish candle close above high of 2^nd and above high of the 1^st candle.

  6)Three inside down:

Three inside down is a strong bearish reversal pattern. The 1^st candle must be the bullish candle, shows that market is still bullish. The 2^nd candle is bearish and shorter and closes below the midpoint of the 1^st candle. The 3^rd candle is long bearish candle close below the low of the 2^nd candle and below the low of the 1^st candle.

This was all about candlestick patterns. You need to learn and practice to analyze it. More practice is more helpful for any chartist.

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