Buy Signals With Bullish Candlestick Patterns

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Candlestick patterns can give great buy and sell signals. There are many candlestick patterns that can be identified and used to give trading signals but these three bullish candlestick patterns give great buy signals.

1)- Morning Star 2)- A Bullish Engulfing Pattern 3)- A Tweezer Bottom

Now these three candlestick patterns can occur both in an uptrend as well as a downtrend. However, these patterns are of great value and offer great returns if spotted correctly in an uptrend. These patterns when they appear on a smaller time frame should be ignored which many times is nothing more than the end of a retracement on a larger time frame. If they appear in a sideways or consolidating market, they should again be ignored. However, when these three candlestick patterns appear in an uptrend they can be highly profitable. These patterns are ideal on 1 hour or higher timeframe charts.

Morning Star; A morning star is formed when a large bearish candlestick is followed by one or more candles with very small bodies which is followed by a bullish candle that forms 60% above the bearish candle. Appearance of a morning star signals that the bears are losing control of the market and investors are no longer selling.

When a Morning Star appear, it means that more buyers are no stepping into the market equalling the number of buyers and sellers in the market. This is soon going to be followed by the number of buyers becoming more than the number of sellers. The appearance of a Morning Star is the signal for a new buying rally in the market.

A Bullish Engulfing Pattern is formed when a large bullish candle is formed that engulfs the previous bearish candles. This is a strong signal that the market is about to reverse itself! When a Bullish Engulfing Pattern appear in the downtrend, it means the bottom of the downtrend has been reached and soon there will be more buyers in the market taking the prices up with them.

It is a bit difficult to identify the Tweezer Bottom on the chart for the beginners. But with experience, you will be able to correctly identify the Tweezer Bottom. A Tweezer Bottom signals that the sellers are feeling exhausted and soon buying will start in the market. A Tweezer Bottom is formed when a bearish candle is followed by more than one candles with small bodies and large wicks on their downside.


About the Author:
Mr. Ahmad Hassam has done Masters from Harvard. Master these Candlestick Patterns. Discover a Pro Stock Trading System that works even during the times of recesssion!



Article Originally Published On: http://www.articlesnatch.com


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