There are perhaps hundreds of books written on Japanese candlestick chart patterns that present several hundred of the different Japanese candlestick chart patterns. Although there are so many, don’t get sucked into the sheer number of Japanese candlestick chart patterns that a trader has to learn.

Get comfortable with Japanese candlestick chart patterns

There are only a few basic candlestick patterns to get started with and this article will show one area of ​​candlestick patterns and that is anticipating reversals. These Japanese candlestick chart patterns will cover most reversal scenarios and a trader just has to be really good with them.

Recognize candlestick chart patterns with ease

The most common and powerful Japanese candlestick chart patterns to indicate reversals are:

1) Doji

2) spinning tops

3) Evening and morning stars

4) double or triple caps

5) Head and Shoulders

Doji

Dojis are formed when the price opens and closes at the same level in a candle, indicating price indecision. They are seen more significantly after extended recovery periods with long body candles. A trader should only give importance to doji that occur in long rallies with big moves and not to doji that are at the range limits.

spinning tops

The tops indicate that buyers and sellers have a clear idea of ​​what the direction of the market will be from the small body candles formed. The forces of supply and demand are equally balanced and will usually appear at the end of a long run.

It is a clear sign that the current trend is running out of steam. It is also a good idea to use it in conjunction with other indicators to confirm the trend change.

Evening and morning stars

An evening star is formed when the first candle signs show a long-bodied candlestick followed by a short-bodied candlestick with a long wick, and lastly a long-bodied candlestick in the opposite direction that covers much of the length. of the first candle. The reversal signal will be even stronger if the second and third candles have a large price gap.

The formation of the morning star is the exact opposite of the evening star.

triple and double tapas

These two formations are very common and very powerful combinations. It occurs when it trades at its support/resistance level, pulls back, and attempts to break through the level once more. The price fails and therefore indicates a great sign that the trend is reversing.

head and shoulders

This formation is similar to the triple top except that its middle peak is higher or lower than the others. It indicates a failed continuation pattern in which the price fails to reach a higher high or a lower low after a spike and stops near the high of the first shoulder. When the price continues and breaks the support of the first shoulder, a trend change is confirmed.

Candlestick Chart Patterns Conclusion

These five simple candlestick formations should be enough to cover most reversal scenarios. The main idea is not to get overwhelmed by the patterns and stick to just trading them. It provides the trader with an idea of ​​a possible trend change and prepare for it with a combination of indicator signals as confirmation to trade the chart pattern.