A Price Action Trader is also often considered a candlestick-patterned Trader - as a candlestick chart is a 'chart of choice' for many people. Traders will use candlestick charts to "read price steps" through candles and use those candlestick patterns to identify price patterns in order to make good profits.

Most price patterns are expressed in the form of certain candlestick patterns. When a candle closes in a particular direction (up or down) - it could be a signal to the trader about a price move. In the article below.

Reversal Candlesticks

Pin Bar

The Classic Pin Bar was first mentioned by veteran Trader Martin Pring. It is a reversal pattern whose characteristic shape resembles a small stick. It is called a "bar" because it is discovered on a bar chart pattern, and people use that name to call it. Technically, it should be called a "bar candle" that's right but

  • The long upper or lower shadow
  • The body of the candle is in the shorter shadow
  • The body is very narrow
  • The body is on one side of the candle (above or below)

Rejection Candle

This signal is the reversal trading signal, simply because it is the most variable and profitable candlestick pattern.

A long upper or lower shadow represents resistance from an area on the chart, a strong bullish or bearish body (long body) indicates either buy or sell has stronger control. A rejection Candle with a long body means that we can track the response of classical Pin bars well. Candle Rejection is also used very effectively in technical analysis.

  • Upper or lower shadow to show higher or lower price rejection
  • Very small shadows protrude at the closing price
  • The real body of the candle will be either a bullish or a bearish one
  • The strong bullish body is in the upper part of the candlestick, the bearish body is in the lower part of the candle.

The Outside Candle

Outside Candle, it sounds a bit odd that outside candles or candles outside the candle, you can remember whichever is the pattern where the second candle has a longer body than the 1st candle. Behind these 2 candles is an exciting story! The story is about how these 2 candles are formed when a Breakout suddenly turns into a False Break and then a Huge Reversal. The amplitude of the candle is larger than the surrounding candle

First, the high or low body of the first candle is broken by the 2nd candle - giving you the impression of a Breakout is occurring. But it was actually just a false Break, creating a trap and the price would bounce back. The market suddenly moves in the opposite direction of the breakout just now and this candle will close in the opposite direction, with a large body, out of range of the previous candles - creating a strong reversal signal.

  • An Outside candle pattern is set by two candles
  • The next candle must have a higher high and lower low compared to the previous candle
  • The close should be out of the range (body) of the previous candle
  • The closing price of the candle is inside the body

The general idea of Price Action

These are popular reappearance candlestick patterns that indicate an imminent reversal. You can use them for use in personal analysis when you combine these reversal candlestick patterns with fundamental technical chart analysis, the chances of success will be much higher.

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