| When you want to identify high profit candlestick | | | | the end of the relevant pattern (basically the last |
| patterns, look for recent reversal and continuation | | | | candle signals the new trend).Of course, this means |
| patterns first. Start by reviewing the most recent | | | | that if you wait for that confirmation candle you may |
| candles (the last day or so on a daily chart) and work | | | | miss most of the price move. |
| your way back in time. These recent candles are the | | | | So, you need to learn to anticipate what the |
| most relevant and are the best predictors for what | | | | completed pattern will look like. That's why it is |
| is likely to happen next. | | | | important to know the patterns so well that you can |
| Once you have identified a specific recent pattern, | | | | recognize them while still forming or half completed. |
| look back in the chart history and find similar patterns. | | | | Use other technical analysis matrixes (for example, |
| Note how the stock or currency responded during | | | | negative divergence on MACD with weak money |
| those time periods. This will give you a clue as to the | | | | flow) beyond normal candlestick charts to gain |
| potential strength/relevance of the current signal. | | | | confirmation. This will help you gain confirmation in the |
| Simple 1 and 2 day patterns tend to occur frequently | | | | midst of the pattern itself rather than catching the |
| in many different stocks. Although some of these | | | | tail end of the new trend. |
| patterns don't have the highest degree of reliability, | | | | The Kicker - High Profits Ahead |
| their frequency offers you a large number of trading | | | | One of the most profitable candlestick chart patterns |
| opportunities. If 60 to 70 percent of your trades are | | | | on the market is the Kicker. It is a 2 day reversal |
| profitable, then your overall profit potential is high. | | | | pattern that happens at the end of a long trend. |
| Additionally, these tend to be part of larger patterns. | | | | Basically, a Kicker is a failure of that continuation and |
| This means it is to your advantage to spot them | | | | creates a strong reversal. |
| quickly. Here are a few of the most reliable patterns: | | | | For example, it might happen immediately after a |
| * Hammer - 1 candle with a small body near the top | | | | Three White Soldiers (bullish) or Three Black Crows |
| & a long shadow at the bottom, bullish; color is | | | | (bearish) pattern. Both of these patterns are normally |
| irrelevant | | | | continuation signals when three long candles of |
| * Inverted Hammer - small body at the bottom | | | | approximately the same length form during a trend. |
| & long shadow at the top instead, bearish | | | | Normally these two strong patterns tend to be most |
| * Dragonfly Doji - open & close the same with | | | | reliable when they are perfectly formed. In other |
| long shadow at the bottom, usually bullish; least | | | | words, there is no gap and the candles are all the |
| common of the four doji | | | | same length. Imperfection in the pattern creates a |
| * Rising Windows - two white bodies with short or | | | | scenario where a Kicker is more likely to happen. |
| no shadows separated by a gap | | | | The old trend line is clearly broken when another long |
| Others that occur frequently but are less reliable | | | | candlestick shoots abruptly in the opposite direction |
| include: | | | | below the opening of the previous day. The opening |
| * Spinning Top - 1 candle signifying indecision; very | | | | of the second day might create a gap in the |
| small body with longer shadows on top and bottom; | | | | opposite direction of the prior trend. When bearish, it |
| important because it is often part of larger pattern | | | | looks like a vertical cliff on the chart. This normally |
| * Harami - weak to moderate signal depending on 4 | | | | happens when significant and unexpected news is |
| combinations, 2nd day's body completely within the | | | | announced contrary to the old trend. This is more |
| body of 1st; bearish when 1st candle is white; bullish | | | | likely to happen the longer a specific trend continues |
| when 1st candle is black | | | | - it eventually becomes ripe for exhaustion. |
| * Engulfing - moderate reversal signal, 2nd day | | | | Sometimes a high profit candlestick pattern similar to |
| engulfs or extends beyond both ends of the 1st day | | | | the Kicker will occur as the dominant bulls or bears in |
| & is the opposite color | | | | a market slowly lose confidence. This can be signaled |
| Reversal Patterns - Anticipation | | | | by progressively shorter candles in the three day |
| The highest profit candlestick patterns for a single | | | | pattern. If this does emerge, expect a reversal to |
| trade tend to be reversal patterns that have some | | | | happen. It's not a sure thing, but you will know by |
| sort of additional confirmation. Candlestick analysis | | | | the opposite position and direction of the next day's |
| has a method for confirmation embedded as part of | | | | opening whether or not you anticipated correctly. |