Complex candlestick patterns

Complex candlestick patterns are advanced formations created by multiple candlesticks that provide deeper insights into potential market reversals and continuations. Examples include the Morning Star, Evening Star, Three Black Crows, and Three White Soldiers. These patterns offer more nuanced signals compared to single candlestick patterns, as they incorporate several periods of price action to indicate stronger trends or reversals. Traders use complex candlestick patterns to enhance their market analysis, allowing for more accurate predictions and better-informed trading decisions.

One of the simplest candlestick patterns is Three White Candles – a set of 3 rising candles where each close is above the previous closing. This is an uptrend. It has little chance of changing.

Piercing patterns usually indicate an upcoming reversal. What we have here is a falling candle followed by a rising one whose close is above the red one’s center.

An engulfing pattern is one where 3 candles are engulfed within an opposing candle. The pattern indicates we’re in the midst of a correction, or pullback.

Dark CLOUD covering is comprised of a falling candle following a rising one whose open is above the green’s close and close – below the green candle’s 1/3 line. Here we’re expecting a reversal into a bear market.

Another reversal into a bear market is indicated by a Shooting Stars pattern – a bull candle followed by a short bearish one whose close is below the previous candle’s opening.

A morning star signifies a reversal into a bull market. A red candle is followed by a short one and then a long bull candle whose close is above the middle of the first candle.

And, finally, an EVENING star is the opposite of the morning star – a green candle followed by 2 bear candles – short and long, with the close of the last below the middle of the first.

The history of candlestick patterns is truly fascinating. They’re said to have been invented by a billionaire rice merchant who interwove crowd psychology and meteorology with traditional Japanese beliefs and a network of informants and agents. Munehisa Homma was centuries ahead of his time, and without doubt we haven’t learned a fraction yet of what his candlesticks have to teach us.