Candlesticks patterns are short term signals although many times they can be the starting point of a new long term trend. It is the best way for inferring conclusions about the psychology behind price movement. They show us who won the ”battle” in a certain time frame, buyers or sellers.
They can be categorized in two classes, reversal patterns and continuation patterns, although the first one is the most important because it can give us clues about the reversal of a prior trend. By entering first at the start of a new short or long term trend, losses are minimized and potential profits are maximized. The opening of the right position in the beginning of the reversal is the utmost goal for every trader or investor and candlesticks patterns provide a lot of help in that direction. As any other technical criterion they should not be used in isolation but in combination with other technical analysis instruments like supports or resistances.
Candlesticks patterns can vary from one to five candlesticks in the same formation. Some of them are quite often but other are hard to find on a price chart. Reversal patterns are almost thirty as bullish and bearish pairs, whereas continuation patterns are almost fifteen.
Relatively to reversal patterns the more steep is the preceding trend the better is the signal they give. In a sideways movement they are practically worthless.
How to use candlesticks’ pages
The pages ”Bullish & bearish reversal candlesticks patterns” and ”Continuation candlesticks patterns” contain a full catalogue of all existing patterns. Their enlistment is being made according to the frequency of their appearance rather than alphabetically. Beside the bullish patterns which signal a reversal after a downtrend, are their inverse bearish patterns which signal a reversal after an uptrend. The most common observed have links to more analytical explanation and trading examples. When a candlestick is orange instead of green or red it means that it can be both colors. By using CRTL+F someone can search for a candlestick pattern if he/she knows its name. Also if someone sees something that looks like a pattern in a price chart he/she can have a look on the relative page to check if this is an official candlestick pattern.