Basic candlestick analysis patterns

In this section, we will talk about what a candlestick pattern is. I covered this issue quite widely in one of my previous articles, and such patterns as volume candle, tower, 3 crows or a cube, we will not consider this article. Instead, I will offer you to consider one exclusive pattern, the mention of which you will not find anywhere else.

Hairpin Pattern

The pattern is a candlestick pattern consisting of 1 candlestick. Everyone saw these candles on the chart, but many simply do not know their true meaning and understanding. I do not pretend that my understanding is the only true one, but, as I said earlier, my articles are based on my many years of practical experience.

So, in the classic candlestick analysis, the hairpin model does not occur. The pattern is a single candle, which has one very long shadow and a small, often missing body. The model can be present both in a growing market and in a falling one. The essence of the candle resembles the “ volumetric candle ” pattern that I described earlier. The principle of hairpin formation is similar – it is a fight of bulls and bears inside one candle. The result will be first a strong attack by some, and then a counterattack by others, which led to the final equality. It would seem that was all, but counterattacks, as a rule, did not spend all their strength, and in the following periods of time, they attack again and win. Now we will understand in practice.

It makes sense to open a sell position when the formation of the next candle after the completed “candle-hairpin” completes and a new candle (Sell zone) begins to form. The expected profit should be fixed when the price passes a distance less than or equal to the total length of the hairpin and candle formed after it (Profit zone). In this case, the limiter of possible losses makes sense to set at a distance greater than or equal to half of the expected profit (Stop zone).

What is worth adding? There are a number of rules that must be observed in order to use the pattern more efficiently and avoid popular errors:

  1. In its classic form, the pattern is a candle with a long shadow and a small body. In this case, the shadow length of the candle should be at least 10 times the length of the candle body.
  2. Sometimes, in order to prevent unnecessary risks, it is better to enter the model only at the level of the stud closing price, after the formation of the second candle.
  3. The pattern works best on the D1 timeframe. On smaller timeframes, the pattern was tested very little, and the result was much worse.

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