The main types of candles

Quite often, disputes arise over the names of candlesticks in technical analysis. In order not to get involved in such disputes, I immediately make a reservation that I will offer you my own interpretation of the names of candles and the basic patterns of candle analysis, which are the simplest and easiest to remember.

In the figure above, I depicted the 12 most popular and important candles that can be found on the price chart. Let’s look at each of them in more detail. Let’s start with the most popular hammer figure in candlestick analysis.

  1. Inverted hammer – a candle is a signal of a trend reversal at the base of the market, but requires confirmation by the next candle, which must be white. The body can be black or white. The inverted hammer represents the end of the previous trend. This is evidenced by the long upper shadow. At first, the price showed an increase, but at the end of the period, the bears still prevailed and sold the price, thereby painting the candle black. In fact, the candle means the last bear’s attempt to prevail, and if the next candle is white, it will mean that the bears lost and the figure of the inverted hammer in the candle analysis is true.
  2. The hammer – the candle is one of the most important reversal signals at the bottom of the trend. It is characterized by a small body (white or black) located in the upper part of the price range of the session, and a very long lower shadow. As with the previous model, the hammer requires confirmation with the next candle, which must be white. The price initially showed a decline, but at the end of the period, the bulls still prevailed and raised the price, thereby painting the candle white. In fact, a candle means the last attempt of the bulls to prevail, and if the next candle is white, it means that the bulls won and the hammer figure in the candlestick analysis is true.
  3. The hanged man is a candle that looks like a hammer, but it appears only in the ascending market and means the possible end of growth. The candle requires confirmation by the next candle, which should be black. The price initially showed a decline, but at the end of the period, the bulls still prevailed and raised the price, thereby painting the candle white. In fact, a candle means the last attempt of the bulls to prevail, and if the next candle is black, it means that the bulls lost, and the bears won, and the figure is true.
  4. A shooting star is a candle that looks like an inverted hammer, but it appears only in the upward market and means a possible end to growth. The candle requires confirmation by the next candle, which should be black. At first, the price showed an increase, but at the end of the period, the bears started to prevail and lowered the price, however, their pressure was not enough to paint the candle black, and it remained white with a long upper shadow. In fact, the candle means the last bear’s attempt to prevail, which failed, but if the next candle is black, it will mean that the bulls still won globally, and the figure is true.
  5. A morning star is a candle that belongs to a large group of candles called “stars”. A morning star differs from a falling star in that it does not have a long shadow. It is just a candle with a small body that appears at the end of a downward trend and symbolizes the dawn of a new trend. At first, the price showed a decrease, but at the end of the period the bears lost their strength, and all that was enough for them was a small candle, and if the next candle is white, it will mean that the bulls eventually won globally, and the figure is true.
  6. An evening star is the opposite of a morning star. This candle appears at the end of an uptrend and symbolizes sunset. At first, the price showed an increase, but at the end of the period the bulls lost their strength, and all that was enough for them was a small candle, which, by the way, must be black, and if the next candle is black, this will mean that the bulls in, As a result, they lost and it was time for the bears, and the figure is true.
  7. Abandoned Infant – This is a candle that is part of the “star” group. Very similar to the morning star, with one but important difference – the candle is a Doji candle. A Doji candle has nobody, in other words, it symbolizes the equality of sellers and buyers. The price initially showed a decline, but at the end of the period, bears and bulls fought for their superiority, but in the end, neither side prevailed and the doges formed, and if the next candle is white, this will mean that the bulls eventually won the global plan, and the figure is true.
  8. Harami is a candle, which is a pretty strong signal for a change in trend because it includes signal amplification, price gap. Harami can be either bullish or bearish, and it can also be white or black, and in some cases even look like a Doji candle. Harami itself is a candle with a small body and short shadows. Its main features are two facts. The harami itself should be completely inside the body of the previous candle and with shadows and body. There should be a price gap (gap) between the closing price of the previous candle and the opening price of the hara. If all these conditions are met, the harami candle is true.
  9. Bullish absorption is not one candle, but two at once. For this reason, the absorption model is often referred not to candles, but to the section of candlestick Forex patterns. The absorption model is very simple. It can be bullish or bearish. The difference will only be in the color of the second candlestick of the model. A bull absorption will be considered a model in which the second white candle completely overlaps the previous one, absorbs it. If this condition is met, the model is considered true. This model has found a wide application in classical stock trading in the USA. The presence of this model on the daily chart of the asset is almost the main signal for a change in trend.
  10. Bearish absorption is an analog of the previous model, only in a growing market with the subsequent change of trend to a downtrend. Accordingly, the second bearish absorption candle will be black. All absorption conditions must be met, as in the previous version.
  11. Harami Cross – This is a candle that refers to the “stars”. The cross harami is an analog of the usual harami, with the difference that the Doji candle appears in the form of the candle itself. For this reason, this candle is sometimes called the “Doge Star”. All conditions for the execution of this model are similar to the conditions for ordinary hara. Signal cross harami is considered more reliable than regular harami.
  12. Tombstone – This is a candle that looks like a shooting star, but it has completely nobody. It means a possible end to growth. A candle, as in the case of a star, requires confirmation by the next candle, which should be black. The price showed growth at first, but at the end of the period, the bears gained the upper hand and pushed the candle to the opening price. In fact, a candle means the last attempt of the bulls to prevail, which was completely absorbed by the bearish attack, and if the next candle is black, it will mean that the bulls have completely won and the figure is true.

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