A candlestick shows the high, low, open and close for a security each day. Sounds simple enough, but what can you really do with that information?
This article focuses on continuation patterns and how they could deny or confirm trends in today's markets, giving the investor a clearer picture of whether to hold his or her position or execute a buy/sell order.
The Patterns We continue this look at candle charts with some additional patterns on both the bullish and bearish sides of the equation. On the bullish side of the market, we'll show you the engulfing pattern, harami and the harami cross. On the bearish side, we will have a closer look at the engulfing pattern, the evening star and both the harami and the harami cross.
Engulfing Pattern - BearishAn engulfing pattern (bearish) develops in an uptrend when sellers outnumber buyers; this action is reflected by a long red real body engulfing a small green real body.
Harami - BearishA harami (bearish) is another very recognizable candlestick pattern that shows a small real body (red) completely inside the previous day's real body.
Harami - Bullish
Harami Cross - BearishA harami cross (bearish) is a pattern of a harami with a doji instead of a small real body following up on the next trading session.The doji is within the range of the real body of the prior session.
Harami Cross - BullishThe harami cross, whether the bullish or bearish version, starts out looking like the basic harami pattern. The harami cross bullish is the exact opposite of the harami cross bearish and does not require any further explanation. Again, a trend has been reversed.