Itโs important to understand the different types of candles and the different formations. Trading is all about taking the right setups where there is a better risk to reward ratio. Here is some that I personally look for
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(1/9) Hammer Candle: The Hammer Candle is a solid body with a wick coming out of the bottom. This tells us that at one point during that time frame, the share price was trading lower and buyers stepped in. This is a bullish signal.
(2/9) Inverted Hammer Candle/Hanging man: Similar to the hammer, the inverted hammer is practically the opposite. The inverted hammer is a solid body candle with a wick coming from the top. This indicates that sellers stepped in near the end of the candle.This is a bearish signal
(3/9) Doji Candle: The Doji Candle is a candle with a small body including equally long wicks both ways. This candle indicates both buyers and sellers are present and cancel eachother out. This candle is often a sign of reversal and could be interpreted as bearish or bullish
(4/9) Tweezer: Tweezer candles often indicate the peak of a trend. The objective of tweezers are to identify the top or bottom of a trend. This is normally a candle or multiple candles showing a wick to the top or bottom of the trend. Give the tweezer guy @DiamondxTrades a follow
(5/9) Next, I want to talk about some candlestick formations, candlestick formations are stronger than any single candle because they involve multiple candles over a longer period of time.
(6/9) Head and Shoulders: H&S consists of three tops with the one in the middle being slightly higher. The level found at the bottom is often referred to as the โnecklineโ The share price must remain above this for it to remain valid. This is interpreted as a bearish formation
(7/9) Inverse Head and Shoulders: Similar to H&S, This is the exact opposite. This formation consists of three bottoms, one being lower than others. This is normally considered a bullish pattern.
(8/9) Shooting Star: A shooting star is a candlestick pattern that includes a candle with a wick coming out of a candle making a new high on the trend. Yo qualify as a shooting star, the wick must be twice as long as the body. A shooting star is a bearish formation.
(9/9) Thank you for taking the time to read. These are some of the basic candle types and formations I look for. There are hundreds of different formations. Should I do more?๐ค
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