Bullish Candlestick III

Now continuing with the theme of bullish candlestick we need to explain the following candles Engulfing, Ladder Bottom, Piercing Line, Three Stars in the South.

Engulfing



This pattern is one of the most clear. This formation indicates that buyers have taken control over the vendors so that will slow the fall, and often precedes a rally in prices.

First Candle: The candle may first appear even as a Doji, the smaller the first candle and the second largest candle, that will give us a sign of change stronger. The small candles Dojis and we reflect a hesitancy on the trend, so that the smaller the first candle but it indicates the end of a bearish trend.

Second Candle: This candle has confirmed the end of the bearish trend. The larger the candle upward, the greater the rally in prices and hence the better the signal shift.

This pattern is also very significant if it has recently been a very long bearish trend, or a sharp fall in prices. In both cases suggests that there may be oversold and thus a possible change in trend.

Support Level: The level reached by the Engulfing us in the future indicate a level of support.

Characteristics

• After a bearish trend, the first candle continues the trend with a red candle.


• The second candle is a candle which wraps upward (hence the name Engulfing) to the first candle, candle very close second over the first candle.

Ladder Bottom



In this pattern we see that the first candles are on a consistent downward trend. But as it progresses sellers have the opportunity to close their shorts and get benefit. As we can see in the fourth candle appears Inverted Hammer. Candle in the quarter as prices are being purchased, the high growing. But even this candle sellers are able to lower the levels near the open of the candle creating a small body. In this candle, we see that sellers are beginning to lose control. The fifth candle we see a rally in prices created a bullish candle (green).

Characteristics

• After a bearish trend, three consecutive bearish candles, which closes a lower than the previous one.


• The fourth candle is a candle with a bearish long upper shadow (long upper shadow). An Inverted Hammer.


• The fifth candle is a bullish candle.

Piercing Line



The first candle on the market continues to trend downward. The second candle buyers have brought the price close to the opening price of the previous candle.

Normally, traders believe that the lower the candle of two days will be better because the bigger the sale price after the opening but buyers will be willing to bring prices back up.

This training suggests that buyers have started to take control of the market, and sellers have begun to lose control of the momentum lost by the bassist. The rallies are common after this formation.

The higher the second candle closing with respect to the body of the first candle, the higher the probability of completing a bearish trend. If the candle does not close over half of the body of the first candle, the trade believe that it is safer to wait for a confirmation signal on the next candle.

But many traders waiting for a confirmation no matter how deeply the Piercing Line arrives.

The Piercing Line is the opposite of the Dark Cloud Cover.

Characteristics

• After a trend already established, the first candle will be a bearish candle (red)


• The second candle will be a bullish candle (green), which closed over half of the body of the first candle.

Three Stars in the South



Three In The South suggests that there is a weakening of the trend. Although each candle can shut down more and more, and despite the fact that vendors can bring the price below which you can see the long shadows lower (long lower shadow), these candles can not close with prices lowest in this way to continue the bearish trend.

Although the Three In The South is a reversal pattern, the traders do not usually take as a strong signal of change itself. Instead, traders use it as an indication that vendors should close their positions and wait to make purchases.

This is an important formation after a long sale.

Characteristics

• After a bearish trend, the first candle will be a bearish candle (red) with a long lower shadow (long lower shadow).


• The second candle is a candle bearish (red) similar to the first, but with a shorter shade lower.


• The third candle is a candle bearish (red) which Trading within the range of the second candle and a small body with no shadows (Marubozu red).