Candlestick Patterns: Long Wick Candles

Introduction

• Focus on the long wick candle pattern.
• Four variants discussed:
  • Hammer
  • Inverted Hammer
  • Shooting Star
  • Hanging Man
• Related premium trading guides available.

Hammer Candlestick Pattern

• Trend: Downtrend
• Candle Formation: Small body, long wick below.
  • Candle can be red or green.
• Price Action:
  • Indicates failed bearish momentum, sellers taking profit.
  • Potential for upward reversal.
• Key Tip: Longer wick indicates stronger signal.

Shooting Star Candlestick Pattern

• Trend: Uptrend
• Candle Formation: Small body, long wick above.
  • Candle can be red or green.
• Price Action:
  • Indicates failed bullish momentum, buyers taking profit.
  • Potential for downward reversal.
• Key Tip: Longer wick indicates stronger signal.

Inverted Hammer Candlestick Pattern

• Trend: Downtrend
• Candle Formation: Small body, long wick above.
  • Candle can be red or green.
• Price Action:
  • Indicates buyers entering market, long wick forms.
  • Potential for upward reversal.

Hanging Man Candlestick Pattern

• Trend: Uptrend
• Candle Formation: Small body, long wick below.
  • Candle can be red or green.
• Price Action:
  • Indicates sellers entering market, long wick forms.
  • Potential for downward reversal.

Trading Strategy

• Combine candlestick patterns with key levels for effective trading.
• Example: Reaction to support level by inverted hammer, confirmed by bullish engulfing candle.
• Multiple candlestick patterns at key levels create higher quality trade setups.

Advanced Techniques

• Multi-Timeframe Trading:
  • Use different timeframes for earlier entry points.
  • Example: Hammer pattern on primary timeframe aligns with trend change on lower timeframe.
• Trade Confirmation:
  • Look for pattern formations like descending triangles.
  • Use trendline breaks for entry points.

Conclusion

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