You may be familiar with candlesticks you often use to read crypto market conditions.
Candlesticks attract a lot of trader interest because their appearance and function help traders precisely analyze price movements.
To help you analyze this candlestick, Fay wants to tell you more about candle reversals!
Hey, back at Indodax Academy with fay! This time, Fay wants to talk about candle reversal.
So a reversal candle is a candlestick pattern that can show a change in trend from an uptrend to a downtrend and vice versa.
With this reversal candlestick pattern, you, as a trader, can know when a trend will change.
This will also help you make transaction decisions to sell or buy the right crypto assets at the right time to get the maximum profit!
In more detail about this reversal candle, Fay also wants to discuss the three reversal marking candle patterns.
Three Line Strikes
This pattern occurs when a pattern has three bearish candles in a downtrend sequence. Three bearish candles appear in succession, each closing lower than the previous candle.
This shows the seller has mastered the market and pushed the price down. After the three bearish candles appear on the fourth candle, a bullish candle will form, indicating a reversal is occurring.
But to prevent potential signal errors, it’s a good idea to do an open position when the candle is formed after a bullish candle so that the confirmator candle that shows a reversal happens.
Two Black Gapping
A wide gap between the first and second candles characterizes this pattern.
Usually, the two black gapping patterns are in a series of uptrends or uptrends, which ends because a bearish candle is formed.
The candle formed next is still bearish with a much lower OHLC level than the first, forming a gap down.
This is where you can later know if the price has experienced a trend reversal towards a bearish or bearish reversal.
Then this bearish reversal will be confirmed by forming a bearish candle after a gap down.
Three Black Crows
The shape of this pattern is similar to a three-line strike. The difference is that the three black crows formed are a series of uptrends, and then a bearish candle appears sequentially and decreases.
This condition then signals a bearish reversal trend that will occur.
The three black crows pattern usually appears when the trend has reached its highest peak or when the price is overbought.
In this condition, many traders usually sell so the price can fall back from an overbought position.
The greater power of the seller than the buyer makes the next candle bearish.
So, from this point, there are signs of a reversal.
But you better wait until another bearish candle is formed so that the stronger reversal candle is confirmed.
If the candles formed next are two bearish candles that form a three-black crow pattern, then the opportunities for selling entries and taking profits will be even more open for you!
Remember, don’t just use one analysis when making buying or selling decisions. Strengthen it by combining it with other analyses!
Of the three patterns, it explains the reversal candle. There are still several candle patterns that mark a reversal, you know!
I will continue discussing the second part of the reversal candle! See you!