Most traders already understand and are very familiar with candlestick charts and use them often. However, what is a reversal candle?
As is well known, candlesticks do attract many traders because they look very attractive. In addition, this type of chart can also show price movements more clearly in one candle body.
On the other hand, in line with the times, the use of candlesticks and the analysis of their candle patterns are also increasingly diverse. To find out the chart reversal pattern, see the full review below.
What is Candle Reversal?
The candle reversal pattern or candlestick reversal pattern is a candlestick pattern that can show traders about a change in trend, either from a downtrend to an uptrend or vice versa.
By understanding the reversal candlestick pattern, you, as a trader, will be able to know when a trend will change.
This will enable you to make the right crypto transaction decisions, both buying and selling, at the right time.
Of course, this is important because by making the right transaction decisions at the right time, later, you can maximize the money that will be achieved.
3 Reversal Marker Candle Patterns
At least there are three reversal marker candle patterns that you need to know. Here is the description.
Three Line Strike
Three Line Strike occurs when a pattern has three bearish candles in a downtrend series. The three bearish candles each must have a lower low level than the previous candle so that the formed formation decreases.
Later, after these three bearish candles appear, the fourth candle will form a bullish candle, marking the reversal. However, to avoid signal errors, you should open a position when the candle is formed after the bullish candle so that there is a confirmator candle that shows the reversal happened.
Two Black Gapping
Next, there is Two Black Gapping, with a character in the form of a fairly wide gap between the first and second candles. Usually, this pattern is present in a series of uptrends (uptrends) before the trend ends because a bearish candle is formed.
The next candle that is formed is still bearish, with a much lower OHLC level than the first, so it appears to create a gap down. Later, you can find out that the price has experienced a trend reversal towards bearish (bearish reversal).
The reversal is increasingly confirmed by forming a bearish candle after the gap is down.
Three Black Crows
Three Line Strike has almost the same pattern as the Three Black Crows earlier. However, the difference is that the Three Black Crows are formed in a series of uptrends (uptrend), and bearish candles appear sequentially and descend. This condition then marks a bearish reversal tendency to occur.
The Three Black Crows pattern is ideally born when the trend has reached its highest peak or when the price has been at the overbought level. In these conditions, traders usually do a lot of selling (sell) so that the price can come back down from its current overbought position.
Given that the seller’s strength is greater than the buyer’s, the next candle formed is bearish. From that point on, you could say that the signs of a reversal have already begun to appear.
However, please wait for another bearish candle to form so that a more substantial reversal is confirmed. If the next candle formed is two bearish candles and includes a Three Black Crows pattern, then the opportunity for a sell entry and earning money will be wide open for traders.
Types of Candlestick Reversal Patterns
The following are the types of reversal candle patterns that are important.
Single Candlestick Reversal Patterns (Bullish)
This is a 1 candlestick pattern which indicates that the trend will change direction, from bearish to bullish. This candlestick pattern consists of:
- Southern Doji
- Southern Long Leg Doji
- Inverted Hammer
- Bullish Belt Hold
Single Candlestick Reversal Patterns (Bearish)
This 1 candlestick pattern will indicate that the trend will change direction from bullish to bearish. The various candlestick patterns are:
- Northern Doji
- Northern Long Leg Doji
- Shooting Star
- Hanging Man
- Bearish Belt Hold
Double Candlestick Reversal Patterns (Bullish)
It is a 2 candlestick pattern which indicates that the trend will change direction from bearish to bullish. Here are the types:
- Bullish Pregnant (Bullish Harami)
- Bullish Pregnant Cross
- Bullish Homing Pigeon
- Matching Low
- Bullish Engulfing
- Piercing Line
- Tweezer Bottom
Double Candlestick Reversal Patterns (Bearish)
This is a 2 candlestick pattern which indicates that the trend will change direction from bullish to bearish. There are several kinds of candlestick patterns on this one, namely:
- Bearish Pregnant (Bearish Harami)
- Bearish Pregnant Cross
- Bearish Homing Pigeon
- Matching High
- Bearish Engulfing
- Dark Cloud Cover
- Tweezer Top
Triple Candlestick Reversal Patterns (Bullish)
Is a 3 candlestick pattern which shows that the trend will change direction from bearish to bullish. Here are the types:
- Morning Star
- Morning Doji Star
- Three White Soldiers
Triple Candlestick Reversal Patterns (Bearish)
This next 3 candlestick pattern will show that the trend will change direction from bullish to bearish. Some of these candlestick patterns are:
Evening Doji Star
Three Black Crows
Thus a review of the reversal candle that is important to know. Also check out articles about crypto assets, blockchain, and others only at Indodax Academy.