CANDLESTICK Pattern Analysis
In this article, I am going to cover all Reversal Candlestick Pattern Analysis in detail. In previous article we have discussed Candlestick Analysis in Trading, PIN BAR Trading Strategy, Wide range candle analysis. And in this article we will cover 2 candle reversal patterns
Outside Reversal Pattern
BULLISH OUTSIDE REVERSAL PATTERN STRUCTURE
- First candle is a narrow range candle or doji
- The second candle completely engulf first candle and close above the first candle high.
- The second candle low below of the first candle low ,but the close must be above the first candle close and high above previous candle high
- The second candle should be accompanied by high volume
OUTSIDE REVERSAL PATTERN PSYCHOLOGY
What exactly is going on at these levels? Lets understand he two candlestick pattern psychology. First candle should be narrow or doji.
A Doji represent either one of two things:
- Buyers and sellers are equally strong
- Indecision in the market if appear after an extended move
Basically, smart money testing the selling pressure below support to make sure there is no new business to be done at these levels. When no selling pressure below low of previous candle, smart money start drive price up
How Reversal candlestick Patterns Work?
Reversal candlestick psychology is one of the reasons why reversal patterns are such effective predictors of price reversals. Here’s an example:
LOW OF BULLISH OUTSIDE REVERSAL PATTERN As support
BULLISH OUTSIDE REVERSAL PATTERN should followed by bullish price action. One more bull candle should formed to confirm the bullish reversal or validated the bullish engulfing candle
They will work best in trending conditions. Trade with the trend. In an uptrend bullish outside reversal pattern work better.
Trade from support or resistance level
How do we trade it?
- Buy above the bullish Engulfing pattern
- Stop loss below of the pattern
Stay tuned I will add remaining reversal pattern to this article. Here in this article, I try to explain Reversal Candlestick Pattern Analysis in detail. I hope you enjoy this article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney. Any doubt or question please ask happy to help you.