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In the previous video we had discussed about single candlestick patterns, in the video we will go a step ahead and talk about multiple candlestick patterns.
Multiple candlestick patterns are made of 2-3 candlesticks that is used for identifying trend reversal as single candlestick patterns.
Let us discuss some famous candlestick patterns:
The Engulfing Pattern:
The Engulfing patterns are mainly used for indicating trend reversals and the second body should engulf the first body totally.
The Bullish Engulfing Pattern is a bullish reversal pattern which consists of two bodies, the first being a small bearish candle and the second being a larger bullish candle, engulfing the first candle.
Similarly, the Bearish Engulfing pattern indicated bearish reversal that consists of a small bullish candle engulfed by a larger bearish candle on the next day.
The Harami Pattern:
The Harami means “pregnant” in Japanese
The Harami pattern is similar to the engulfing the only difference is the formation of the Harami Pattern. It consists of a larger body on Day 1 and a smaller body on Day 2.
The Bullish Harami Pattern indicates that uptrend is going to take place. The first candlestick should be a longer bearish candlestick and the second candlestick should be smaller bullish candlestick.
The Bearish Harami Pattern indicates that downtrend is going to take place. The first candlestick should be a longer bullish candlestick and the second candlestick should be smaller bearish candlestick.
The Morning Star:
The morning star is three candlesticks pattern indicating the bullish trend reversal. Below is the formation of the morning star.
The morning star is formed in three sessions, the first candlestick should be a large bearish candle, the second should be small bullish or bearish candle and the third one should be large bullish candle.
The third bullish candle should open gap up.
The Evening Star:
The Evening star is the opposite of morning indicating bearish reversal pattern. Below is the formation of the evening star.
The evening star is also formed in three sessions, the first candlestick should be a large bullish candle, the second should be small bullish or bearish candle and the third one should be large bearish candle.
The third bearish candle should open gap down.
Three White Soldiers:
This is a bullish reversal multiple candlestick pattern that consists of three green candles.
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Three Black Crows:
This is a bearish reversal multiple candlestick pattern that consists of three red candles.
For all these candlestick patterns, there should be a confirmation in the next candle. In the case of a bearish reversal candlestick pattern, a bearish candle should be formed the next day and in the case of a bullish reversal candlestick pattern, a bullish candle should be formed the next day.
These candlestick patterns discussed in this video helps the traders in setting their strategies for various trades, one should always study these patterns well instead of blindly following any of these.
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