When it comes to Forex trading strategies you could just flip a coin but that’s just foolhardy. You could achieve the same results just by tossing money into a vacuum but when you enter the world of Forex trading you do it with one goal in mind – to end up on the plus side and earn some extra cash along the way. One interesting trading strategy involves patterns. Let’s take a look at some of them:
1 – Dual Candlestick – Inverted Hammer Pattern
To start there is no wax, no flame and actually no candle involved. The terms used to describe these patterns are used to help you to visualize what they look like. The inverted hammer forms at the bottom part of a downward trend and is actually a reversal pattern with a pair of candlesticks. In other words, it looks like a hammer pattern…but, inverted. What it means is that the beginning of the trend showed dominant buying with sellers picking up the pace at the end which closed the session close to the price it opened at.
2 – Dual Candlestick – Engulfing Pattern
This is a major candlestick with a possible trend reversal. Essentially a candlestick forms at the bottom of a downward trend with a second one totally covering (engulfing) the first one. A bearish engulfing pattern comes from the top of an upward trend with the bullish being one that forms from the downward trend.
3 – Dual Candlestick – The Dark Cloud Cover
You will discover that weather, fire and astronomy all play a role in the naming of these patterns. This one is best described as a top reversal pattern with multiple candlesticks. Two candlesticks form and essentially cover another one with up to 50-percent penetration. This formation signals buyers dominating the session at first with sellers gaining to where they outperform the buyers.
4 – Triple Candlestick – The Morning Star Pattern
This is a set of three candlesticks in a bullish reversal which forms following a downward trend. A small candlestick forms detached from the close of the previous session. Supply and demand in equilibrium is represented by the small body of the candlestick. A third candlestick deep inside the first candlestick’s body completes the pattern.
5 – Triple Candlestick – The Evening Star Pattern
Since Forex trading strategies are built upon opposites, what would you think the Evening Star would look like? If you said it was very likely the opposite of The Morning Star Pattern you would be thrust to the front of the class. Essentially this pattern forms following an upward trend with other candlesticks filling in the roles like in The Morning Star Pattern but…the complete opposite. Think of it as a mirror image and you’ll get a better idea.
Can You Learn and Earn From Japanese Candlestick Patterns?
Well, this is an advanced and somewhat complex trading strategy that many expert level traders use. What they really show is the differences between bull and bear markets and the trends that tend to create them. This in itself makes for a valuable training tool for your trading career.