The quickest way to increase your fun with candlestick patterns is to increase it by two with double candlestick patterns! As much as we are having fun with all of this, you have to understand that the more patterns you become accustomed to, the better (or should we say wiser?) a trader you will become. There is nothing secret about candlestick patterns as pretty much all the traders in Forex know what they are. Well, at least they have heard of them.
Some of the better traders use them frequently as part of their technical analysis. What you do with them is entirely up to you. But you still need to know what to watch out for even if all you end up doing is nodding your head and saying quietly to yourself, “Oh, there’s another candlestick.”
Soy and beeswax are probably your best choices of candles. They burn long and don’t normally flare up and cause any problems. However, Forex trading is not the place for either of those kinds of candles. But you will find a pattern that bears the striking and somewhat alarming name of engulfing. In the real world a fire that engulfs something pretty much completely destroys it.
In Forex trading a bullish engulfing candlestick pattern involves two candlesticks and signals that possibly a strong increase in pricing can be on the horizon. The pattern shows a bearish candle followed immediately by a much larger bullish candle. It is said that the second candle engulfs the first one. On the other side of the coin, a bearish engulfing candlestick pattern is the opposite of the bullish one.
Tweezer Bottoms And Tops
A dual candlestick reversal pattern is called a tweezer. It’s a pattern that tends to show up after a long uptrend or downtrend has occurred. It is telling you to be on the lookout for a soon to come reversal. Visually the two candlesticks are lined up in such a way that they actually resemble a pair of tweezers, if you can sort of look outside the box a little bit.
The tweezers tend to follow these patterns: the first candlestick is bullish and the second candlestick is bearish. The shadows of each candlestick will be of equal length which tells you a little more about the trading activity. Where the tweezers play different roles is when they become tops or bottoms. The Tweezer Tops will indicate matching highs where the Tweezer Bottoms will be indicators of matching lows.
What Was This About Again?
Reading candlesticks can be a valuable tool in your Forex trading toolbox. Just like a typical toolbox, you don’t always pull out each tool for every job. The same applies to Forex trading. Some tools will serve you better than others. Only you will know when to pull out the right tool for the job. The key is to have your toolbox loaded with all possible tools that you may require rather than just a few to get you by on this project. The more you know, the better a trader you will become.