Best 5 Forex Candlestick Patterns for Day Trading.
Forex candlestick patterns are crucial for the success of your price action technical analysis. Along with chart patterns, traders constantly use candlestick patterns for day trading to open and close different trades. This is so because every Forex candle pattern contains a tradable potential. For this reason, I will dedicate the following material to the best 5 candle patterns Forex indicators and the way they should be traded when spotted on the chart.
What are the Forex Candlestick Patterns?
Forex candlestick patterns are special on-chart formations created by one or few Japanese candlesticks. There are many different candlestick pattern indicators known in Forex, and each of them has specific meaning and tradable potential.
Forex traders constantly use candlestick chart patterns for day trading to foretell potential price moves on the chart. Forex candlesticks help them guess where the price will go and they buy or sell currency pairs based on what the pattern is telling them. Therefore, you should also spare time to examine the best candlestick patterns for intraday trading if you want to be a successful Forex trader.
Type of Candlestick Patterns for Day Trading.
There are two types of Forex candlestick patterns for day trading – continuation and reversal candle patterns. Let’s now briefly go through each of these two kinds.
Continuation Forex Candle Patterns.
Continuation Forex candle patterns are the ones that come after a price move and have the potential to continue the price action in the same direction.
The truth is that continuation candle patterns are not very popular in Forex trading. The reason for this is that they are not that many. In comparison to that, reversal candlestick patterns are dominating the Forex charts.
Reversal Forex Candle Patterns.
The reversal Forex candle patterns are the ones that come after a price move and have the potential to reverse the price action.
Compared to continuation candle patterns, the reversal candle pattern indicators are the majority of the candle patterns you will meet on the Japanese candlestick charts.
Best 5 Candlestick Patterns Explained with Examples.
In this relation, you should not be surprised that the best 5 candlestick patterns for day trading are reversal patterns. 5 of the most profitable Forex candlestick indicators are:
The Doji Family Tweezer Tops / Tweezer Bottoms The Hammer Family Three Inside Ups / Three Inside Downs Evening Star / Morning Star.
Notice that I have separated these into “families” or in their bullish and bearish versions since they refer to the same thing but upside down. Let’s now explain each of these with examples.
Doji Candle Patterns.
The Doji candle family consists of single candle formations where the price action opens and closes at the same price. Every Doji candlestick symbolizes the equalization of the bearish and the bullish forces. This means that the current price trend is getting exhausted and it is likely to be reversed.
The Doji Forex pattern could appear after bullish moves as well as after bearish moves. Despite that, the function of the pattern stays the same – to reverse the price action.
Since the Doji candle closes at the same level where it opened, the candle looks like a dash. Yes, but this is not the only Doji candle pattern known in Forex trading. There are other Doji candlesticks too. Below you will find the most popular Doji candlestick pattern types.
The confirmation of all of the Doji patterns comes when with the finish of a candle that closes in the direction that is opposite to the trend. This candle is the first indication that the reversal is beginning.
Tweezer Tops and Tweezer Bottoms.
The Tweezer Tops is a double candlestick pattern Forex indicator with reversal functions. The pattern comes at the end of bullish trends and signalizes about the beginning of a fresh bearish move.
The first candle of the Tweezer Top candlestick formation is usually the last of the previous bullish trend. The second candle of the Tweezer Top pattern should have an upper shadow that starts from the top of the previous shadow. At the same time, the upper shadows of the two candles should be approximately the same size.
The Tweezer Tops has its opposite equivalent that is called Tweezer Bottoms. The Tweezer Bottoms Forex pattern has absolutely opposite structure. The pattern comes after price drops and signalizes upcoming bullish moves.
The first candle of the Tweezer Bottom is usually the last candle of the previous bullish trend. The second candle of the Tweezer Bottom pattern should have a lower shadow that starts from the bottom of the previous shadow. At the same time, the lower shadows of the two candles should be approximately the same size.
The confirmation of the Tweezer Candlesticks comes with the candle that manages to close beyond the opposite side of the pattern. This candle is a strong indication that the trend is reversing.
The Hammer Family.
The Hammer candlestick pattern is a single candle pattern that has three variations depending on the trend they take part in. Every Forex candlestick that belongs to the Hammer family has a small body and a big upper or smaller shadow. At the same time, the other shadow is either missing or very small.
You will guess right if you are wondering if the name of the Hammer candle family comes from the structure of the candles. The candles in the Hammer family are four, and they all have reversal character.
Let me meet you with these candles now:
I have shown the bullish and the bearish version of each candle. Notice that it doesn’t matter which of the two candles you will receive. The meaning is the same.
Hammer Candlestick Chart Pattern.
The first candle on the sketch is the Hammer candlestick chart pattern. The candle emerges during bearish trends and signalizes that a bullish move is probably on its way. The Hammer candle has a small body, a long lower shadow and a very small or no upper shadow. Traders use the Hammer candlestick to open long trades.
Inverted Hammer Candlestick Pattern.
The Inverted Hammer candle has absolutely the same functions as the Hammer candle, but it is upside down. The Inverted Hammer has a small body, a big upper shadow, and a small or no lower shadow. Same as the Hammer candle, the Inverted Hammer candlestick comes after bearish moves and signalizes that a fresh bullish move might be emerging. Traders use the Inverted Hammer pattern to open long trades.
Hanging Man Candle Pattern.
The Hanging Man candlestick is absolutely the same as the Hammer candlestick pattern. It has a small body, a long lower shadow and a very small or no upper shadow. However, the Hanging Man Forex pattern occurs after bullish trends and signalizes that the trend is reversing. In this relation, the Hanging Man candle pattern is used by traders to open short trades.
Shooting Star Candlestick Pattern.
The Shooting Star candle pattern has the same structure as the Inverted Hammer candle. It has a small body, a long upper shadow and a tiny or no lower shadow. However, the Shooting Star Forex candle comes after bullish trends and signalizes that the bulls are exhausted. As a result, a reversal and a fresh price decrease usually appear afterward. In this relation, Shooting Star candlestick chart pattern acts as a signal to short Forex pairs.
The confirmation of the Hammer, Inverted Hammer, the Shooting Star and the Hanging Man comes with the candle which closes in the direction opposite to the trend. This candle is likely to be the first of an eventual emerging trend.
Three Inside Up and Three Inside Down Candlestick Patterns.
The Three Inside Up is another reversal candle pattern indicator that comes after bearish trends and foretells fresh bullish moves. It is a triple Forex candlestick pattern that starts with a bearish candle. The pattern continues with a bullish candle, which is fully engulfed by the fist candle, and which closes somewhere in the middle of the first candle. The pattern ends with a third candle, which is bullish and breaks the top of the first candle.
The first candle of the Three Inside Up candle pattern is usually the last candle of the previous bearish trend.
The Three Inside Up has its opposite equivalent – the Three Inside Down candlestick pattern. The Three Inside Down is a mirror image of the of the Three Inside Up. It comes after bullish trends and usually begins fresh bearish moves.
The Three Inside Down candlestick pattern starts with a bullish candle, which is usually the last of the previous bullish trend. The pattern continues with a second candle – a bearish one that is fully engulfed by the first candle and closes somewhere in the middle of the first candle. The pattern then continues with a third candle, which is bearish and goes below the beginning of the first candle.
The confirmation of the Three Inside Up and the Three Inside Down candlestick patterns comes with the third candle that closes beyond the beginning of the first candle of the pattern.
Morning Star Candle and Evening Star Candle Pattern.
The Morning Star candle pattern is another three bar formation that has reversal functions. The Morning Star candlestick chart pattern comes after bullish trends and signalizes eventual price reversal.
The pattern starts with a bullish candle that is long, and it is usually the last candle of the previous bullish trend. Then it continues with a very small candle that could sometimes even be a Doji star, and it is possible that this candle sometimes gaps up. The third candle of the pattern is bearish and goes below the middle point of the first candle, and it could also gap down from the second candle.
The opposite equivalent to the Morning Star Forex figure is called Evening Star candlestick pattern. The Evening Star Forex figure is a mirror version of the Morning Star that comes after bearish trends and signalizes their reversal.
The Evening Star candle pattern starts with a bearish candle that is long, and it is usually the last candle of the previous bearish trend. Then it continues with a very small candle that could sometimes even be a Doji star, and it is possible that this candle sometimes gaps down. The third candle of the pattern is bullish and goes above the middle point of the first candle of the pattern. It could also gap up from the second candle.
The confirmation of the Morning Star and the Evening Star candlestick reversal patterns comes with the end of the third candle. If the pattern emerges meeting the requirements of the three candles then you can trade in the respective direction.
Best Forex Candlestick Patterns Cheat Sheet.
I have created a simple candlestick pattern cheat sheet for your convenience. It contains all the sketches shown above.
You can use these Forex candlestick patterns for day trading by simply peeking at the cheat sheet to confirm the patterns. Save the image on your PC, or simply print it for your convenience.
Real Examples of Candle Pattern Indicators.
Now that you are familiar with the structure of the best candlestick patterns for intraday trading, I suggest that we go through coupe chart examples of how these work in trading.
The first example on the chart shows the Three Inside Up and the Three Inside Down chart pattern indicators in action. See that after each of these two patterns the price action creates a turning point and the price reverses the previous trend.
You should open a short trade at the Three Inside Down pattern and a long trade at the Three Inside Up Pattern. You should place your Stop Loss orders at the opposite side of the patterns as shown in the image.
This is a Tweezer Bottoms Forex candle pattern. See that the lower shadows of the two candles start and end approximately at the same level, which confirms the validity of the pattern. As a result, the price action reverses, which triggers a long trade. At the same time, you should put a stop loss order below the lowest point of the pattern.
Now let’s go through the Morning Star candle pattern and the Hanging Man candlestick. Both patterns have the ability to end a bullish trend and to start a fresh bearish move.
You should approach both patterns with a short trade, and you should sell upon their confirmation placing Stop Loss orders above their high. As you see, in both cases the price decreases after the confirmation of the pattern.
Lastly, we will discuss a Doji candlestick pattern that comes after a bearish trend. Our Doji candlestick analysis shows that the price ends the bearish move and starts a fresh bullish move.
You should trade in bullish direction here placing a Stop Loss order below the lowest point of the Doji star candle.
Stop Loss Orders on Forex Candle Patterns.
You should always use a Stop Loss order when trading Forex candle patterns. As you have probably seen on the trading images above, the best place for your stops on candle trades is at the opposite side of the patterns.
If you are trading a bullish candlestick pattern, place your Stop Loss order below the formation. If you are trading a bearish candlestick pattern, then you should place your Stop Loss order above the candle figure on the chart.
Take Profit Orders and Targets on Forex Candlesticks.
The rule of thumb says that you should trade every candle pattern for a minimum price move equal to the size of the pattern measured from the tip of the upper shadow to the tip of the lower shadow.
In some cases, the price action will continue further than that. Therefore, use the basic price action rules to determine further exit points on the chart. If you spot another candle pattern during you trade that suggests the end of the trend, you should simply exit your trade and collect your profit.
Conclusion.
Forex candlestick patterns are crucial for the price action technical analysis of currency pairs. The candlestick pattern indicators form on the Japanese candlestick charts that visualize the price action of Forex pairs. There are two main types of candle patterns Forex indicators: Continuation candle patterns – not very popular in Forex trading Reversal candle patterns – widely used to profit on the Forex market The best Forex candlestick patterns for day trading have reversal character. These are: The Doji Candlestick Patterns – Doji, Long Legged Doji, Dragonfly Doji, Gravestone Doji, and Four Price Doji Tweezer Tops and Tweezer Bottoms The Hammer Candle Pattern Family: Hammer, Inverted Hammer, Shooting Star, and Hanging Man Three Inside Up and Three Inside Down Evening Star and Morning Star Candle Patterns You should place your Stop Loss orders at the opposite side of the candle pattern you are trading. Stay in each candle trade for a minimum price move equal to the size of the pattern. Extend your targets by applying price action rules.
GET STARTED WITH THE FOREX TRADING ACADEMY.
Damyan is a fresh MSc International Management from the International University of Monaco. During his bachelor and master programs, Damyan has been working in the area of financial markets as a Market Analyst and Forex Writer. He is the author of thousands of educational and analytical articles for traders. When being in bachelor school, he represented his university in the National Forex Trading Competition for students in Bulgaria and got the first place among 500 other traders. He was awarded a cup and a certificate at an official ceremony in his university.
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Scalping.
TABLE OF CONTENTS:
What is the meaning of scalping in forex? Forex scalping strategies, Forex scalping techniques, Scalping Definition, Forex, Scalping trading meaning .
What is Scalping.
Scalping is a form of intra-day trading method where traders tend to trade with the aim of targeting a few pips of profit. There are many trading strategies that can quality as a scalping method. In this article, we will introduce you to a few forms of scalping strategies that are easy to understand and make use of price action as the basis of analysis. ( ? What is Price Action tarding? )
Scalping strategies based on PA (Price Action):
Support/Resistance based scalping strategy.
In this form of scalping, the primary elements of analysis are based on support and resistance. ( ? Support and Resistance Definition ) This scalping strategy can be ideally applied to 30minutes or 1 hour timeframe charts. However, before switching to these timeframes, it is important to understand the primary trend. Therefore, first check on the daily and H4 chart intervals for the trend.
After identifying a downtrend in the daily chart interval, we now switch to the H4 charts. The region marked between the two red vertical lines, are the areas which we focus for our trading. On the H4 charts, we also notice a downtrend and therefore plot a down sloping trend line.
After identifying the support and resistance levels, we then switch to the H1 chart interval. In the chart below, we notice how the chart is set up. When price retraces to the previously known resistance level, it is indicative to take a short position. This short position is in tandem with the trend on the daily charts and the H4 charts.
The target level for the short position would be the previously identified support level. After the bounce from the resistance level, price continues in a gradual downtrend before reaching the specified support level, which is also our area of taking profits.
For this price action based scalping strategy to be effective, traders should be able to identify support and resistance levels correctly. Also a bit of patience and discipline is required along with some confidence in their trading analysis.
In the example above, after the short position was triggered, there were moments when price tried to rally but failed to reach the previous high. These moments of price action in real time would have tested a trader’s confidence. Those who would have closed their positions due to fear would have lost out on a great trading opportunity.
Fibonacci based scalping strategy.
In this type of scalping strategy, the first step is to identify the trend for the chart interval that you intend to trade. After the trend is identified, plot a trend line accordingly. The basic premise of this scalping strategy is to trade the break of the trend line. However, we make use of the Fibonacci levels to target the price levels.
In the chart below, we look to the H1 chart interval. Here, an uptrend was identified and therefore a trend line was plotted connecting the lows. While waiting for the trend line to be broken, using the Fibonacci retracement tool, we plot the swing high and low points during the uptrend. Having gotten the Fib values, we first wait for the trend line to be broken.
After the trend line was broken, place a short trade at 38.2% Fib level, targeting 61.8%. Notice how price promptly dropped towards 6.8% Fib level.
Besides the Fibonacci retracement tool, another factor that might be missed is that the 61.8% also shows a previous support/resistance level. Once price reaches the target of 61.8% it promptly reversed the momentum.
With this type of a price action based scalping approach, it is essential to be patient for the right conditions to form. For example, despite plotting the trend line, a trader wouldn’t be too sure when the trend line would be broken. Therefore, patience is an essential element in this scalping strategy.
Combining candlestick patterns to the entry could further enhance this scalping strategy.
Using the same example, instead of shorting the pair directly after 38.2% was approached; trading when the dark cloud cover candlestick pattern was formed would offer a higher chance for the trade to reach its target.
Short Term Scalping based on Candlestick patterns.
In this form of scalping, trades are based on short term candlestick patterns. To be successful with this form of price action scalping technique it is very important that the trader is familiar with the various candlestick patterns. While there are too many candlestick patterns, it is prudent to pay attention to only the most important candlestick patterns such as engulfing bars, dark cloud cover/piercing line candlestick patterns and so on.
The chart above shows the trade signals based on the candlestick patterns that were formed.
Short trade is taken after identifying the dark cloud cover pattern Short trade is taken after spotting a doji candle followed by a bearish candlestick pattern Long trade is taken after spotting a bullish engulfing/inside bar candlestick pattern.
Price Action Scalping Strategy – Conclusion.
As seen in the above examples, it is very simple to scalp the markets based on price action, rather than having to rely on various combinations of indicators.

Forex candlestick patterns scalping

One of the top professional forex trading always using basic technical analysis forex trading with candlestick patterns. This standard analyzing usually using daily and four hour time frame. So we can trading with flexible time and no need stay in in front of your laptop or your pc all day long or all night long. Don’t waste your time because forex!! is it right? I think your answer the same with me. We should learn and practice using daily and four hour price action trading strategy beside this forex basic learning e-book.
Candlestick Patterns Using As A Signal Confirmation – Read E-book About Candlestick Basics.
This ebook will bring us learn about forex basics and chart pattern that can give us more accurate analyzing before made any trading decision. Don’t forget to filtering your any strategy using 2-5 open closing from equivalent candlestick from daily time frame as key level trading strategy. Any trading forex strategy still need this filter, even you’re using advanced techniques like trend lines, moving average, murray math, fibonacci retracement and many more trading strategies.
This ebook about technical analysis forex trading with candlestick and pattern only help us to determine chart pattern and situation current trends or even sideways condition, so this forex basic learning from this ebook still need to be filtered with daily filter, this filter are 2-5 equivalent open close candlestick from daily time frame.
Just download and learning this simple basic for forex trading strategies that you should know and learning about this basic trading chart pattern, this forex basic cannot be denied because this step is a must for learning forex market. Without this forex basic ebook you cannot make any accurate trading decision. And i hope this ebook about technical analysis forex trading with reversal candlestick strategy and pattern can give us more accurate trading signals over and over again and prevent us on margin calls.

Forex candlestick patterns scalping

Just for information, forex candlestick patterns works best only on H4 time frame above or at least from H4 because contract price from forex market made on every 4 hours like option beside more big time frame it’s mean candlestick patterns more stronger or more valid. We can use this candlestick trading strategy as our scalping trading style if you want getting small pips with highly accuracy but even better use this reversal candlestick patterns strategy as our primary variable in using swing forex trading system because it more pips we’ll got. Because actually market mapping price are move from one candlestick pattern to another candlestick pattern and this happened on big time frame (H4-Monthly). In a fact market move from bullish candlestick pattern to bearish candlestick pattern and vice versa. From this forex trading concept we can use this reversal forex candlestick patterns as our support resistance trading strategy right?
It’s very different if using this candlestick pattern in small timeframe. Yes, its because there’s more fake signals appear on this candlestick patterns. Professional forex traders using candlestick analysis at least from four hour time frame and Daily as their main charts as seen on picture below : 😉
Here is link below that you can download and learn and lastly don’t forget to exercise your skill about learning this secret majors reversal candlestick patterns. And the most important thing is we have still to filter this candlestick basic with supply demand zone in big time frame at least four hour time frame or daily more better. Read this secret easy candlestick patterns explained in this pdf to get more accurate forex signals and stable profit all the time. My trading recommendation is we don’t need any forex candlestick patterns indicators to read candlestick patterns it self, just reading by our eyes it would be better than indicators. Use this forex reversal candlestick patterns as our based of strong support resistance area.