Candlestick patterns are price patterns that are reflected in the form of Japanese candlesticks. These formations are helpful in predicting future stock price direction because they help reflect the sentiment of the market. There are numerous formations that candles can combine to form but only a certain few hold a higher probability of predicting a stocks future direction. In your own trading, you will find to use some more than others and you will definitely have a favorite one. The most important thing about candlestick formations are they are only suggestive. Any formation will need confirmation with a candle close the following day above or below it, depending on the formation. Depending on your style of trading, you may choose to go aggressive by not waiting for the confirmation but you must take into account that they are only suggestive.
Why are these formations so helpful? One thing about stock trading is that it is less about price and more about emotion. Candles help display traders emotions. You will find that combining these with the technical indicators can be extremely advantageous. All of the formations are reversal patterns. We will do our best to help you identify these patterns.
Bearish Harami – A bearish harami is a bearish reversal pattern found in up trends.
Bullish Harami – A bullish harami is a bullish reversal pattern found in down trends.