Wednesday, October 3, 2012

Best Candlesticks Bearish Patterns for Technical Analysis

We previously identified what was the top 4 bullish patterns for technical analysis, as important the bullish patterns identification will help you to find the right timing to short the market or to close a long position in both forex and stocks. I will introduce here some of the most reliable bearish reversal patterns, on the other hand it is highly recommended to not rely on a single indicator, therefore you should also look at some other technical indicator such as the RSI or the moving average to confirm the trend.
Moreover as we said previously, you can also verify that the pattern occurs on different time-frame such as 5 min, 10 min and 15 min.

1) Bearish Dark Cloud Cover:
The Bearish Dark cloud cover is a bearish reversal pattern and one of the most reliable candlestick pattern in technical analysis
-The market is uptrend (bullish)
-Long and white candlestick at first
-The second candlestick is black and it opened above the high of the previous one, it also closes within the range of the white candlestick.
- After the Second candlestick the trend is very likely to turn bearish.
Confirm it with other indicators.

Reliability: 72%

2) Bearish Kicking:
-Prior Market trend is not relevant
-The first candlestick is a white Marubozu (the open equals the low, and the close equals the high)
-The second candlestick is a black Marubozu
-The second marubozu opens below the low of the white Marubozu (downward Gap)
 Confirm the trend with other indicators.

Reliability: 84%

3)Bearish Three Black Crows:
the bearish three black crows is 89% reliable on the trend reversal to bearish
-Occurs after a bullish trend
-3 Consecutives black candlesticks with medium to long length follow
-Each of them closes at a new low
-Each opens within the range of the previous black candlestick
-Each closes near its lows
Note: it is even better if the 2nd and 3rd candlestick open below the middle of the previous one.

Reliability: 89%

4) Bearish Abandoned Baby:
bearish abandoned baby indicates the reversal from a bullish to a bearish trend and is very common in technical analysis
-Market is in uptrend
-First comes a long white candlestick
-Then comes a Doji candlestick (cross) with an upward gap
-The third candlestick is black and starts below the previous doji, showing the new bearish trend

Reliability: 67% -->


herve said...

The reliability of these patterns is proven, they are all part of my technical analysis, althought they are often right about the pattern reversal, it is often difficult how far the bearish reversal is gonna go, moreover if the market is very volatile it is quite easy to catch some pips with a right "take-profit" and of course a stop loss in case it goes wrong.

Vandhana Karthick said...

Short and sweet information about technical candlesticks patterns. Write more as like this..I have one doubt? How does this reliability rated from your point of view??

Stock Future Tips said...

Good Explanation !

Keep it up

Dalal Stock

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