3 Best Forex Patterns Based on Candlestick Indicators
Forex Candlesticks Patterns are one of the most commonly used indicators on forex charts. However when a trader starts doing more research, they come across 100's of patterns and most of them are left confused on which one is the most reliable and which ones should be discarded. To help you with that, I am suggesting to you three forex candlestick patterns that you must be aware of. Before I begin, let me mention that I am suggesting these candlestick formations on the basis of -
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1. How frequently do they appear.
2. How reliable they are.
3. How difficult or easy are they to spot.
2. How reliable they are.
3. How difficult or easy are they to spot.
With that said, lets go through the top 3 candlestick patterns for Forex trading -
1. Bullish and Bearish Engulfing Pattern - One of the most common and one of the most straight forward patterns to identify and make trade decisions on. When a significant sized bullish candle is engulfed by a long bearish candle during an uptrend, this may signify that uptrend is about to end and the downtrend may be resuming. This is bearish engulfing. This information when combined with other technical indicators can help in making a decision regarding opening or closing of a trade. the vice-a-versa is true for a bullish engulfing forex pattern.
2. Evening and Morning Stars - Equally reliable, but this candlestick formation is not that common. However, when spotted, a lot of traders place their trade without even waiting for a confirmation.
3. Forex Candlestick Doji - This is not a pattern, but just a single candlestick formation. However, its formation on a forex chart signifies that the existing trend is about to end and a trader should make a trading decision whether to keep the trade open or perhaps adjust stop losses etc. When it is seen on a daily chart, a lot of traders close their trades.
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