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12 Ultimate Candlestick Reversal Pattern Best Strategy IQ Options

Candlestick Reversal Pattern Level 2 for Binary Options and Forex Trading

Candlestick reversal patterns are the candlestick patterns are excellent to be used as a benchmark for taking the open position trading.

With the emergence of one of the pattern reversal, then price movements tend to be turned in the near future.

When that happens the trader can exploit it to the open position.

Candlestick reversal patterns are suitable as a binary option trading strategies. Basically, there are four kinds of candlestick patterns are:
  1. Candlestick reversal Patterns
  2. Candlestick continuation Patterns
  3. Candlestick patterns consolidation
  4. Candlestick patterns post consolidation
trend reversal candlestick pattern

And in this article, I will explain the reversal candlestick pattern. For reversal candlestick patterns are grouped into 4 kinds, namely:
  • Candlestick reversal Patterns level 1
  • Candlestick reversal Patterns level 2
  • Candlestick reversal Patterns level 3
  • Candlestick reversal Patterns level 4
If in the previous article I discussed the candlestick reversal patterns of level 1, then it is time to explain the reversal candlestick pattern level 2.

12 Major Reversal Candlestick Pattern Level 2 


Candlestick Reversal Pattern Level 2 is the candlestick patterns which reliability and sometimes require confirmation
ultimate candlestick reversal pattern

Following reversal candlestick patterns as strategy trading IQ option:


1. SHOOTING STAR/INVERTED HAMMER
candlestick pattern bullish and bearish reversal

A Bearish Reversal Pattern type: Level 2

Description:

While the uptrend appears candle with a body of relatively short upper shadow and is longer than the body.

The candle can be either bullish or bearish candle.

Psychology:

When the market is experiencing an uptrend, price in the open above the closing price the previous day so that gap up and indicate that the trend will continue. But after being able to rise, the price finally closed near the opening price.

This marks a change from the bullish market sentiment become bearish.

Note:
  • A confirmation is required to give a sign reversal will occur. The next session should be opened and move down.
  • Usually, the volume has increased.

2. HAMMER
key reversal candlestick pattern

Type: Bullish Reversal Pattern Level 2

Description:

Emerging downtrend while the candle with a body of relatively short and lower shadow which is longer than the body.

The candle can be either bullish or bearish candle.

Psychology:

When the market is undergoing a downturn in prices, open below the closing price the day before so the gap down and indicate that the trend will continue.

But after the turn, the price finally closed near the opening price. This marks a change from being bearish market sentiment bullish.

Note:
  • A confirmation is required to give a sign reversal will occur. The next session should be opened and move up.
  • Usually, the volume has increased.

3. SHORT DUSK LINE
candlestick bearish reversal pattern chart school

A Bearish Reversal Pattern type: Level 2

Description:
  1. Along Bullish candle with a body appears when an uptrend.
  2. The next session opened lower at the top middle of the body first candle and closed weakened under the first candle.

Psychology:
When the market is experiencing an uptrend later during the opening prices opened lower in the opposite direction with the current trend is a strong indication of bullish sentiment changes become bearish.

This is backed up with a close below the first candle so that it shows the seller that started to take control.

Note:
  • The second body candle is getting longer the more strong potential reversal occurs.
  • It is usually followed by increased volume.

4. DAWN LINE
candlestick reversal pattern forex

Type: Bullish Reversal Pattern Level 2

Description:
  1. Along Bearish candle with a body appears when downtrend.
  2. The next session opened more high-ranking, i.e. under the middle of the body and the first candle closed above a strengthened first candle.

Psychology:

When the market is undergoing a downturn than when the opening price opened higher in the opposite direction with the current trend is a strong indication of bearish sentiment changes become bullish.

This is supported by the close of the first candle on top so that it shows the buyer who began to take control.

Note:
  • The second body candle is getting longer the more strong potential reversal occurs.
  • It is usually followed by increased volume.

5. BEARISH MEETING LINE
7 key candlestick reversal pattern

A Bearish Reversal Pattern type: Level 2

Description:
  1. The bullish candle appears when an uptrend.
  2. The next Candle gap up above high the previous session but prices closed down near the closing price the previous session.

Psychology:

When the market is experiencing an uptrend, the next session opened with a gap up that indicates market participants still think conditions will remain bullish.

But prices reversed course and closed again near the closing price the previous session.

This indicates market participants aren't convinced the uptrend will continue and they are starting to think the market will be bearish.

Note:
  • The second candle Body must be the same or almost the same.
  • Long body candle is getting increasingly strong sentiment change that occurs.
  • It is usually followed by increased volume.

6. The BULLISH MEETING LINES
harami candlestick reversal pattern

Type: Bullish Reversal Pattern Level 2

Description:
  1. Bearish candle appears when an uptrend.
  2. The next Candle gap down below the low of the previous session but prices closed up near the closing price the previous session.

Psychology:

When the market is undergoing a downtrend, the next session opened with a gap down which indicates market participants still think will remain bearish.

But prices reversed course and closed again near the closing price the previous session.

This indicates market participants are not sure the downtrend will continue and they are starting to think the market will be bullish.

Note:
  • The second candle Body must be the same or almost the same.
  • Long body candle is getting increasingly strong sentiment change that occurs.
  • It is usually followed by increased volume.

7. THREE INSIDE DOWN
bearish reversal candlestick pattern meaning

A Bearish Reversal Pattern type: Level 2

Description:
  1. The bullish candle appears when an uptrend.
  2. the next Candle is a bearish candle and is within the range of the first forming candle inside day and a bearish harami.
  3. the next Candle gap down with a second candle and finally closed under low first candle

Psychology:

When the market is experiencing an uptrend, following bullish candle inside day occurs indicating doubt among market participants as to whether the uptrend will continue.

The next session of the gap down and closed under the low first candle which indicates a change of sentiment and change of control from the buyer to the seller.

Note:
  • It is usually followed by increased volume.

8. THREE INSIDE UP
strong reversal candlestick pattern

Type: Bullish Reversal Pattern Level 1

Description:
  1. The bearish candle appears when downtrend.
  2. the next Candle is a bullish candle and is within the range of the first forming candle inside day and bullish harami.
  3. the gap up the next Candle with a candle the second and finally closed above the high of the first candle

Psychology:

When the market is undergoing a downtrend, after bearish candle inside day occurred that showed hesitance among the market participants are downtrend will continue.

Gap up the next session and closed at high first candle which indicates a change of sentiment and change of control from the seller to the buyer.

Note:
  • It is usually followed by increased volume.

9. THREE OUTSIDE DOWN
iq option candlestick strategy

A Bearish Reversal Pattern type: Level 2

Description:
  1. Bullish candle with a small body appears when an uptrend.
  2. the next Candle gap up but finally closed under the first candle resulting outside day and a bearish engulfing pattern.
  3. the next Candle opened near the close second candle and move it down so that it produces a bearish candle.

Psychology:

When the market is experiencing an uptrend, a candle with a small body shows the market is starting to lose momentum.

Next occur gives an indication of the engulfing pattern reversal and the change of sentiment.

The third candle provides confirmation of the occurrence of reversal.

Note:
  • It is usually followed by increased volume.

10. THREE OUTSIDE UP
iq option candlestick pattern

Type: Bullish Reversal Pattern Level 2

Description:
  1. Bearish candle with a small body appears when an uptrend.
  2. the next Candle gap down but finally closed above the first resulting in a candle outside day and bullish engulfing pattern.
  3. the next Candle opened near the close second candle and move upwards resulting in a bullish candle.

Psychology:

When the market is undergoing a downturn, a candle with a small body shows the market is starting to lose momentum.

Next occur gives an indication of the engulfing pattern reversal and the change of sentiment.

The third candle provides confirmation of the occurrence of reversal.

Note:
  • It is usually followed by increased volume.

11. BEARISH BREAKAWAY
iq option candlestick analysis pdf

A Bearish Reversal Pattern type: Level 2

Description:
  1. First Candle is a bullish candle that occurs when an uptrend.
  2. The next session gap up and be a bullish candle with a short body
  3. the third Candle can be either bullish or bearish candle with a body that is longer than the second candle.
  4. the fourth Candle be a bullish candle with a shorter body and high of the previous candle.
  5. the fifth Candle prices opened under close the previous session and closed at or near the gap the second candle.

Psychology:

This pattern shows the failure of the market to maintain the momentum of the trend. Gap up that happened provide information that buyers still control.

But the price of not being able to ride further and retracement that is rapidly going to close the gap indicates the change in sentiment is strong among market participants.

Note:
  • It is usually followed by increased volume.

12. the BULLISH BREAKAWAY
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Type: Bullish Reversal Pattern Level 2

Description:
  1. First Candle is a bearish candle that occurs when downtrend.
  2. The next session gap down and bearish candle with a body in the form of short
  3. the third Candle can be either bullish or bearish candle with a body that is longer than the second candle.
  4. the fourth Candle in the form of a bearish candle with a shorter body and the low of the previous candle.
  5. the fifth Candle prices opened above the close of the previous session and closed at or near the gap the second candle.

Psychology:

This pattern shows the failure of the market to maintain the momentum of the trend. Gap down happens to give information that sellers still control.

But the price of not being able to go down further and retracement that is rapidly going to close the gap indicates the change in sentiment is strong among market participants.

Note:
  • It is usually followed by increased volume.

That's 12 candlestick pattern reversal level 2 for analysis of binary options trading strategies and forex. Don't miss out as well to learn:
Hopefully, this article can help you in doing the analysis of trading and can capitalize on a consistent basis.

Make sure you have mastered and create a trading strategy that is able to generate a profit before trading using the real account. Maybe useful and profit.
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30 July 2018 at 00:51

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