Introduction
Candlestick patterns are one of the most popular tools used by traders to analyze the market. They provide valuable insights into market sentiment and can help identify potential trend reversals. In this article, we will be discussing the 16 most common candlestick patterns found in the IG platform.
What are Candlestick Patterns?
Candlestick patterns are formed by the open, high, low, and close of a trading session. They are represented by a candlestick on a chart and can be either bullish or bearish. A bullish candlestick pattern indicates that the buyers are in control, while a bearish candlestick pattern indicates that the sellers are in control.
The 16 IG Candlestick Patterns
1. Hammer
The hammer candlestick pattern is a bullish reversal pattern that forms after a downtrend. It has a small body, a long lower shadow, and little or no upper shadow.
2. Hanging Man
The hanging man candlestick pattern is a bearish reversal pattern that forms after an uptrend. It has a small body, a long lower shadow, and little or no upper shadow.
3. Shooting Star
The shooting star candlestick pattern is a bearish reversal pattern that forms after an uptrend. It has a small body, a long upper shadow, and little or no lower shadow.
4. Inverted Hammer
The inverted hammer candlestick pattern is a bullish reversal pattern that forms after a downtrend. It has a small body, a long upper shadow, and little or no lower shadow.
5. Bullish Engulfing
The bullish engulfing candlestick pattern is a bullish reversal pattern that forms after a downtrend. It has a long body that completely engulfs the previous candlestick.
6. Bearish Engulfing
The bearish engulfing candlestick pattern is a bearish reversal pattern that forms after an uptrend. It has a long body that completely engulfs the previous candlestick.
7. Piercing Line
The piercing line candlestick pattern is a bullish reversal pattern that forms after a downtrend. It has a long white candlestick that opens below the previous day’s low and closes above the previous day’s midpoint.
8. Dark Cloud Cover
The dark cloud cover candlestick pattern is a bearish reversal pattern that forms after an uptrend. It has a long black candlestick that opens above the previous day’s high and closes below the previous day’s midpoint.
9. Morning Star
The morning star candlestick pattern is a bullish reversal pattern that forms after a downtrend. It has three candlesticks – a long black candlestick, a short candlestick, and a long white candlestick.
10. Evening Star
The evening star candlestick pattern is a bearish reversal pattern that forms after an uptrend. It has three candlesticks – a long white candlestick, a short candlestick, and a long black candlestick.
11. Three White Soldiers
The three white soldiers candlestick pattern is a bullish reversal pattern that forms after a downtrend. It has three long white candlesticks that close progressively higher.
12. Three Black Crows
The three black crows candlestick pattern is a bearish reversal pattern that forms after an uptrend. It has three long black candlesticks that close progressively lower.
13. Doji
The doji candlestick pattern is a neutral pattern that forms when the open and close are the same or very close. It indicates indecision in the market.
14. Bullish Harami
The bullish harami candlestick pattern is a bullish reversal pattern that forms after a downtrend. It has a small body that is completely engulfed by the previous day’s body.
15. Bearish Harami
The bearish harami candlestick pattern is a bearish reversal pattern that forms after an uptrend. It has a small body that is completely engulfed by the previous day’s body.
16. Spinning Top
The spinning top candlestick pattern is a neutral pattern that forms when the body is small and the shadows are long. It indicates indecision in the market.
Conclusion
Candlestick patterns are a powerful tool for traders to analyze the market. By understanding the 16 most common candlestick patterns found in the IG platform, traders can make more informed decisions about when to enter and exit trades. Remember to always use proper risk management and never risk more than you can afford to lose.
