Candlestick Charting Explained Workbook: Step-by-Step Exercises and Tests to Help You Master Candlestick Charting

3REVERSAL PATTERNS: REPELLING THE ADVANCE

Reversal patterns alert a trader that a shift in market psychology may be occurring and that a change in price direction may be near. Think of reversal patterns as an attacking army (buyers or sellers) being repelled and sounding a retreat, allowing the other side to begin a push in the opposite direction. These patterns or warnings can occur in as little as one day or in some cases as many as five days. Owing to the short-term predictive nature of candlesticks, their implications are usually short term, but this does not mean that they can’t signal the early stages of longer-term trading opportunities. The key to understanding and using reversal patterns effectively is being able to identify them and ...