Get to know the major candlestick patterns…
The Forex Candlestick Chart PDF gives a gives a thumbnail graphical representation of the major forex candlestick patterns.
Each of these thumbnails is clickable: clicking takes you to a separate page that gives detailed analysis of the candlestick pattern in question.
This analysis is broken down into:
- A description of the individual candles involved in each pattern
- The underlying psychological and fundamental processes at work in the formation of the pattern
- Consideration of possible trade entry points after confirmation of the pattern
The chart uses real screen grabs from actual forex charts. This is important. Most websites, when describing a candlestick pattern will give a visual representation of the pattern that has been created in a paint or drawing program. While this is okay for the purposes of showing the basic presentation of the pattern, as with all things in real life, the actual patterns themselves that you will come across in your live forex trading are not so readily identified from these idealised diagrams.
It’s a bit like learning bird-watching from a book of photos. What you actually encounter in real-life situations is different. It is best to train your eye to recognise each pattern as it formed on real charts.
The individual candlesticks are first described for each pattern. For example, looking at the glossary you can see the first example includes a hammer candle – the second white candle in the circle. On its own, this can be a powerful sign, the Rejection Candle. However, for the purposes of defining it as a hammer pattern, we need the candle on either side of it. The candle to the left is the setup candle, the candle to the right is the confirmation candle. This will be described in detail for each of the patterns when you click on its image in the chart above.
I recommend you print the chart out and pin it above your PC monitor, or somewhere you can use it as a ready reference. Another option is to store the PDF file on your desktop. It’s amazing how quickly we forget the details involved in each candlestick pattern (until we have been trading for quite some time, at any rate). Having a chart of the patterns close by is extremely handy during the heat of trading battle!
Use it as a visual aid until pattern recognition becomes instantaneous and instinctive. Learn the meaning of each pattern in a heart beat, so your live forex trading flows, and so you won’t ever again look at a chart and wonder “is this candlestick price pattern significant?”