Money Making Candlestick Formations Candlestick Line
Hammer
An important bottoming candle-stick line. The hammer and the hanging man are both the same line, that is a small real body (white or black) at the top of the session’s range and a very long lower shadow with little or no upper shadow. When this line appears during a downtrend it becomes a bullish hammer. For a classic hammer, the lower shadow should be at least twice the height of the real body.
Hanging man
An important top reversal. The hanging man and the hammer are both the same type of candlestick line (i.e., a small real body (white or black), with little or no upper shadow, at the top of the session’s range and a very long lower shadow). But when this line appears during an uptrend, it becomes a bearish hanging man. It signals the market has become vulnerable, but there should be bearish confirmation the next session (i.e., a black candlestick session with a lower close or a weaker opening) to signal a top. In principle, the hanging man’s lower shadow should be two or three times the height of the real body.
Harami
Harami — a two candlestick pattern in which a small real body holds within the prior session’s unusually large real body. The haramiimplies the immediately preceding trend is concluded and that the bulls and bears are now in a state of truce. The color of the second real body can be white or black. Most often the second real body is the opposite color of the first real body.
Harami cross
A harami with a doji on the second session instead of a small real body. An important top (bot- tom) reversal signal especially after a tall white (black) candlestick line. It is also called a petrifying pattern.
Inverted hammer
Following a down-trend, this is a candlestick line that has a long upper shadow and a small real body at the lower end of the session. There should be no, or very little, lower shadow. It has thesame shape as the bearish shooting star, but when this line occurs in a downtrend, it is a bullish bottom reversal signal with confirmation the next session (i.e., a white candlestick with a higher close or a higher opening).
Morning star
A major bottom reversal pattern formed by three candlesticks. The first is a long black real body, the second is a small real body (white or black) which gaps lower to form a star, the third is a white candlestick that closes well into the first session’s black real body.
Morning Doji Star
Morning doji star — the same as a morning star except the middle candle- stick is a doji instead of a small real body. Because there is a doji in this pattern it is considered more bullish than the regular morning star.
Piercing pattern
A bottom reversal signal. In a downtrend, a long black candlestick is followed by a gap lower during the next session. This session finishes as a strong white candlestick which closes more than halfway into the prior black candlestick’s real body. Com- pare to the on-neck line, the in-neck line, and the thrusting line.
Tweezers top and bottom
When the same highs or lows are tested the next session or within a few sessions. They are minor reversal signals that take on extra importance if the two candle- sticks that comprise the tweezers pattern also form another candlestick indicator. For example, if both sessions of a harami cross have the same high it could be an important top reversal since there would be a tweezers top and a bearish harem cross made by the same two candlestick lines.
