| Let's have a look at candlestick top reversal patterns. I | | | | harami cross pattern needs confirmation. |
| will discuss bearish patterns with the engulfing pattern, | | | | An evening star is a bigger white body, followed by |
| dark cloud cover, harami, evening star, abandoned | | | | one or more small black or white bodies with a rising |
| baby, hanging man and shooting star pattern and more. | | | | window above the closing price of the first white body. |
| Before looking at the top reversal patterns we have to | | | | The black candle that follows ideally lays 50% or more |
| define the rules for a top reversal to be a valid pattern. | | | | within the first white body and has a falling window |
| A top reversal is only possible AFTER an uptrend. | | | | with the previous candle body. |
| Most patterns need a confirmation. | | | | An evening doji start is a bigger white body, followed |
| A confirmation must appear one up to three | | | | by one or more doji's with a rising window above the |
| candles after the pattern. | | | | closing price of the first white body. The black candle |
| This confirmation is at least a closing price lower | | | | that follows ideally lays 50% or more within the first |
| than the previous closing price and preferably a big | | | | white body and has a falling window with the previous |
| black candle, high volume with the new down move, a | | | | doji. This is a stronger reversal pattern than the |
| falling window, or breaking support. | | | | evening star. |
| A reversal pattern during price consolidation must | | | | A bearish abandoned baby pattern is an evening star |
| be considered a continuation pattern. | | | | with a small body or doji star with a window between |
| For best results, you must combine candlestick | | | | the doji and the white and black candle, resulting in an |
| patterns with Western technical analysis. | | | | island reversal. The island can have more candles and |
| An unconfirmed pattern has no further meaning. | | | | more than one doji. |
| An engulfing bearish pattern in an uptrend is a small | | | | A hanging man is a small white or black body close to |
| white body, not a doji, followed and enclosed by a | | | | the high price. It has a long lower shadow, with a |
| bigger black body. Though not necessary, it is better | | | | minimum size of twice the height of the body. There is |
| when the black body also encloses the short shadows | | | | a very small shadow or no shadow at the top. A |
| of the white candle. An exceptional occurrence at the | | | | dragonfly doji, a doji with open and close price at the |
| end of an uptrend is a black body followed by a bigger | | | | level of the high price, is a specific version of the |
| white body; this is called a last engulfing pattern. | | | | hanging man pattern. Confirmation is required. |
| A dark cloud cover in an uptrend is a bigger white | | | | A bearish shooting star is a small white or preferably a |
| body that is followed by a black body with a higher | | | | small black body, near the low price. It has a long |
| opening price than the white body; however, the black | | | | shadow above, minimum twice the size of the body. It |
| candle closes below the midpoint of the white body. | | | | has a very small shadow or no shadow below. There |
| Confirmation is required. | | | | is a gap between the bodies of the bearish shooting |
| A bearish counterattack is a white candle in an | | | | star and the previous candle. |
| uptrend, followed by a black candle, where closing | | | | A top reversal only after confirmation. A bearish |
| prices of both candles are at the same price level. | | | | gravestone doji is a bearish shooting star where the |
| Confirmation is a must. | | | | opening, closing, and low prices are all about the same. |
| A bearish harami in an uptrend is a black or preferably | | | | Three black crows are three black candlesticks with |
| a white body, followed by a small white or black | | | | each subsequent bar making lower closing prices, |
| candle that is completely covered by the first candle | | | | close to the low of the bar. Opening prices of candles |
| body. A top reversal signal after confirmation. | | | | two and three are preferably within the body of the |
| White-black and white-white combinations are the | | | | previous candles. Many times, there will be a small |
| most common. | | | | reaction before the new downtrend is resumed. |
| A bearish harami cross pattern in an uptrend is a black | | | | This is the end of my overview of candlestick top |
| or preferably a white body followed by a doji that is | | | | reversal patterns. Next article we will have a look at |
| completely covered by the first candle body. A bearish | | | | candlestick bottom reversal patterns. |