Over time, the variety of candlestick patterns in forex trading has more variations, ranging from the pattern of one candlestick, two bars, three bars and so on. However, of all these choices, it turns out there are some profitable candlestick patterns that you should know.
Flash Back to Understanding Candlestick Patterns
Candlestick is an ancient charting method from Japan that has proven its accuracy until centuries ago until now. Although it has been used for a long time, its popularity has become part of the popular technical analysis used by various traders.
It should be noted, analysis with candlestick patterns is included in the discretional analysis method. That is, technical analysis through candlestick patterns, basically will rely on the subjective intuition of traders to understand the price patterns on the chart until it becomes an actual trading execution. The implication is that it takes experience and high flight hours so that this method is truly optimal to bring consistent profit.
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Examples of Profitable Candlestick Patterns
In order to make it easier for beginners to understand, profitable candlestick patterns will follow the systematics of technical analysis in general, candlesticks have a standby level of "signal" and "confirmation".
The "signal" level means that the candlestick has formed a pattern that will show a move up or down, but traders have not been advised to place a position first. Meanwhile, the "confirmation" level means that the candlestick pattern has suggested that traders place a position following the direction of movement in accordance with the pattern that appears.
Here are 3 categories of profitable candlestick patterns according to the form of confirmation in the opening position:
1. Pinbar pattern
The pinbar pattern is one of the most profitable candlestick patterns that most often appears on the chart. This pattern is easily recognized because the shadow length is always longer than the body and nose of the opponent. The shadow length compared to the body and nose, the higher the indication of the likelihood that there will be a trend or reversal.
2. Pattern Inside bar
This second profitable candlestick pattern is usually the most frequent when the trend has reached the highest or lowest point. Pattern Inside Bar is always represented by the characteristics of two candlestick bars, where one of the bars is smaller and is between the range of the parent bar (Mother Bar).
This profitable candlestick pattern indicates consolidation between vs. sellers. buyers, where both are still trying to attract each other until finally one party loses then the other party dominates so that a new trend is formed. In its development, Engulfing patterns are also included in the Inside Bar pattern category.
