Hi, someone know that candle pattern?
- Thread starter MushinT
- Start date
It's a weak version of either bullish engulfing or piercing line so even though the price went up after the pattern, it didn't stay up for long and eventually came crashing down. If it's a bullish engulfing, the bullish candle didn't really engulf the whole down candle. If you count it as piercing line, the bullish second candle didn't open low enough so the sellers didn't all leave yet so that's why when there was weakness in the market later, the price still came back down.
Of course that's all from hindsight. The price pattern after the two candlesticks could be completely different. Candlestick patterns are reliable only 30% of the time and are very open to interpretation.
Here's (after the fact) is best entry point. Low of lower swing high taken out - also extended wick above screams selling taking place. Magenta moving average nearby is just coincidental - price doesn't care about average price, what lengths are used, how it is calculated yada yada.
My suggestion, forget complicated, convoluted multi candle pattern. Bar-by-bar price action works best.
The pattern in red circle is pretty classic Bear Engulfing pattern, together with the bull candle before it, it forms an Evening Star pattern. Both of these patterns by themselves individually are quite strong reversal patterns with Evening Star pattern one of the most reliable reversal patterns so they do make nice price entry points.
