What is the Most Powerful Candlestick Reversal Pattern?

[tomorton]

What is the Most Powerful Candlestick Reversal Pattern?

it is my opinion that candlesticks have no power in and of themselves. What happens after the pattern is random. there is no cause & effect. if candlesticks had power they would be cause and have an effect. but since after the candle is random there is no link of causality only random happening.

Astrology might do just as well or better than candlesticks. where does that leave candlesticks? Be careful what you believe.

I don't think any serious trader believes candlesticks or candlestick patterns move prices, or has ever said so. It is the buying/selling activities of the major market participants which move prices, and the results of these are made visible as individual candlesticks which can be viewed in combination as candlestick patterns. Price behaviour after the pattern depends on whether the major players continue their objectives and behaviours. They continue with these often enough and with sufficient financial commitment that it is statistically provable (and proven) that certain candlestick patterns followed by certain price movements are not random.

Do have a look at Thomas Bulkowski's thepatternsite or Steven Nison's books on candlestick for a better understanding of the use of candlestick patterns.

 

[Sprout]

A single candlestick such as on a daily chart is an artifact of 3 things. Those three things form a context. The context is relevant and often overlooked in it’s entirety. That visual representation of a single day’s activity is composed of five datapoints. The context is WCB (What Came Before), WHN (What’s Happening Now) and WMCN (up to you to figured out.) The datapoints are OHLCV whereas V determines OHLC. A single day is composed of 81 candlesticks, each with OHLCV. Even though each day is unique in how is expresses an archetypal basic pattern - this pattern is present no matter what timescale one is observing. Is is the same pattern long or short. There is a single event that links this pattern to it’s opposite. This is the FTT. It’s more of a conceptual overlay that you build in your mind’s eye that once built then can be seen and acted upon. It can show up on any candlestick, that’s what makes it powerful.
If you are just looking for single candlesticks you are missing the forest as you look for a specific tree. Trees in a forest do not grow alone and you’d be lost not even knowing how lost you are. A forest is an ecosystem and to understand it, it really has to be experienced in it’s entirety - otherwise you’re just a logger that just wants to clearcut and $&@ up the entire countryside including the stream where are the fishes are.

 

[birdman]

Regarding reversals ... I automatically thought of 1,2,3 formations as mentioned by Xela here https://www.elitetrader.com/et/threads/the-simplest-strategy-that-works.322443/#post-4679967 where she says they are the only reversal trades she ever takes.

I do a whole of searching and reading old post on various subjects. Hardly a visit to the forum goes by, without me thinking of Xela and her valuable contributions. Sure miss you Xela!

Member "They" wisely reminds us ... this pattern is not 3 bars next to each other. It is a multi-bar pattern. Think about it - multiple bars means multiple traders, multiple traders means more money vested in a direction, more money vested in the leg down from point 2 to point 3 will be the panicking money that gets you a decent move upon the breakout above point 2 (long example) https://www.elitetrader.com/et/threads/trading-the-1-2-3.322444/page-2#post-4681400