October 21, 2017

Candlestick Charting Is Much More Than Reversal Patterns

Bullish and bearish engulfing, morning and evening star patterns or the bullish and bearish kicker have become well known among traders everywhere as common candlestick reversal patterns. Yes there’s more but for the purpose of this article I wanted to use these examples to get the juices flowing just a bit knowing that they are some of the most popular patterns to trade. Reversal patterns have become synonymous with candlestick charting but if you’re using them as a tool for trend reversal recognition only you’re missing half of the benefit candlesticks give.

Trend trading is undoubtedly the safest method of active trading. We’ve all heard the old adage; the trend is your friend and it’s as true today as it was when it was first thought or said.  Candlestick reversal patterns, or for the purpose of this article, candlestick patterns can alert the trader to trend continuations with as much reliability as any method available. The best part is it is also one of the simplest methods available today!

Over a year’s time the market spends most of its time trending. Since most stocks follow the market doesn’t it make more sense trading with a trend than constantly looking for a reversal? Even if you’re a swing trader, you can ride the stock price through the next leg up and exit on the first bearish candle. This method of trading works extremely well and is one of the methods I teach in Candlestick Trading for Maximum Profits.

Below I have illustrated an example of how I teach entries into trends:

AXS Candlestick Chart

Notice how often a bullish candlestick pattern reveals itself at the trend line. There were entry points for both the trend and swing trader as this trend unfolded with plenty of opportunity for profits! Not only were there opportunities at the “hard” trend there were opportunities at dynamic support also which is what I teach my students to look for.

Yes, candlestick patterns are much more than a method of trading reversals. Candlesticks can be used at tops, bottoms and anywhere in a trend to enter a profitable trade! I invite you to check out our candlestick charting course Candlestick Trading for Maximum Profits for more methods of profitably using candlestick charts in your trading.

Candlestick Course