Candlestick Basic Strategies CheatSheet LFP
Candlestick Basic Strategies CheatSheet LFP
Candlestick Basic Strategies CheatSheet LFP
1. The Hammer…………………………………………………………………………………………………….Page 4
2. The Piercing Candle…………………..……………………………………………………………………….Page 6
3. Bullish Engulfing……………………...……………………………………………………………………….Page 8
Bonus Section:
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A message from the Lionheart Funding Program.
6 Top Japanese Candlestick Strategies to Master for Bull & Bear Markets.
The cheat sheet included at the end of this ebook contains over 30 candlestick patterns, with each of them relating to specific trading strategies,
used by world-famous traders.
This ebook contains 6 of those strategies that you can use to enhance your trading starting today, and therefore increase your winning trades.
Each candlestick pattern is properly described for clear understanding, followed by an easy-to-follow explanation of the strategy.
Included with each, is an illustrative example on an actual trading chart, to assist you in executing the strategy.
Finally - please do not forget to have a look at the bonus offers included at the end of this ebook.
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An Introduction to Candlestick Patterns and their Importance.
In the world of trading, understanding the subtle cues of market behavior can significantly enhance decision-making skills. Among the various
analysis techniques, candlestick patterns stand out for their ability to provide deep insights into market sentiment and future price movements. This
article serves as a comprehensive guide to using a candlestick patterns cheat sheet, a tool invaluable to traders of all levels, from novices learning
the ropes to seasoned veterans refining their strategies.
Candlestick patterns are graphical representations of price movements in a trading instrument over a specific period. Originating from Japan over
200 years ago, these patterns are now a staple in trading rooms around the world, offering a visual snapshot of the market's emotional ebb and
flow.
Candlestick patterns help traders visualize the battle between bulls and bears in a market, providing crucial information on potential uptrends,
downtrends or continuations. For both new and veteran traders, understanding these patterns can be the key to executing timely and profitable
trades.
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Bull Market Strategies:
1. The Hammer.
Description:
The Hammer is a single candlestick pattern that is formed at the end of a downtrend and signals bullish reversal.
The real body of this candle is small and is located at the top with a lower shadow which should be more than twice the real body. This
candlestick chart pattern has no or little upper shadow.
The psychology behind this candle formation is that the prices opened and sellers pushed the prices down initially.
Then, buyers entered the market, pushed the prices up and closed the trading session more than the opening price.
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Strategy:
Traders can enter a long position if the next candle formed is a bullish candle, and can place a stop-loss at the low of the Hammer candle.
Illustration:
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2. The Piercing Candle.
Description:
A Piercing pattern is a multiple candlestick chart pattern that is formed after a downtrend indicating a bullish reversal.
It is formed by two candles - the first candle being a bearish candle which indicates the continuation of the downtrend.
The second candle is a bullish candle which opens lower than the previous close, but closes more than 50% of the real body of the
previous candle.
This shows that the bulls are back in the market and a bullish reversal is going to take place.
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Strategy:
Traders can enter a long position if the next candle formed is bullish and can place a stop-loss at the low of the second candle.
Illustration:
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3. Bullish Engulfing.
Description:
The Bullish Engulfing pattern is a multiple candlestick chart pattern that is formed after a downtrend indicating a bullish reversal.
It is formed by two candles, with the second candlestick engulfing the first candlestick.
The first candle is a bearish candle that indicates the continuation of the downtrend, initially.
The second candlestick is a long bullish candle that completely engulfs the first candle and shows that the bulls are back in the market,
signaling an uptrend.
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Strategy:
Traders can enter a long position if the next candle formed is bullish and can place a stop-loss at the low of the second candle.
Illustration:
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Bear Market Strategies:
Description:
The Hanging Man is a single candlestick pattern which is formed at the end of an uptrend and signals bearish reversal.
The real body of this candle is small and is located at the top with a lower shadow which should be more than twice of the real body. This
candlestick pattern has no or little upper shadow. The psychology behind this candle formation is that the prices opened and sellers
pushed down the prices.
Suddenly the buyers came into the market and pushed the prices up but were unsuccessful in doing so as the prices closed below the
opening price.
This can result in the formation of a bearish pattern and signifies that sellers are back in the market and the uptrend may end.
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Strategy:
Traders can enter a short position if the next candle formed is bearish and can place a stop-loss at the high of the Hanging Man pattern.
Illustration:
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2. Dark Cloud Cover.
Description:
The Dark Cloud Cover pattern is a multiple candlestick pattern which is formed after an uptrend indicating bearish reversal.
It is formed by two candles, the first candle being a bullish candle which indicates the continuation of the uptrend.
The second candle is a bearish candle which opens higher than the previous close, but closes more than 50% of the real body of the
previous candle.
This shows that the bears are back in the market and that a bearish reversal is going to take place.
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Strategy:
Traders can enter a short position if the next candle is formed is bearish and may place a stop-loss at the high of the second candle.
Illustration:
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3. Evening Star.
Description:
The Evening Star is a multiple candlestick pattern which is formed after the uptrend indicating bearish reversal.
It is made of 3 candlesticks - with the first being a bullish candle, the second a doji candle and third being a bearish candle.
A ‘doji’ candle is formed when the opening and closing of a candlestick are equal, or close to being equal. It is considered a neutral
formation suggesting indecision between buyers and sellers.
The first candle shows the continuation of the uptrend, the second candle being a doji indicates indecision in the market, and the third
bearish candle shows that the bears are back in the market and a bearish reversal is going to take place.
The second candle should be beyond the real bodies of the first and third candle.
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Strategy:
Traders can enter a short position if the next candle formed is bearish and can place a stop-loss at the high of the second candle.
Illustration:
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BONUS SECTION
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Bonus 1: 30 Candlestick Pattern Cheat Sheet.
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