Candlesticks continuation patterns are the patterns which continue the direction of the previous trend. It can be a bullish trend or bearish trend.
In this article, you will learn only four continuation patterns. Because these patterns works best.
In first two articles of candlesticks patterns, you learned about bullish reversal patterns and bearish reversal patterns. Now we are on the last article. After this article, you will be able to identify all the important candlesticks patterns easily.
Bullish Continuation Candlesticks Patterns
1. Doji
Doji candlestick pattern is an indecision candlestick pattern, where traders don’t know anything about the next market move. You will see a small real body and long shadows on both the sides. Open and closing of this candle will be roughly same.
First there will be an uptrend and you will see a doji candle. Doji candle acts as an indecision in the market. So buyers and sellers have no idea about the next move. In an uptrend, this candle might act as a profit booking candle. You will also see a continuation chart pattern in smaller time frame.
You can enter into trade above high of this candle.
2. Rising Three Methods
Rising three method is a five candle pattern, which occurs in an uptrend. You will see a big bullish candle then three small bearish candles and finally a big bullish candle.
There will be an uptrend first and you will see a big bullish candle in an uptrend. This candle shows strong buying pressure. Then there will be three small bearish candles. Which acts as a profit booking or interruption in the trend. Small candles show lack of selling pressure. Here you will also see a continuation pattern in smaller time frame. At last, there will be a big bullish candle, which will show continuation of the trend. Again buyers takes over sellers with this candle.
You can enter into trade on last candle.
Bearish Reversal Candlesticks Patterns
1. Doji
As you know, doji is an indecision candlestick, which shows buyers and sellers both are equally involved in the market. You will see a small real body and long shadows on both the sides. Open and closing of this candle will be roughly same.
First there will be a downtrend and you will see a doji candle. Doji candle acts as an indecision in the market. So buyers and sellers have no idea about the next move. In a downtrend, this candle might act as a profit booking candle. You will also see a continuation chart pattern in smaller time frame.
You can enter into trade below the low of this candle.
2. Falling Three Methods
Falling three method is a five candle pattern, which occurs in the downtrend. You will see a big bearish candle then three small bullish candles and finally a big bearish candle.
There will be a downtrend first and you will see a big bearish candle in the downtrend. This candle shows strong selling pressure. Then there will be three small bullish candles. Which acts as a profit booking or interruption in the trend. Small candles show lack of buying pressure. Here you will also see a continuation pattern in smaller time frame. At last, there will be a big bearish candle, which will show continuation of the trend. Again sellers takes over the buyers with this candle.
You can enter into trade on last candle.
Final Thoughts
Now you have the idea of candlesticks continuation patterns. In last three parts, you learned about all the important candlesticks patterns. I think you will be good at reading candlesticks. Candlesticks are the base of technical analysis, without this, you won’t be able to trade well.
In next few parts, you will learn about trend, trend lines, support / resistance, supply and demand zones etc.
Superb!