The 5 Most Effective Candlestick Patterns

 

A specialized technique known as a candlestick chart condenses data from many periods into a single price bar. They are thus more valuable than conventional open-high, low-close bars or straight lines that link closing prices. Candlestick patterns forecast price movement. This colorful technical instrument, which goes back to Japanese rice merchants in the 18th century, is made more interesting by proper color coding.

In his well-known 1991 book, Japanese Candlestick Charting Techniques, Steve Nison introduced candlestick patterns to the West. These patterns, which go by colorful names like bearish dark cloud cover, evening star, and three black crows, are now well recognized by traders. Numerous long- and short-side trading systems have also used single bar patterns like the Doji and hammer.

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