TA Challenge: How to use bullish candlestick patterns?
Basic Principles
Relying solely on visual patterns can be risky for traders. Before we consider trading bullish candlestick patterns, it's important to keep in mind two significant principles:
1. A valid bullish reversal pattern should arise during a downtrend; otherwise, it might indicate a continuation pattern instead.
2. Most bullish reversal patterns require confirmation through a subsequent bullish price rise supported by high trading volume.
Here are some useful indicators to help traders distinguish true reversal patterns from false signals:
Volume
Rising trading volume during the pattern development stage is typically viewed favorably by traders, as it can validate the pattern's significance (and potential uptrend). As shown above, the hammer pattern formed a reversal, supported by a significant increase in trading volume.
RSI
When trading the three white soldiers pattern, it's important to be aware that a robust upward move may lead to a temporary overbought condition. For example, the Relative Strength Index (RSI) could exceed the 70.0 level. In certain scenarios, a short-term consolidation phase may follow the three white soldiers pattern, but the overall bias in the short- and medium-term is likely to remain bullish.
Resistance level
To assist in overcoming the limitations of visual patterns, traders should consider using bullish candlestick patterns in conjunction with other technical indicators such as trendlines, Moving Averages, and Bollinger Bands. For example, a trader might look for an upcoming area of potential resistance before establishing a long position. If the pattern emerges on low volume near-term resistance, the trader may refrain from committing until the breakout is more definitively verified.
Let's discuss
Which bullish candlestick pattern do you consider the most valuable in trading and why? Share your thoughts with other traders and seize the opportunity to win a $1 cash reward!
*Cash rewards can only be redeemed with your trading account at moomoo app and be used to buy equities (like stocks, ETFs, etc).*The above rewards are mutually exclusive and will be issued within 10 working days after the event ends.
Eligibility for rewards will be determined by Moomoo Technologies Inc., at its sole discretion, on the quality, originality, and user engagement of the posts.
Disclaimer:
This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve.
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content. See this link for more information.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
Read more
Comment
Sign in to post a comment
Moomoo Community Official Account
Master trading and boost your traffic with me.
Chat or inquire? DM me anytime. I'm real, not a robot!
58KFollowers
569Following
23KVisitors
Follow
Always Hungryy : need to use combination of all patterns to identify opportunity. not only 1 pattern.
Dan Burdick : interesting
Moon fairy 大炮仙 ❤ : Bull candlestick i always look for male type, those fat long solid with a birdy point up one to match with short female red candlestick. Technical indicator i will use 69 chart pattern to determine my entry point. If resistance too strong i will use Ky strength index to determine the trend.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Silverbat : Current oversold actions attracting buyers who sold a week ago and mid-turn investors
70698353 : nice
70577514 : very informative I'm still new to trading but I'm getting better
73634903 : Bullish Engulfing completely negates the previous days candle. It is a very strong signal.
kind Koala_6840 : I eat red crayons
for breakfast
Rising Star Sunny : still blur
Max888 : Very informative
View more comments...