Fundamentals of candlestick

Greetings to everyone.
Today, I want to discuss about the fundamentals of candlestick
Although many of us are familiar with it, I still believe that giving a definition of candlestick is still a nice act.

Definition:

Candlestick pattern can be defined as the graphical illustration of a particular price in order to spot it direction of movement, which can be either an uptrend (bullish) or download (bearish).

Element of candlestick patterns

Basically, the candlestick patterns consist of two major elements. These elements give a key way to its classification.
They are;

• Type
• Complexity

Complexity

In a simple term, a candlestick complexity means the number of candlesticks that formulates that particular pattern. I.e. it can single or more.

The complexity of candlestick is divided into two;

• simple pattern and
• complex pattern

Simple patterns are those pattern that is formulated by a single candlestick. While complex pattern is a pattern that utilizes two or more candlesticks

Types of candlestick pattern

Candlestick patterns consist of three types.
They are;

• Reversal pattern
• Continuation pattern
• Neutral pattern
  
  
  Reversal pattern: This is a pattern that signifies that a market trend will change it direction towards opposite direction. This can be from bearish to bullish or vice versa.
  In bullish reversal pattern, the trend continues in bearish direction then change to bullish trend after a certain pattern which is considered as a signal appears. However, the same thing is applicable to bearish reversal pattern but in opposite direction.
  
  
  Continuation pattern: This is either an uptrend or downtrend pattern that shows that the price movement will continue in the same direction.
  The bullish continuation pattern is a continuation pattern that shows that a price will continue in the bullish direction. While bearish continuation pattern shows that the price will continue in the bearish direction.
  
  
  Neutral pattern: In this pattern, there’s an occurrence of monetary stop. This pattern does not indicate either bearish or bullish movements. They are form by one candlestick which is mainly Doji candlestick.

Classification of candlestick pattern

In spotting the classification of candlestick patterns, we used the combination of types (reversal, continuation & neutral), complexity (simple & complex) and type.

Example:

• Simple bullish reversal pattern
• Complex bearish continuation pattern
• Simple neutral pattern

NOTE: Each candlestick pattern is identified by using it name and classification.

Advise

It is good to know all this patterns, but not a mandatory. The major thing is understanding their secret logics.

Therefore, dear Tron Fans, just know that no matter the nature a of candlestick pattern, it can be group into the above explanation.

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