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Today we will be discussing the various types of double candle patterns that there are. Recall that we have;
- Morning star
- Evening star
- 3 white soldiers
- 3 black crows
- 3 inside up
- 3 inside down
- Morning Star: A morning star forms following a downward trend and it indicates the start of an upward climb.it is a pattern consisting of three candlesticks (with the low point usually on the second candle) that are interpreted as bullish signs by technical analysts. It is a sign of a reversal in the previous price trend.
Note that the middle candle can be a bearish or bullish candle as the buyers and sellers start to balance out over the session. The first candle in a morning star pattern is usually a large red or black candle signifying a continued fall in price, the second candle is usually a a smaller candle that shows a more modest decrease in price while the third candle is usually a large green or white candle that opens at a price above the previous candle and then closes near the middle of the first candle.
- Evening Star: The evening star is a bearish candlestick pattern that consists of three candles: a large white candlestick, a small-bodied candle, and a red candle. As opposed to the morning star, evening star patterns are associated with the top of a price uptrend, signifying that an uptrend is nearing its end.
Note that the first candle in an evening star pattern is usually a large white or green candle signifying a continued rise in price, the second candle is usually a a smaller candle that shows a more modest increase in price while the third candle is usually a large red or black candle that opens at a price below the previous candle and then closes near the middle of the first candle.
- Three white soldier: The three white soldier pattern consists of three consecutive long-bodied candlesticks that open within the previous candle’s real body and closes above the previous candle’s high. These candlesticks should not have very long wicks and ideally open within the real body of the preceding candle in the pattern.
As shown above, Three white soldiers is a bullish candlestick pattern used to predict the reversal of the current downtrend in a chart. Usually, traders enter a long position as soon as the three white soldiers pattern is spotted.
- Three black crows: The 3 black crows candlestick pattern is a bearish candlestick pattern that may predict the reversal of an uptrend. The pattern consists of three consecutive long-bodied candlesticks that have opened within the real body of the previous candle and closed lower than the previous candle. Often, traders use this pattern together with other chart patterns as confirmation of a reversal.
- Three Inside Up: The three inside up pattern is a bullish candlestick pattern that contains three individual candles that appear on charts. The pattern signifies that the current downtrend has lost momentum and a move in the uptrend might be starting.
To confirm the inside up pattern,
- The market must be in a downtrend.
- The first candle is usually a black (down) candle with a large real body.
- The second candle is usually a white (up) candle with a small real body that opens and closes within the real body of the first candle.
- The third candle is a white (up) candle that closes above the close of the second candle.
- Three Inside Down: The three inside up pattern is a bearish candlestick pattern that contains three individual candles that appear on uptrends. The pattern signifies that the current uptrend has lost momentum and a move in the lower directions might be starting.
To confirm the Three inside down pattern,
- The market is in an uptrend.
- The first candle is a white (up) candle with a large real body.
- The second candle is a black (down) candle with a small real body that opens and closes within the real body of the first candle.
- The third candle is a black (down) candle that closes below the close of the second candle.