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Price rallies to a significant new high, but sellers push it back down to the previous retracement low (establishing the "neckline").
A pin bar features a small body at one end and a long wick extending to the other.
These indicators help identify overbought or oversold conditions, often used for mean reversion.
A large candle body completely swallowing the previous candle body. trading technical analysis masterclass pdf
The long wick shows that the market aggressively rejected a specific price level. A long lower wick indicates a bullish reversal; a long upper wick indicates a bearish reversal. The Engulfing Pattern
Japanese candlesticks are the standard for professional traders. They pack four critical data points into a single time segment. The first traded price during the specific timeframe. High: The highest price reached during the timeframe. Low: The lowest price reached during the timeframe. Close: The final traded price during the timeframe.
[High] [High] | | +---------+ +---------+ | Close | | Open | | | | | Bearish | Body | | Body | Candle | | | | | Open | | Close | +---------+ +---------+ | | [Low] [Low] Bullish Candle The Three Market Trends Markets move in one of three directions: Price rallies to a significant new high, but
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Patterns are the grammar of the market. They break down into two types:
Price creates a higher high, followed by a minor retracement. A large candle body completely swallowing the previous
Fixed horizontal price levels determined by historical peaks (peaks) and troughs (valleys).
A price level where selling interest is strong enough to overcome buying pressure. It acts as a ceiling. Role Reversal (The Flip)
Places a higher weight on recent price data, making it more responsive to sudden market changes.