Best Candlestick Patterns (That Work)

hey guys so in this video we will show you the exact candlestick patterns we use to identify trade opportunities make sure to click the subscribe button and to hit the notifications bell so that you know exactly when new content is released as we have a lot of new things coming so stay tuned so from looking at the comments a lot of you want more content on price action and understanding candlesticks is a big part of price action also right now comment below on what next topics you want us to cover as we look at the comments to decide what videos to make and we really enjoy hearing from you guys so first why are candlesticks important to understand candlesticks tell a story and are a reflection of what buyers and sellers are doing what this means is the candlestick pattern that forms tells you a lot about what is occurring in that specific time period in terms of buying and selling within the market now there are many ways to use candlesticks but in this video we will be focusing on combining candlesticks with key levels which we have been building on from past videos so make sure you are all caught up so let's go through the specific candlestick patterns we look for the first candlestick type we look for is the long wick candle a long wig candle looks like this where the wick is sticking out and a pro tip the longer the wick the better the candle so how do we use this candle type again back to what we have been discussing in our previous videos we look left and notice that price came up hit and reversed drastically giving us a good level of resistance now as price came back up to this level we had no idea whether there would be a trade opportunity or not what you do is you wait for price action to form at these key levels before deciding what to do price action comes in many forms but in this case what we got was this great long wig candle that rejects resistance resulting in a bounce short so what does the long wick candle tell us in terms of price action the long wick shows that buyers tried to push price higher but failed causing the wick to stick out if buyers were in complete control then you would have a candle that looked like this form instead with a big body showing momentum these long-wicked candles can form as a result of profit-taking at these key levels as well as sellers stepping into the market now there are also false breakouts that occur but we will discuss that in another video so let's show this again you look left and notice that both times price got to this level it hit and reversed drastically giving us a key level of support then as price came back down to this level we were looking for some form of price action at the level first we had momentum loss through shrinking candles with a big candle a smaller candle and then finally you had this green candle form that is a very long wick candle which shows that price tried to push lower but failed which caused the very long wick candle close and then a bounce upwards now moving on so the second candlestick type we look for is the inside bar this here is what an inside bar looks like where the high and the low of the candle is completely inside of the high and the low of the previous candle which shows momentum loss so how do we use this candle type again we look left and on two different occasions price came up hit and reversed giving us a good level of resistance as price came back up to this level we had a candle where the wick is sticking out showing a reaction to the level followed by this inside bar notice how this candle is smaller and is contained within the highs and the lows of the previous candle so what does the inside bar tell us in terms of price action it shows that there was momentum loss because price failed to make a higher high now moving on so the third candle type we look for is what we call a momentum candle a momentum candle looks like this where the candle body is bigger than the previous candles body showing a gain in momentum so how do we use this candle type we like to use the momentum candle after any form of rejection candle such as after a long wick candle or after an inside bar so here's the pound cap and again we look left and notice that price came up hit and reversed giving us a level of resistance as price came back up to this level you had multiple long way candle rejections of this level now many traders will take trades right at these long wick candles which is fine but for more secure traders you can wait for the bearish momentum candle as it shows that sellers are actually stepping into the market which causes the bigger body momentum candle to form now moving on so the fourth candlestick pattern we look for is multiple candle rejections the name is self-explanatory multiple rejections means more than one candle rejecting a key level so again we look left and noticed price came up hit and reversed drastically giving us a level of key resistance as price came back up to this level look at the multiple longwood candles that rejected this level of resistance five candles in total where price tried to push higher but failed creating a good short opportunity so let's show this again we look left and notice price came down hit and reversed drastically giving us a clear level of support as price came back down to this level we again had multiple candles rejecting this level of support five total rejections creating a good long opportunity so what does multiple candle rejections tell us in terms of price action it shows that price tried over and over again to push through the level but failed in this case here sellers tried five times in a row to break lower and through support but failed causing these multiple longwood candles to form so let's get into the psychology of all this think about this from a seller's perspective if you got in short up here and held your position all the way down and noticed this level of support in your mind you were possibly thinking of closing your position and once you see these multiple candle rejections and as someone who understands price action you are telling yourself this might be a good place to take profit in contrast from a buyer's perspective you notice this level holding up as sellers could not push price lower and in your mind you are thinking that sellers might be taking profit at this level as well as other buyers possibly stepping in now this is the key the double action of sellers taking profit and closing positions as well as buyers entering the market and opening long positions causes these specific candlestick patterns to form and once there are more buyers and sellers in the market this triggers a reversal this is a very important takeaway you should always try to look at price action in terms of what other buyers and sellers are thinking and doing and use that in combination with your trading decisions now before we continue if you want us to make more videos more often make sure to hit the thumbs up button and to comment below with your questions and thoughts as this lets us know you want more videos now moving on so the fifth candlestick pattern we look for is shrinking candles and as you should already know we did a whole video on this topic but let's quickly recap what we like to see is shrinking candles as price approaches a key level to show momentum loss as you can see price came up hit and reversed giving us a level of resistance when price came back up to this level we had a big candle smaller candle and an even smaller candle followed by a long wick candle rejection and this was a picture perfect example of shrinking candles but also combining it with along with candle for extra confirmation which followed with a reversal now this also brings us to our next candlestick pattern which is a candle color change as you can see we had three green candles before a red candle finally appears which shows momentum loss this complete pattern is also what we call a combo because you have multiple different candlestick patterns occurring at the same time you have the shrinking candles a candle color change and along with candle rejection which makes this a high quality short opportunity this also leads us to our next section which is combining candlestick patterns together so let's jump to that now in this section we put it all together so just like how we showed you in the previous video how to stack support and resistance traits you can also stack candle patterns together to increase trade quality so here's the euro dollar you look left and notice price came down hit and reversed giving you a level of support as price came back down you first had momentum loss through shrinking candles second we had a long wig candle rejection of support and third a green candle finally appears after consecutive red candles and this is also a bullish momentum candle which confirms that buyers were actually stepping in again notice how we stacked multiple candlestick patterns together to improve trade quality so moving on here's the swiss yen and again price came up hit and reversed drastically giving us a level of resistance as price came back up to this level we had multiple candlestick patterns form first along with candle rejection second we had multiple additional candle rejections third we add an inside bar another inside bar and fourth a candle color change as we add all green candles before a red candle appears now the same thing occurred again once price came back up first we had a candle with the wick sticking out showing a reaction to the level this was then followed by a candle color change to red after green candles and then a perfect inside bar candle so moving on here's the euro cat and again we look left and noticed that price was in a heavy downtrend before finally there was a significant reversal that occurred which signals to us that this is a key level now as price came back down to this level what price action candlestick patterns did we have first we had momentum loss through shrinking candles as we had a big candle a smaller candle and then an even smaller candle second we had the wicks sticking out from both these candles showing a reaction to this level third we had a candle color change as we had two red candles followed by a green candle which shows momentum loss fourth we had an inside bar as this candle is smaller than the previous candle which again shows momentum loss now a lot of traders would look to go long right on this candle if they had intraday confirmation which we will discuss in a future video but for more secure traders you can add in one more price action pattern which is our fifth trait which is the momentum candle the momentum candle shows buying presents as buyers actually stepped into the market which causes this bigger candle to form again stacking candlestick patterns in combination with key levels is a great way to qualify potential trade entries now what we have showed you so far is just scratching the surface in order to take your training to the next level you need to keep adding to your price action toolbox and understand how to use concepts such as time frame confluence intraday confirmation market condition and many other tools we will get into in the future as we continue to build on price action as a whole you will be able to narrow down and filter out okay trades versus very high quality trades so if you enjoyed this video and want us to make more videos more often make sure to hit the thumbs up button and also comment below with your thoughts and what kind of topics you want us to cover as this lets us know you want more videos more often so thanks for watching and i'll see you in the next episode you

Channel: Wysetrade

Views: 1,318,949

Rating: 4.962677 out of 5

Keywords: candlestick patterns, best candlestick patterns, candlestick chart, candlestick, candlestick analysis, candlestick basics, candlestick chart patterns, wysetrade, candlestick patterns forex, price action, candlestick patterns explained, candlestick patterns explained with examples, price action trading strategies, price action trading

Id: W3PCTl5kxe0

Length: 13min 10sec (790 seconds)

Published: Wed May 22 2019