Five Power Candlestick Patterns in Stock Trading Strategies by Adam Khoo

so welcome to this video on candlestick patterns I'm Adam Koo and in this video I'm going to show you the most powerful candlestick patterns I use to find high probability entries or to supplement my trades so before there pause the video read the disclaimer and once you're done let's carry on okay great so when we look at a stock as you know we look at the chart to ascertain the probability of where the price is going to go is it on an uptrend so on a downtrend is it on consolidation but besides looking at the trends we can also look at the candlesticks that make up the price action because the candlestick pattern tells us on a day-to-day basis the sentiment of the market is it more bullish is it more bearish and it helps to fine-tune our entries more precisely so we enter when all the stars are aligned on the bullish momentum and short on a bearish momentum so we look at the price chart I like to use candlestick charts so the chart is made up all these candlestick patterns and you can choose any duration I prefer to use daily candles which means every candle you see represents one trading day so how do you read these candles a quick revision if you're new to this so when you look at a candlestick it can be a bullish candle which is white or green in some charts or a bearish candle which is red or black okay so first let's look at a bullish candle a bullish candle happens when you have got a bullish day which means that on this day the market closed higher than its open so in other words the market opened here at say $10 and by the end of the trading day it closed higher than the open at say $12 so once you have that you've got a bullish candle which is white or green and this is what we call the body of the candle so the body that candle tells us the open versus the clause of the day so for bullish candle we open at the bottom of the body we close at the top of the body now during the day the price could go to a certain high point we call it the day high which could be for example 50 dollars okay and it may go to a slow si $9.00 we call that the day low so the day high in the day low are denoted by these shadows so the upper shadow and the lower shadow okay so you got the shadows and a body now if you take the top of the upper shadow to the bottom of the lower shadow the entire length is called the range of the candle the range of the candle okay so that's how you read a bullish candle now you get a bearish candle when it's a bearish name a bearish day is when the price closes lower than the opening price of the day so in that case the price opens here at say $10 in the morning and closes at $8 so when that happens you've got a bearish candle Rick canned or black handle okay so once again the the body of the candle shows us the open versus the closing price that's the body of the candle and the upper shadow tells us where's the day high so it's a it's a 11 and the lower shadow tells us the day low say at $7 so once it can go to body upper shadow lower shadow and the length from the top of the upper shadow to the bottom is called the range of the candle so please remember all these terms and so once again bullish candle open here close there that's the high that's the law bearish candle opens then closes there that's the top and that's the bottom okay now when you look at Charles the the candles don't all look like this it's like not everyone looks like the same shape okay some are setters I'm a thinner some are taller so much shorter so depending on what the candle looks like the shape of the body and the shadows it tells us about the bearishness of bullishness of that base sentiment that helps us to make better decisions so let's take a closer look and what I'm talking about now these are specific candle shapes that I find powerful and reliable the first one now what I call bullish pin bar okay so this one this one this one this all four of them are bullish pin box why they look like pins okay what drink all have in common number one they all have small bodies right so this is a body body and in this case you can see there is no body why because the open and the closing price is the same price so it's like the body is like one line same with this one okay next notice all four candles have long lower shadows long lower shadows and the lower shadow mix up two thirds of the entire range of the candle so if you have got these conditions it's known as a bullish pin bar now bullish pin bars are bullish reversal patterns what does it mean okay when you see a series of candles coming down and you see one of these bullish pin bars there's a high probability that the price will reverse upwards and we look to go long after the bullish pin bar now what's important to understand is that candlestick patterns by itself is not reliable unless in the right context and easiness appear at the right location so a bullish pin by is only bullish and reliable when is a certain kind of support level when it is at a support level and ideally the lower shadow should cut below this support line which is very often a moving average okay and it should be on an uptrend ideally okay so I repeat once again a bullish pin bar has the highest probability of you know the price going up when it's at a support line on an uptrend okay so let's take a look at some examples over here okay so look at this chart can you kind of tell me or can you can you find where the bullish pin bars right take a look and I'll show you show you the answers in a while do you see one over here that's a bullish pin okay so question does it appear on an uptrend yes why the 50 moving average is above the 150 moving average right it's an uptrend and it's at the some part of an uptrend because it's being supported by this moving average so this is a powerful pattern after a series of candles coming down you've got this bullish pin bar high chance is going to go up which it did okay you find another one over here that's another bullish pin again does it appear on the on the uptrend yes check so you want it to be on the uptrend and it should be at a certain curve support level in this case it is testing the 20 moving average support and the 50 moving average support so you could do a buy once you see this bullish candle boom it goes up can you see that now what's the psychology behind why does it work not all the time but often here's a psychology now let's look once again at a bullish pin bar you've got a small body and a long lower shadow okay now it doesn't matter the color candle it could be green it could be red black blue purple it doesn't matter the shape is what matters okay now here's a psychology behind it what happens what this candle is telling you is that on this day the price opened here or here doesn't matter right and during the day the Bears push the price down going down going down going down going down going down right so everyone thinks the price is going to go down right but the Bulls start to push the price back up the boost push it up push it up push it up push it up push up and by the end of the day it closes way above its lows what is that it tells you that the Bulls were able to gain control of the star and close the price higher so the boost to control so because the boost to control of this stock is a high probability the price will reverse up the next day again it must appear ideally on an uptrend at a subpar level for it to be more reliable okay great now here's the opposite of a bullish pin bar the bearish pinbar so the bearish pin is the opposite of the bullish pin so in this case same thing with a small body it's going to have a small body or no body at all where the open and close are the same price but they all have very long upper shadows right okay see this long upper shadow that and what is considered long the upper shadow must make up two-thirds of the range of the entire candle then is a bearish pinbar so and again you must appear at the right location okay ideally you want to see a series of candles going up and then you see the bearish pinbar one of the four of them and then you anticipate you will come back down again again when is it the most reliable is the most reliable when it appears on a downtrend okay so the trend has to be done and it should appear at the top of the downtrend when it is hitting some kind of resistance right like a resistance line or a moving average where the upper shadow curve like cuts through the resistance that's a high probability short so let's look at some charts and again before there let me talk about the psychology behind it why does it kind of work okay think about this way on a particular day the price opens here or here doesn't matter so again like the bullish pin the color doesn't matter it can be green white red or black okay now during the day the Bulls push the price ups going up is going out is going up right foolish foolish bullies right going up going up but halfway during the day the best take control and push the prices down and by the end of the day it has closed much lower than the high that tells you that Bears have taken control of this stock and I'm going to push it down the next day hence it tends to reverse back down okay but again it has to be the right location let's take a look at way appears on a child so this is a chart can you identify the bearish pinbar take a look and see you can identify and you see it there you go let me draw it again so that's a bearish pinbar okay so you can see that it has appeared okay on a downtrend so this is a downtrend as you can see right because the 50 moving average below the 115 okay is a downtrend and is appearing at a resistance level which is the 50 moving average right so after that you can take a bet is going to go down okay so now you understand the bullish pin bar and the bearish pinbar that's my first favorite candlestick pattern if I want the most powerful ones I use most of the time right the second one we're going to look at I call tweezer bottoms and tweezer tops now don't worry about the names the names are not important what's important is when you look at them you have to understand what you represent are they bullish or bearish reversal patterns now tweezer bottoms as a name suggests tend to appear at the bottom of a trend right so what you see is you see candles coming down and then you see these two and then we anticipate a reversal going up okay now how do you identify these okay so tweezer bottoms are basically you see a bearish candle okay with a pretty large body and small up and lower shadows okay and then after this you see an identical looking candle that's the opposite color so the bearish candle is followed by a bullish candle right and this is a reversal pattern now why does this work now the reason is because a bearish candle plus a bullish candle the same size equals to a bullish pin bar that's right in fact I call this a synthetic bully Finbarr syntactic okay now let me explain how this works let me repeat see you have a bearish candle okay so this is a bearish okay I thought let me let me draw it again right so you have a bearish candle over there like that and then you have got a bullish candle okay now if you were to combine these two together what you get let me explain okay so what happens is that when you look at a bearish candle it opens here and closes here is that correct good so it opens here it opens here so that's my opening price okay that's my opening price now it closes here correct now where does the bullish candle open it opens here and it closes here so if I combine these two candlesticks together that means it opens here right and it closes here so this Plus this equals to this where the open and the close are the same price alright and the high is here and the law is here so when you see these two what you're really looking at is you're looking at this right so is the same thing hence it tends to reverse back up but once again it must appear in the right location it should be appear on an uptrend ideally and at a support level on the uptrend now when you look at these things called tweezer tops is the opposite right so this is normally found at the top of a trend so again you see the candles going up and you see these two at a resistance level okay on the resistance and the overall trend is down so the small trend is up but the big trend is down that's what I mean okay and then you can anticipate it's going to go down why because what do these two represent again it represents that this is the open right is open here so opens here right then it closes here then it opens here and it closes here so we combine these two it means it opens here and closes here which means the open and the close are the same price so that's one line that's the high represented by the long upper shadow and that's the law so once again these two equals to a bearish pinbar got it that's how it works okay so let's look at a chart and can you identify where the tweezer bottoms or the tweezer tops can you see there you go right over here okay so again this is a P in the right context in the right location yes because is it on an uptrend yes it's on an uptrend why because you can see that the 50 okay over here is still sloping up the 150 stopping and although the 50s below the 150 but they are both still stopping up so it's still considered an uptrend okay still concern uptrend and the price it's not below the 200 moving average inside it is testing the 200 moving average and the 200 moving average the red line is still sloping up so it's a confirmed uptrend so it's on a medium long-term uptrend but it's on a short-term downtrend here the series of candles going down and you see this pattern which is equals to this bullish pin right and is at a support level beautiful you can buy and take the trade all the way up let's move on to the third candlestick pattern now this one is one of my favorites and I don't think many people teach this or you can read this in many places right so it's a secret okay but it's really powerful this candlestick pattern is called the one white soldier for bullish and the one black rule for bearish okay so let me explain the one white soldier this green candle you see here or this bullish candle of course it could be white in the costume okay this is a one white soldier how does it qualify okay a one white soldier is a bullish candle that opens above the close of the previous day's bearish candle so what this means is that this can only be a one light soldier if the previous this candle is bearish so this must be a bearish candle it is a bullish candle this can be a white one white soldier okay so it's gonna be a bearish candle now this bullish candle must open right this door open right is the opening price must open above the close of the previous day's candle so this is the open of the bearish candle this is the close so what is saying is that it must open above the close of the previous day's bearish candle so check next this bullish candle must close above the open of the previous day's bearish candle so it must close above the open of the previous day's bearish candle okay so this makes a one white soldier now some people may say hey can it have shadows yeah sure of course can shadows here shadows here shadows here shadows here no worries yeah but I you won this law of this one right soldier to be higher than the law of the previous days bearish candle okay and again ideally you want the high to be higher than the previous bearish candles high as well okay so higher highs and higher lows so this is a one light soldier and again when you see this it's a very powerful pattern that the price could go up especially if you see a series of down candles and you see this pattern you look to go long but again you must be found in the right context in the right location you should be found on an uptrend ideally on an uptrend and at a certain support level so you should be on a sudden moving average or support level got it okay next let's get one black crow the one that crow is the opposite so what that crow is you're looking at a series of candles going up and you see this one one black crow pattern which is this guy and you look to go short okay now what's a one black crow a one black crow is a bearish candle this one that opens below the clause of the previous day's bullish candle so for this year one white sari for this to be a one black crow the previous day has to be has to be a bullish candle alright so this has to be a bullish candle has to be this a bearish candle then this cannot be a one black crow okay so this bearish candle must open so that's the open here and that's a closed right so it must open below the close of the previous day's bullish candle so this bullish candle opens here and closes here right so the open must be lower than the close of this bullish candle check next the bearish candle must close there's a close below the open of the free bullish candle so this close must be lower than this open okay hence you have got this pattern over here so again you can have shadows like that you can share the shadows no problem okay shadows ah but again you should make a lower lows ideally and lower all other lower highs and lower lows okay so once you've got this we can take a shot so ideally again this pattern should be found at a resistance level okay and ideally I'll do it so maybe on a short term uptrend over there but the overall trend should be going down for it to be more reliable so let's take a look at this chart okay can you find the one white soldier take a minute pause the video find it and I'll show you where it is did you find it there there's your one white soldier can you see that okay why does the previous candle is bearish that's the first condition previous has to be bearish okay what else alright it must open above the close of the previous day's candle a must close above the open of the Pyrrhus this candle again price making higher highs higher lows perfect perfect combination okay now next thing is in the right location is it on an uptrend yes the 50s above the 150 and is a support level is being supported by the 50 boom we can go along and take a trip going up okay so that's one over there you find another one is there another one it's the other one no I currently find another one okay now you may say hey could this be a one right soldier yeah because it's a bearish candle and followed by a one white soldier over there so yes this is a one white soldier it's a one night soldier over here but would you have taken the trade no why because when you see a one white soldier you put a buy order five cents at birth and the stop loss can be here so the next day it didn't go above this high this would not have got got the trigger so you not enter the trade by in this case you put a buy order five cents above the high of this candle and the stop-loss five cents below the swing low over here and the next day you got trigger and you would have been in the trade very nicely okay now you can argue that this is also a one right soldier okay now once again you put a buy order here stop-loss here the next day it never got trigger all right so this is the only one they got trigger the rest will want my soldiers that they don't get triggered you would not have taken the trade anyway okay now how about this one can you find the one black crow one black crow again pause the video see we can find it right okay you find the one black crow there's your one black crow why because the previous this candle was bullish okay and this one black crow it opens below the close of the previous candle and closes below the open of the previous kind of candle right he makes a lower high and a lower low who is a one black crow so next is it on a downtrend yes 50 below 150 on a downtrend is it at a resistance level yes it's at a resistance which is the 50 moving average so when you see that you could put a sell order here five cents below the low of this candle can use a sell stop limit order your stop-loss could be here which is a buy stop order that next day gets triggered and boom you're making money going down okay so there's a one black crow can you find another one black crow this is another one black crow right because the previous this candle was bullish and this guy opens again below the close and closes and closes below the open yeah and but I wouldn't have taken this trade because by the time I sell over here and my stop-loss is here the one are maybe a bit big so may not be a nice risk to return ratio but it's a one black crow nonetheless okay 10 P speaking now let's look at the next pattern which is the morning star in the evening star so the morning star is a bullish reversal pattern and again it happens after series of down candles so a morning star consists of tree candles in a specific combination first candle number one is a big bearish candle now following the big bearish candle you wanna see a small candle now this candle can be bullish or bearish it doesn't matter but you want it to be a small candle now let me say how small is small well small is in relation to the other candles so it's kind of relative yeah and it's best if this candle has a small body with upper and lower shadows that are more or less the same length now that's ideal it's not a mass but it's ideal because what we wanna see is we wanna see indecision like I'm not sure where to go see when it's a long bearish candle the markets bearish we're gonna go down right and then suddenly the market goes well I'm not sure now okay so you want it to become like indecision candle okay uh and what's important is that this candle do should be a gap down from candle one I want is a gap down mean so if you look at a bearish candle it opens here over here at the top the body right and it closes over here right so this is a closing price say this is you know five dollars okay now the next day if it opens at five dollars there's no gap but if the next day it opens at say four dollars there's a gap between the previous day's close and the current is open there's a gap of a dollar so you wanna see a gap down and you want to see a again a small indecision candle okay and that's candle too and after this indecision candle the next day you want to see a gap up so again for example this could be a bearish candle for example so it opens there it closes at say three dollars for example but the next day on day three it opens at you know five fifty for example it opens here so again that's a gap all right and we want this candle tree to be a bullish candle that closes at least more than 50% of this bearish candle so imagine if it closes here will be exactly fifty percent right of the cat of the bearish candles range okay by this case it closes over here which is kind of like 80 percent so that's really good okay so when you have this combination it's a red powerful reversal pattern and you can look to go along by placing a buy stop limit order maybe five cents above this candle right by or over here and a stoploss five cents below the low of this candle so that's what stop-loss over there and if the next day it continues going up your order will get triggered and you be in the tree so what we call this a morning star pattern okay so once again when does it when does it have the highest probability of success when it's found at a sub hot level okay and ideally it should be on an uptrend okay which be on an on an uptrend so it's following a trend by the temporary dip on the uptrend so the office of the morning star is the evening star and the evening star is a bearish reversal pattern so in this case we have got a series of candles going up okay and you have got again this tree candle combination that starts with candle one now this time is the opposite you have got a big bullish candle called candle one that opens here and closes there so what is telling you is that the market is bullish is pushing the stock up you want is good let's go up but what happens is the next day it gets up again it's a gap and you have got again that indecision small candle like okay now I'm so bullish Vietnam here I'm not sure you want to go higher or should I go down I'm not sure this indecision and this candle can again be bullish or bearish doesn't matter but you want it to be small relative to the previous candles that are big that's Kendall number two and Kendall Demitri would be a gap down and this time is a bearish candle where now the market says you know what I've decided I'm going down boom so that's a reversal down so once you see this pattern you can put a sell stop limit order could be five cents below this candle any stop-loss buy stop order five cents above the candle so there's some buy that's a sell stop limit order and it's and buy which is which is your stop-loss and the next day if it gets lower it gets triggered and you take the trade all the way down so that's how this pattern works again ideally highest probability is that when this appears on a downtrend during a temporary rarely on the downtrend and it's fighting some kind of resistance over here so it's all got to use these candlesticks in combination with support and resistance lines and not by themselves in isolation so let's take a look at some examples over here okay so again this is an uptrend or a 50s above the 150 like the 20s about the 40 so it's in short-term and medium-term uptrend but what you have is your temporary a series of candles going down a temporary dip and then you have got this Morningstar over here right so you have got this bearish candle usually I prefer the bearish candle to be you know like has have a bigger body but that's fine as well no problem and then we have got this small little candle which I mentioned all right after a little gap down over here so market wants to go down but now it's undecided and the next day it says okay I've decided going back up again right um so you've got a white bullish candle over here that closes more than 50 percent above the range of this candle over there so and it closes above the 50 moving average which is a bullish signal and once you have that you could actually put your buyout over here stop-loss over there and the next day baguettes high up gets triggered and you're in the trade okay so that's how it goes and where it lands no one knows okay ah do we find one over here now this is a bit of a different case okay now first of all see if you can spot the morning star pattern in spot the morning star pattern motifs that means bullish going up okay okay if you look closely you see it here there that's your morning star these three candles over here okay so first you have your candle one which is the big bad bearish candle okay you have got your indecision candle like I dunno what I'm going right is a slight gap down and you got a bullish candle that now closes up 50% of these guys range over there all right okay so series of candles going down and then we have got this tree candle combination you can put a buy order there five cents above stop-loss five cents below next a gets triggered take the trade up okay now you may be saying to me Adam didn't you say that it must be ID on an uptrend right you said highest probabilities must be on an actor isn't it a downtrend right below the 50 moving average blah blah blah yes this is called a counter trend trade so you can use bullish candles on a counter trend trade as well that means to say you you take a bullish long entry even though the downtrend but it is oversold on a downtrend or the soul and what do you mean by Oversoul now this is more taught during the W a professional course but you share a bit over here over salt basically means that it's on a downtrend but it's at the bottom of the downtrend and we're expecting a mean reversion back up now of course when it goes up it may not last it could still continue the downtrend right because it's part of a bigger downtrend or we're taking the short term bounce back to the mean okay back to mean and how do we know it's safe to take well one of the things I use is I use the Bollinger Bands Casey this thing called a Bollinger Bands the Bollinger Bands it's in my video on technical indicators actually so when you have the price coming down very strongly on a downtrend right and it kind of like hits the lower Bollinger Bands and at the same time you can see the stochastics are oversold this tells you that the price is over so that means it's ready for it bounce back up and the Bollinger Bands the lower bands act like a support and the upper bears Epica resistance right can you see the resistance or that right so it's the case of support over here so indeed this Morningstar is finding a support over here when it is oversold so you can actually buy to take a trade now I have to say this is a bit more risky than trend-following trend-following means you buy on the uptrend you follow the trend this is you're buying on the downtrend but it's because you're ticking what we call it count the trend mean reversion back to the mean so it's a bit more risky but we do it as professional traders yeah but if you are not as experienced but you may want to skip this but in particular example okay so here's a here's an evening star can you find an evening star over here there's an evening star okay so that's candle one which is bullish you get if the indecision candle I do the way I'm going and then you got a third bearish candle I'm going down baby right okay good goes down so again notice that it's appearing at a resistance which is denoted by again by this upper Bollinger Bands again you can watch the video on technical indicators if you're not too sure about that so it is finding resistance over there and again notice I'm shorting on the uptrend so this is a counter trend trade we're on a short you know make some money is is going down and get out before the trend continues so I can I can only short on an uptrend it is at the very top it is overbought and I know it's overbought because the stochastic which is an oscillator it's right here above 80 level which is overbought so I'm the high chance is going to come down right so this is again it's a counter trend trade the last pattern we are going to look at is a very common pattern it's called the engulfing pattern so first you have got the bullish engulfing which is a bullish pattern so candles come down and you see a small bearish candle again how small is small right well small is relative to the next guy okay which is big yeah so we see a small bearish candle and the next day we see a huge bullish candle that totally coughs or is bigger than this entire candle right it's like this guy's so let this guy up you think you're bearish I'm more bullish than you I'm going to take you over right so once you got this guy you can see a possible reversal again ideally happens at a support level support level on an uptrend or it could be on a downtrend but it's over so right it could be you're using capitulation strategy or as a parabolic long strategy now the large bullish candle its body by the body should engulf the body of the bearish candle now if you if you read different text books go to different websites there's a slight of a different that there are different definitions like there's some people that say that well this this candles body has to engulf the entire range of the candle that means the two shadows have to be inside the body as well that's a really strict definition for me and I'm not that strict as long as this body and GAO's this body to meet as a bullish engulfing okay so the bearish engulfing is the opposite you have a series of up candles and then you've got a small bullish candle the body is over there and the next day you have a huge bearish candle that swallows engulfs the entire body of this candle right if you're more strict you want to say it engulfs the entire range okay and then it's going to go down you want some kind of resistance over there okay and ideally it's part of a bigger down trim or it could be on an uptrend but it's overbought at it at the top okay heating the Bollinger Bands and the stochastic SAR overbought that can also work there's a counter trend trade again so here's an example can you find the bullish engulfing I'll give you a minute pause the video if you want to take a look okay so did you find this one it's a bullish engulfing and that's a beautiful one because why it's on an uptrend 50s above the 150 27 to 40 so uptrend making a temporary dip on the uptrend and is hitting the 50 moving average which XS a support beautiful put a buy order by order their stop-loss there so that's my entry by that's my stop-loss next day gets triggered boom I'm in the trade beautiful well um then that's a bullish engulfing you see that although this is not as powerful well it's powerful but it's there's no clear support there's no clear simple right so like I said it's not just the candlestick is the location that's important so I like a support there but it is on an uptrend okay so you could take it but I prefer some kind of support like a 50 moving average supported supporting like this comes supportable there's some kind of support over there they'll be ideal right um can you see a one white soldier that's a one white soldier petha can you see that right remember one white soldier go revise that so that could be an indication is going higher where else you find one white soldiers anymore one white soldiers can't find anymore but this is a one black crow one black crow goes down a bit but again um although is one black crow right I wouldn't shot it there why because it's neither here or there I won't shot it because it's on an uptrend so I do not want a shot on an uptrend I'm going against the trend but I could if yours at a top of the uptrend right if it's overbought but in this case it's not overbought yeah I mean I did put in the Bollinger Bands and input the stochastics I could but from experience I can see it's not really overbought overbought means the price goes up did it's like parabolic all the way up here and you know you know he's gonna crash right over here you see a one crow or a an evening star you know and stochastics is overbought above 80 and you got is above the or at the upper Bollinger Band you could do a shot as well okay all right so to summarize it's important know when to use candlesticks candlestick patterns must always be analyzed in the context of the price trend so don't just go along and you see a bullish candlestick pattern please go along only when the bullish candlestick patterns appears at the support of an uptrend so you want to see the overall trend is up higher highs higher lows 50 moving average above 150 okay and you see the bullish candlestick pattern maybe somewhere here somewhere here where it is at a support level so the support could be a trendline it could be a moving average coupe they get high probability or you could also go long on a bullish candlestick pattern if is found at the bottom of a downtrend so it's a downtrend over here right downtrend over here like that and then it goes down and you're at the the bottom of the downtrend and you see this bullish pattern over there you can go long and you're taking a counter trend trade because you're you're buying against the trend hoping to buy and then go up a bit and exit here before it collapses again so you're just taking this quick profit over here now how do you know is at the bottom it's going to bounce well we look at things like divergence for example at this point if you have a bullish divergence pattern a bullish reversal pattern bullish divergence reversal pattern here you could take it all right or it could be a capitulation strategy right where the the Williams percentage are sure that's oversold or it's uh you know the stochastic is over so below 20 I said a lower Bollinger Bands yeah so this is taut and more of the professional traders level uh if you're not comfortable going against the trend is fine at this time okay by just label it exists that's what we do as professionals okay and finally we go short when we see a bearish candlestick pattern only if it appears at the resistance of a downtrend so again this is following the trend is it overall trend is going down like that maybe 50 below the 150 20 below the 40 confirmed downtrend and you see the bearish candlestick pattern here at the temporary rally and it's hitting some kind of resistance like a moving average or a trendline you can do a short and right the trend down okay or you could show a bearish candlestick pattern at the top of an uptrend so it's an uptrend like that and at the top you see this bearish pattern and you could shot it but again again you're selling against the trend is more risky only done if you've got a lot experienced and you only want to do it if it is over bought okay overbought and again there are ways to tell we use Bollinger Bands to see there's a resistance stochastics above a d so on and so forth okay and you shot it all the way down now just be aware of something when you see a trend like this like that very nice uptrend and you see a bearish pattern over here don't shot it because again you're shorting against the trend and normally trends that move 45 degrees up tend to continue alright so even if it goes on a bit you're going to get killed later on what we want to see is we see a 45 degree angle like that and then suddenly the trend goes 90 degrees up parabolic usually when that happens it is not sustainable it is overbought and that's when it appears that are bearish method Shawn the guide all the way down back to the trendline this takes experience again so again don't do this unless you feel that you're ready for it yeah okay got any questions please send me an email please let me know how I can help and with that I conclude this lesson on candlestick patterns

Channel: Adam Khoo

Views: 2,034,838

Keywords: adam khoo, adamkhoowealth1, wealthacademySG, stock trading, stock investing, technical analysis, ETFs, exchange traded funds, CFDs, wealth academy, AKLTG, candlestick, stock trading strategies, candlestick patterns, trading psychology

Id: hoGkfzJeR6A

Length: 50min 29sec (3029 seconds)

Published: Mon Oct 24 2016