Technical Analysis: K-Line and Candlestick Chart Guide (Reversal Edition) - Top Cryptocurrency Exchange Platforms

I have read a book on Japanese candlestick chart (commonly known as K-line) technical analysis,

Quite interesting,

Just taking some free time to organize various chart patterns.

Only a visual guide,

No specific case analysis.

Friends in need can take it freely.

This article is about reversal patterns.

Basic composition of candlestick charts

Candlestick = real body + upper shadow + lower shadow; the body describes the opening and closing prices,

The upper and lower shadows respectively depict the highest and lowest prices during the trading session.

A very small body is called a spinning top (indicating bullish or bearish indecision),

In extreme cases, it becomes a doji.

Reversal patterns

Reversal 1. Hammer and Hanging Man

Judgment criteria: (1) short real body,

Color doesn’t matter (2) no upper shadow or very short,

Lower shadow at least twice the height of the real body

Stronger signals: bullish hammer,

Bearish hanging man,

Longer lower shadow

Reversal 2. Engulfing (Wrap) pattern

Judgment criteria: (1) two candles,

Opposite colors (2) second candle’s real body covers the first candle’s real body,

No need for shadows to be engulfed

Stronger signals: first real body smaller,

Second real body larger,

Previous long-term trend,

Second candle with high trading volume,

Multiple engulfing candles in a row

Reversal 3. Dark Cloud Cover pattern (Dark Cloud Line)

Judgment criteria: (1) second day’s opening price higher than the first day’s high (2) second day’s close below the midpoint of the first day’s real body

Stronger signals: deeper penetration below the previous real body,

Occurs during a long-term upward trend,

Second day’s opening price above a key resistance level,

High trading volume at the opening of the second day (explosive)

Reversal 4. Piercing pattern (Cutting Back Line)

Judgment criteria: (1) second day’s opening price below the first day’s low (2) second day’s close above the midpoint of the first day’s real body

Stronger signals: deeper upward penetration,

Occurs during a long-term downward trend,

Second day’s opening below a key support level,

High trading volume at the opening of the second day

Note: Piercing pattern requires caution,

Upward penetration must be deep enough,

Otherwise, it signals a bearish trend (wait to enter, cut in, or insert)

Reversal 5. Shooting Star

Small real body,

And the real body forms a gap with the previous day’s real body; a doji star is a doji star; the color of the star’s real body doesn’t matter

Judgment criteria: (1) price gaps between the first and second real bodies (2) second and third real bodies may or may not gap (3) third real body deeply penetrates the first real body

Stronger signals: the second (star) and both the first and third real bodies have gaps,

The third day’s close penetrates the first real body more deeply,

The first day’s volume is light, and the third day’s volume is heavy

Abandoned baby pattern: doji star with shadows forming gaps (note: not just real body gaps)

Reversal 6. Shooting Star and Inverted Hammer

Judgment criteria: (1) short real body,

Color doesn’t matter (2) no lower shadow or very short,

Upper shadow at least twice the height of the real body

Note: Inverted hammer needs to wait for the next day’s bullish confirmation (e.g., gap up at open with an inverted hammer’s real body)

Reversal 7. Morning Star pattern

Judgment criteria: (1) small real body contained within the previous long real body (2) the two real bodies may have different colors

Stronger signals: larger gap between the two real bodies,

The latter real body smaller

Reversal 8. Flat Top pattern

Judgment criteria: (1) two candles with the same high or low points (2) can be combined with other candlestick patterns

Reversal 9. Belt Hold pattern

Judgment criteria: (1) long real body (2) opening price at the day’s low for bullish (or) at the high for bearish ( signals

Stronger signals: longer real body

Reversal 10. Crow Pattern

Upward gap with two crows: )1( second and third candles gap from the first long white candle )2( ideally, the third candle contains the second candle

Three crows: )1( three candles with closing prices at or near the lowest point )2( each candle’s open within the previous candle )3( ideally, the first candle’s real body is below the high of the previous white candle

Reversal 11. Counterattack (Date) pattern

Judgment criteria: )1( two candles with opposite colors )2( same closing price

Stronger signals: the second day’s open lower (bullish counterattack) or higher (bearish counterattack)

Reversal 12. Round and Tower patterns

Round: )1( convex arc shape )2( first small real body appears, then gaps up or down

Tower: )1( several long candles followed by a brief pause )2( then a long candle appears, resembling a tall tower on both sides

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