This is part 2 of the series. This video will teach you some of the best candlestick patterns to profit from the financial markets. These can be used for all types of markets including forex, index trading as well as gold, oil, and other commodities. There are many different candlestick formations and here are just a few. First, we will look at the pin bar. This is a bearish pin bar. Pin bars are one of those well known candlesticks. This is because they are very consistent. We can see the body here and the wick above. The tail should be atleast two thirds of the length of the candle. The body should be no greater than one third. You will find a bearish pin bar after bullish move in the market. The wick shows a strong surge of sellers coming into the market. This suggests that the bears want to see the market go down to gain control of the price momentum.
A bullish pin bar is the same, but the opposite way and found after a bearish move. It suggests that the bulls want to see the market rise after taking control of price momentum. These pin bars are practically the same as other reversal candles such as hammers and hanging man. The Marubozu is a candle which is often a good indication of momentum and directionality in the market. The close of the candle is the key aspect of this pattern. The close is right at the top or bottom of the candle's range depending on whether the candle is bullish or bearish. It indicates that either the buyers or sellers are controlling the price action and direction of the market. You will often find these in trending markets.
The spinning top is the opposite of the marubozu. The marubozu is indicating conviction, decision, and market direction, the spinning top is doing the opposite. They indicate indecision. The body is small and indicates little movement between open and close. The wicks indicate that the buyers and sellers were active during the time period.
An engulfing candle is one, which is bigger than the candle which preceded it. It is often used by reveral traders as an indication that a trend will reverse. The engulfing candle engulfs the body of the previous candle. As you can see, the OHLC of the previous candle is completely engulfed by the current candle. In case of a bullish engulfing candle, the close of the current candle is above the previous candle's high. In case of a bearish engulfing candle, the close of the current candle isd below the previous candle's low.