Investopedia Flashcards
Bearish Engulfing Pattern
A bearish engulfing pattern develops in an uptrend when sellers outnumber buyers
This action is reflected by a long red real body engulfing a small green real body. The pattern indicates that sellers are back in control and that the price could continue to decline
Bullish Engulfing Pattern
An engulfing pattern on the bullish side of the market takes place when buyers outpace sellers
This is reflected in the chart by a long green real body engulfing a small red real body
With bulls having established some control, the price could head higher.
Bearish Evening Star
An evening star is a topping pattern
identified by the last candle in the pattern opening below the previous day’s small real body
–> The small real body can be either red or green
The last candle closes deep into the real body of the candle two days prior
The pattern shows a stalling of the buyers and then the sellers taking control
More selling could develop
Bearish Harami
A bearish harami is a small real body (red) completely inside the previous day’s real body
This is not so much a pattern to act on, but it could be one to watch
The pattern shows indecision on the part of the buyers
If the price continues higher afterward, all may still be well with the uptrend, but a down candle following this pattern indicates a further slide
Bullish Harami
The bullish harami is the opposite of the upside down bearish harami
A downtrend is in play, and a small real body (green) occurs inside the large real body (red) of the previous day
This tells the technician that the trend is pausing
If it is followed by another up day, more upside could be forthcoming
Bearish Harami Cross
A bearish harami cross occurs in an uptrend, where an up candle is followed by a doji—the session where the candlestick has a virtually equal open and close
The doji is within the real body of the prior session
The implications are the same as the bearish harami
–> This is not so much a pattern to act on, but it could be one to watch
–> The pattern shows indecision on the part of the buyers
–> If the price continues higher afterward, all may still be well with the uptrend, but a down candle following this pattern indicates a further slide
Bullish Harami Cross
A bullish harami cross occurs in a downtrend, where a down candle is followed by a doji
The doji is within the real body of the prior session
The implications are the same as the bullish haram
Bullish Rising Three
This pattern starts out with what is called a “long white day.”
Then, on the second, third, and fourth trading sessions, small real bodies move the price lower, but they still stay within the price range of the long white day (day one in the pattern)
The fifth and last day of the pattern is another long white day
Even though the pattern shows us that the price is falling for three straight days, a new low is not seen, and the bull traders prepare for the next move up
Bearish Falling Three
The pattern starts out with a strong down day
This is followed by three small real bodies that make upward progress but stay within the range of the first big down day
The pattern completes when the fifth day makes another large downward move
It shows that sellers are back in control and that the price could head lower
