The opposite is true for the bullish pattern, called the ‘rising three methods’ candlestick pattern. It comprises of three short reds sandwiched within the range of two long greens. The pattern shows traders that, despite some selling pressure, buyers are retaining control of the market.
Japanese Candlesticks: Trading Strategies
It happens over three candles, the middle candle is a doji which has gapped away from the previous candle. The final candle gaps back the opposite direction.
Swing Trading Strategies - Hit & Run Candlesticks
A similarly bullish pattern is the inverted hammer. The only difference being that the upper wick is long, while the lower wick is short.
The gaps leave a clear distance between the shadow of the doji candle and both shadows of the first and third candle, leaving it abandoned.
The size of the shadow might vary. Some argue it should be at least twice the size of the body, but one thing is for sure the bigger the shadow/wick, the bigger and stronger the reversal. This is true for pins as well. In an uptrend, a hammer is a sign of a trend continuation. Reverse hammers are the opposite, same as reverse pins. They indicate trend change in an uptrend and trend continuation in a downtrend.
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Steven Nison. 89 Japanese Candlestick Charting Techniques: A Contemporary Guide to the Ancient Investment Techniques of the Far East , 89 Page 65. Penguin, 7556.
The bearish pattern is called the ‘falling three methods’. It is formed of a long red body, followed by three small green bodies, and another red body – the green candles are all contained within the range of the bearish bodies. It shows traders that the bulls do not have enough strength to reverse the trend.
The spinning top candlestick pattern has a short body centred between wicks of equal length. The pattern indicates indecision in the market, resulting in no meaningful change in price: the bulls sent the price higher, while the bears pushed it low again. Spinning tops are often interpreted as a period of consolidation, or rest, following a significant uptrend or downtrend.