Japanese candlestick patterns provide high-quality trade signals to retail traders. Thousands of investors in Australia have changed their lives just by learning about the Japanese candlestick patterns. New traders often get frustrated as they have to learn different formations of complex candlestick patterns. In the early stage, we recommend retail traders only learn about the reliable candlestick patterns.

Though there are tons of candlestick patterns, we are going to emphasize four powerful patterns. These are –

• Pin bar pattern

• Engulfing pattern

• Morning star pattern

• Evening star pattern

Pin bar pattern

The pin bar is the most frequently used patterns in the Forex market. It is formed from a single candlestick which has a very small body. The wick or shadow of the candle will be 3-4 times the length of the body. Formation of the pin bar at the major support or resistance level provides us with powerful trade setups to take both short and long trades.

Never think the pin bar pattern is 100% accurate. If the price hits the stop loss, the pin bar is most likely to work as a continuation pattern. While using the pin bar, be very careful with the risk exposure so that you don’t have to lose a big sum of money. Always look for the potential trade signals in the higher time frame as it will provide you with better trading opportunities.

Engulfing pattern

The engulfing pattern is formed with the combination of two candlesticks. In a bullish engulfing pattern, the first candle is a part of the existing bearish trend. The second candle will engulf the first candle and this pattern must be formed at the demand zone. For the bearish engulfing pattern, the first candle will be a part of the uptrend. The second candle will engulf the first candle and form the bearish engulfing pattern.

To become skilled at using double candlestick patterns, traders are asked to use the demo account at the initial stage. But make sure you learn things on a professional learning platform. Rakuten about the high-end broker Saxo and this will aid you to make better decisions. Always learn things in a premium trading environment so that you don’t have to deal with any technical glitches.

Morning star pattern

The morning star pattern is formed from a combination of three candles. Thousands of professionals in the Australian trading community prefer to trade with the morning star pattern as it provides quality trade signals. The first candle will be part of the bearish candle and the second candle will be a doji or bullish pin bar. Finally, at the third candle, we will spot a strong bullish candle.

The morning star pattern generates better results when the trades are taken in a higher time frame. Lower time frame trade signals formed by the Japanese candlestick pattern are not that reliable. So, try to look for this pattern in the hourly or daily chart only. By choosing the higher time frame, you will also be able …