2017-03-19 (Sunday)

Reversal Signals are the on-chart candlestick indicator signaling turning point of downtrend will make move to uptrend and the vice-versa. The main importance of understanding reversal signals pattern is to make a final decision on whether 'to Buy' or whether 'to Sell'.

This is my compilation from reading various articles on forex subject and they worked for me, taking profit during my trading course on my real account.

The seven (7) reversal signals

1.) Doji
2.) Harami
3.) Engulfing Bullish/Bearish
4.) Tweezer/Marubozu
5.) Morning Star
6.) Evening Star
7.) Hammer and Hanging man

Pictorial Learning

1.) Doji

There are five (5) types of Doji;

Doji Pattern I

Doji Pattern II

Doji Pattern III

Dragon Fly Doji

Graveyard Stone Doji

Any formation of Doji candlesticks, it does not mean that a final decision has to be made at that time (on the spot), but, must wait for next sideway candlestick formed whether bullish or bearish. Once bullish, make an entry for 'Buy' and once bearish, make an entry for 'Sell'.

2.) Harami

Both candlesticks forming a unique shape that looks like a pregnant woman.

Harami candlestick is a reversal signal for a forex trader to decide making entry for buy or sell

If the sideway formed bearish, make an entry for 'Sell'. If the sideway formed bullish, make an entry for 'Buy'.

3.) Engulfing Bullish/Bearish

A widely used Japanese candlestick pattern is the engulfing bar. It can either be bullish (price rising) or bearish (price falling)

Image Credit to Trader Rach

So, the sideway confirmation candlestick formation influences the decision making for; If the sideway formed bearish, make an entry for 'Sell'. If the sideway formed bullish, make an entry for 'Buy'.

4.) Tweezer/Marubozu

A Marubozu type of candlestick has no wicks at either ends of the candlestick, representing a strong buying or selling pressure.

Image Credit to EA-Coder

So, Marubozu signifying for what?

A bearish Marubozu has also a long body with no lower and upper wicks. The open price was equal to the high price and the close price was equal to low price, which means sellers are fully in control of the market during the entire trading period

Image Credit to EA-Coder

5.) Morning Star

Morning star candlestick normally formed during turning point from downtrend to uptrend. At this point, a trader must get ready to making an entry for 'Buy'.

The first part of a Morning Star reversal pattern is a large bearish red candle. On the first day, bears are definitely in charge, usually making new lows

Image Credit to the Online Trading Concept

6.) Evening Star

Evening star candlestick normally formed during turning point from uptrend to downtrend. At this point, a trader must get ready to making an entry for 'Sell'.

The first part of an Evening Star reversal pattern is a large bullish green candle. On the first day, bulls are definitely in charge, usually new highs were made

Image Credit to the Online Trading Concept

7.) Hammer and Hanging man

Hammer signaling for bullish from downtrend and Hanging man signaling for bearish from uptrend. Once Hammer candlestick formed, a forex trader must get ready for 'Buy'. Once Hanging man candlestick formed, a forex trader must get ready for 'Sell'.

Sometimes, you'll see an inverted Hammer candlestick formed, which is, normally formed at the peak of uptrend. So, it signifies ready for 'Sell'

The Hanging Man is a bearish reversal pattern that can also mark a top or resistance level. Forming after an advance, a Hanging Man signals that selling pressure is starting to increase

Image Credit to the Online Trading Concept

Otai Selangor Club

Reversal Signals

The seven (7) reversal signals

Pictorial Learning

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