RELIABILITY:Moderate
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A long black day occurs
What it Means:Occurring in a downtrend, the Engulfing depicts an opening at a new low, followed by a high buy-in that closes at or above the previous day's open. This signifies that the downtrend has lost momentum and the bulls may be gaining strength. The Engulfing indicator is also the first two days of the Three O... Continue reading ...
RELIABILITY: Low / Moderate
How to identify it:
· Small real body at the upper end of the trading range · Lower shadow at least twice as long as the real body · No (or almost no) upper shadow There is a sharp sell off after the market opens during a downtrend. However, by the end of the trading day, the market closes at or near its high for the day. This signifies a weakening of the previous bearish sentiment, especially if the real body is white (...
PATTERN: Reversal
· First day is a long black day · Second day is a doji that gaps in the direction of the previous trend · The shadows of the doji should not be long In a downtrend, the market bolsters the bears with a long black day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario generally shows the potential for a rally, as many positions ha...