Hey Guys What Is The Best Candlestick Pattern In Forex?
Candle stick pattern are lagging indicators and should be confirmed with the other tools like fib and fork. So far most of the time I have seen many patterns appearing but 95% of them appear to be fake when observed on next 2 - 3 candles.
There no best pattern. It’s what you understand the most and what’s work for you. Keep experimenting you will find the right one.
OK, Which Pattern Works Best For You From Your Experience?
I’ve never read that anyone has done any sort of systematic and objective researcgh into this.
Thomas Bulkowski did this in stocks using D1 charts, but the stock market is obviously very different from the forex market in terms of open and closed sessions - so many decent patterns depend on gaps from close to open, which is not a feature in forex. But his work is helpful in defining patterns and demonstrating a testing set-up.
Trading is basically about working with context. And speaking of candlesticks, pin bars seem very popular to me. It works for reversal.
I dont think there is a ‘best’ candle sticks provide information and it is relative to the circumstances at the time. For istance because there is a large bearish wick doesnt mean price is going to turn bearish. You have to look at structure, at the recent range, at the time frame your trading, whether there is a pull on liquidity on a higher time frame. These all frame your trade candle sticks at best are the tip of the ice berg when making a trading decision.
They are OK but as with so many things, its not always what tools you have you but how you use them.
Some traders will seek higher probability trade opportunities from pin bars, so some use tactics such as
confirmation of the pattern, or a reversal from a pull-back into the trend rather than a reversal of the trend.
We’re all different, its the end result that counts.
there is no such thing as best pattern, you study those patterns so you can anticipate market movement if it match that one particular pattern and make appropriate trading order.There are indeed more common patterns that appear on the chart but definitely no single best (you can read about few popular one here).
I don’t want to say that.
Trading decisions cannot be made in the market by relying only on the pin bar. You have to trade according to the type of market or momentum.
The pin bar only increases the probability.
Agree, i barely look for candlestick patterns, though I consider if I found the one on chart which is in my knowledge. Reality is that its tough to recall each one.
The best candlestick pattern in Forex trading is the engulfing pattern. This pattern is formed when the candle of one color completely engulfs the other colour candle. It is considered to be a very reliable signal that the trend is about to change. Traders can use the engulfing pattern in all timeframes.
I don’t agree that engulfing patterns are so useful in forex.
The classic engulfing pattern is defined by the body of the second candle engulfing the body of the first - not the whole candle. This means the open of the second candle must be different from the close of the first, and as forex does not have an over-night gap in trading (apart from the weekends), this means that its rare to get a classic engulfing pattern in forex on D1 charts and impossible on an intra-day chart.
Outside bars can be useful pointers, especially where the close of the outside bar is above or below the entire range of the first bar.
Patterns like engulfing candles can be used as a signal to enter a trade. But to increase your probabilities you should use them in combination with other things such as support/resistance, and the most important: price structure.
For example, price is in an overall downtrend, but there’s a pullback up to a resistance zone, then a bearish engulfing candle or a pin bar forms.
That’s when you have the best chance of success.
Every pattern you can recognize with a great degree of certainty is a good pattern.
That said, my favourite are definitely pinbars at significant support or resistance levels. Those tend to work like a charm.
The engulfing pattern is the best candlestick pattern for Forex trading. When one color’s candle entirely engulfs the other color’s candle, this pattern is created. It is regarded as a very reliable indicator that the trend is likely to shift. The engulfing pattern is applicable to all timeframes.
I don’t there are best candlestick patterns, there are only the most useful ones. For example, three line strikes, it means that if we have a three bullish bars in a row, where each of them is lower than the previouse one, so we can open a long position, because there will be a huge strike upwards. Another inetresting and useful pattern is an evening star. The bearish evening star reversal pattern starts with a tall green bar that carries an uptrend to a new high. The market gaps higher on the next bar, but fresh buyers fail to appear, yielding a narrow range candlestick.
One pattern I watch out for on D1 charts is a warning signal or even exit signal. Some people call it an outside key reversal: its an outside bar which as a bearish signal appears in a strong uptrend with the close lower than the preceding bar’s low: its a bullish signal if it prints in a downtrend but the close is higher than the preceding bar’s high.
I don’t use them as entry signals as I like to only enter a trend when it is established, I don’t take reversal signals. But that’s personal choice and risk tolerance, it might be a valuable tactic.
What do you mean the best? Those which always work? None of them. Analyzing sheer chart patterns is not a good idea, really. I mean that they can be wrong pretty frequently. More than that, even indicators can be wrong when they are used solely. That is why, you trading decisions should be based on the combination of different indicators and ideas in order to make the whole trading strategy well balanced. To put it in a more coherent way, an indicator can be mistaken, but two indicators have less chances to be mistaken, three indicators even less. So, chart analysis should accompanied by some other factors.
Another candlestick pattern which is interesting if not highly useful I just noticed on the weekly time-frame.
Where the body - open to close only - of the weekly candlestick is pierced by the 50EMA, price usually continues in the direction of that candlestick for at least the following week. So if price rises from the weekly open below the 50EMA and closes higher than the 50EMA, then price will normally close higher than the weekly open in the following week. Vice versa if price opens above the 50EMA and closes below it. My initial estimate for this performance across the 28 major pairs over 3mths is 71%.
I think this justifies putting a bit more research work into this characteristic.