Problem with candlestick patterns

Hi everyone!. I’m having so much trouble identifying quality candlestick patterns, specially two candle patterns (name it engulfing, piercing, etc) because when I think they’re formed on the chart, and I confirm them by other indicators, they seem not to produce the effect they’re supposed to do and that happens very often to me. Any suggestions where can I get more specific information about candlestick patterns?
Thanks in advance.

Are you looking for these patterns in a sideways movement? Most patterns that are supposed to signal a reversal should be looked for at significant peaks and valleys. A hammer right in the middle of a sidways line of candles doesn’t have as much weight as one at the top of a peak.

Also, the candle stick patterns hold more weight on higher time frames.

Thanks for the response ThePhoenix. It’s just that after a trend reaches a top/valley I find that these patterns (engulfing, piercing, dark cloud, etc) just stop the trend and it starts to move sideways, and one pattern is formed right after another, for instance, an engulfing pattern is formed and right away a dark cloud appears but none of them seem to work. Does it happen to anyone else or am I doing something wrong?

thank you.

I attach what to me, seems like a long engulfing pattern. It’s a 20 min usd/jpy chart. I didn’t work.

Can you tell me what am I missing??

Thank for your valuable opinions!

Engulfing.bmp (750 KB)

Another example is this evening star formed in a 2 hour usd/cad chart. And again, it didn’t worked. I’m so counfused.

Evening star.bmp (750 KB)

[B]To wrtm_19 :[/B]

Hello there!!

Just popped in from my holidays while I was doing some forex practise testing of the Starc bands. :slight_smile:

I am not normally here at this time of year, I just happened to drop by and will not return formally until February next year.

I see that you have posted previously on my thread so I will take care to answer…

I will answer your concerns in 2 stages…

  1. Give you the correct information for learning.
  2. Answer your specific questions about your 2 candlestick trades.

Here we go…You have a lot of reading to do

  1. Read the following hyperlink ;

Japanese Candlestick Charting Explained

Also the following :


[U]very important[/U]…read and learn the attachment.

  1. Your 2 trades ;

[B]The first pattern[/B], a long engulfing, correctly recognised, is placed on opening Bollinger bands and a mid band that is clearly going down.

You are taking a high risk trading this one.

Now, I cannot see to the right of the chart but it does look like the price action went up after all, that is the engulfer did work.
However, it would have first killed your stop loss in the process!! :smiley:

[U]I do notice that the entry red candle only just passed thro the correct PCI stop loss position.
The loss you would have made would have been very small.[/U]

The patterns do not always work - there are some losses.
With practise and skill, you can weed out the unsuccessful ones.

I notice also that if you look in the second vertical column on your chart, you will see another long engulfing pattern on the lower BB.
This one was a success, and went on to touch the upper BB!! :slight_smile:
In this case the BB were showing signs of closing - this is what you want for engulfers.

[U]Read that attachment - very important!![/U]

[B]The second pattern[/B] is not the best choice.
The are green stars and red stars - the green ones are the best.

Even so, the pattern is properly chosen, a little low on the BB, but all is going in the right direction.
I cannot see to the right of the chart but it again looks like this pattern was a success.
The first entry candle was a green one - no matter - that is a retracement.
These are best traded with my Intermediate and Advanced levels.

[U]A good profit would then have come out of this one.[/U]

Finally, I would like to say that I practice what I preach, that is, I trade my Basic/Intermediate/Advanced levels myself exactly the same as I teach others to do so.

Wishing you every success,
Till February,
Regards, Tymen.

Hi Tymen!!! I’m so glad to hear from you again! And an honor that you respond my question!!!.

As always very helpful. Hope you’re well and read you on february!!

Best Regards!