Hidden Ninja, Part Three: Candlestick Trading
Trading in candlesticks is one of the most useful tools in the hands of a trader. And these are not empty words. Firstly, this method has been around for several hundred years, it has been tested for years and continues to gain popularity. Secondly, it can be used both separately and absolutely with any other way of trading together. Thirdly, it is very easy to master it even for a beginner, as It is visually understandable and simple. The trading system, in whatever form it means, involves an analysis of a group of factors on the basis of which the trader decides which way to place the bet. This may be an analysis of indicators, an analysis of the economic situation in the world, an analysis of the levels of resistance and support. If you remember the main models of Japanese candles, another type of analysis will appear in your arsenal that will perfectly complement any trading system. In this article, I will talk about three-digit trading patterns for candlesticks.
Three-digit candlestick trading patterns
Soldiers and crows
- Type of model: soldiers - bull, crows - bear,
- Signal: soldiers - call, crows - put,
- Features of the model: 3 candles of the same color, closing each of the following above or below the closing of the previous.
Soldiers and crows are considered one of the most powerful patterns in the candlestick trade. Let it not bother you that the models are called black and white, in the original it is customary to mark rising candles in white and lowering candles in black. When we see three candles in a row of the same color with little or no shadows - this is a clear sign of a reversal. An amplifying signal for binary options will be an increase in each of the following bodies, which will show us the growth of a new trend. The model, in my opinion, is very simple and straightforward.
- Model Type: morning star - bull, evening star - bear,
- Signal: morning star - call, evening star - put,
- Features of the model: after the first candle at the end of the trend is the second very small, then comes the candle of the opposite first color.
Star models can often be seen near strong levels of resistance and support. After the end of the price trend, we see the second candle with a small body or no body at all, but at the same level as the first, then a reversal is formed. Please note that the upper borders of all three candles are approximately at the same level, as if touching resistance or support.
- Type of model: inside up - bullish, inside down - bearish,
- Signal: from inside up - call, from inside down - put,
- Features of the model: the same model as the harami, which I already wrote about, plus a confirmation candle.
Those who managed to remember the harami model, which I wrote about in the previous article, will not be difficult to deal with this. The third candle following the hara gives us confirmation of a trend reversal. The model is strong and is often found on the chart.
Here, in fact, are all the basic secrets of Japanese candles. At the end of a series of three articles on trading in Japanese candlesticks, I would like to note that models are not always looming perfectly on the chart. You should not be afraid to use imperfect models; take a note of checking the trading signals for binary options that your strategy gives, with candlestick patterns and checking the signals that give candlestick patterns with your strategy. You can read about single-candle models in the article “Hidden Ninja, Part One: Japanese Candlestick U-Turn Models”, and about dual models in the article “Hidden Ninja, Part Two: Japanese Candlestick U-Turns”.
And finally, a screenshot with an example of a three-candlestick model: