Patterns are – Dark Cloud Cover, Piercing Pattern, Engulfing patterns and Tweezer tops and bottoms
Dark Cloud Cover and Piercing Pattern
Dark Cloud Cover is a bearish reversal pattern consisting of a black candlestick that follows a long bodied white candlestick during an uptrend. The long bodied black candle casts an ominous dark cloud over the preceding upward trend in price. The black candlestick opens with a gap at a new high and closes below the midpoint of the body of the previous white candles.
The Piercing Line Pattern is a bullish Japanese Candlestick reversal pattern and the opposite of the Dark Cloud Cover pattern.
Piercing line appears during a downtrend, with the first candle long bodied and bearish (red or black). The following candle opens with a gap at a new low, and closes at a level where the candle reaches above the midpoint of the previous candle.
This pattern is reversal and it is displayed, when we have a strong uptrend or downtrend movement. This pattern to be valid we need a candles to “engulfs” the previous candle and to be in the opposite body color. For downtrend, the reversal candle must be white and for uptrend must be black. It is not necessary the shadows (wicks) of one candle to engulf the shadows of previous one.
The Bullish engulfing pattern happens when a bearish candle is immediately followed by a larger bullish candle
The Bearish engulfing pattern occurs when bullish candle is immediately followed by a bearish candle that completely “engulfs” it
Tweezer Bottoms and Tops
The tweezers are dual candlestick reversal patterns. This type of candlestick pattern could usually be spotted after an extended up trend or downtrend, indicating that a reversal will soon occur.
Tweezer Tops consists of two or more candlesticks with matching tops. The candlesticks may or may not be consecutive and the sizes or the colors can vary. It is considered as a minor reversal signal that becomes more important when the candlesticks form another pattern.
Tweezer Bottoms consists of two or more candlesticks with matching bottoms. The candlesticks may or may not be consecutive and the sizes or the colors can vary. It is considered as a minor reversal signal that becomes more important when the candlesticks form another pattern.