Reversal Patterns

Price bounces can be triggered by contact with any kind of support and resistance area. This can be a daily pivot line, a horizontal price support, a moving average line, or a Bollinger band line to name just a few.

The three-inside candlestick pattern is useful in predicting trend turning points and swings in currency pairs and other markets. It’s not a common pattern.

A harami pattern marks a sudden break in a trend where there’s indecision. At this point the buyers and sellers are closely matched leading the price to hover.

A bullish engulfing candlestick can be a useful buy signal. But in order to trade them we have to be able to recognize reliable patterns from the false ones.

If you’d blindly traded the bearish engulfing candle over the past decade, you’d probably have done slightly worse than if you’d traded on a coin flip.

Trend reversals are often led by double top or double bottom chart patterns. If the reversal fails it can lead to a double top/bottom breakout.