Forex 202: Lesson 1 of 5

Welcome to our Forex 202 course! Tailored for those who have grasped the fundamentals, this 5-module curriculum will delve deeper into the intricacies of currency exchange, advanced market analysis, and refined trading strategies. From mastering the art of candlestick patterns to honing your skills in multiple time frame analysis, our Forex 202 course equips you with the expertise and assurance to thrive in the ever-evolving forex landscape.

Candlestick Patterns

  • Understanding Candlestick Patterns
Stock market. Stock exchange trading graph, investment chart

Understanding Candlestick Patterns

Candlestick patterns are representations of price movements on a chart. They consist of one or more candlesticks that provide insights into market sentiment and potential price reversals or continuations. These patterns are formed by the open, close, high, and low prices of a specific time period. 

Example 1: Bullish Engulfing Pattern

Let’s start with a classic pattern – the Bullish Engulfing. This pattern consists of two candlesticks. The first is a smaller bearish (down) candle, followed by a larger bullish (up) candle that engulfs the previous candle’s body. The Bullish Engulfing pattern suggests a potential reversal from a downtrend to an uptrend. 

Example 2: Bearish Harami Pattern

Moving on, let’s explore the Bearish Harami. This pattern involves two candlesticks as well. The first is a larger bullish candle, followed by a smaller bearish candle that is entirely contained within the previous candle’s body. The Bearish Harami indicates a possible reversal from an uptrend to a downtrend. 

Example 3: Morning Star Pattern

Now, let’s dive into a more complex pattern – the Morning Star. This three-candle pattern begins with a large bearish candle, followed by a smaller candle that represents indecision. The third candle is a bullish candle that closes above the midpoint of the first bearish candle. The Morning Star pattern suggests a potential reversal from a downtrend to an uptrend. 

Example 4: Evening Star Pattern

The Evening Star is the counterpart to the Morning Star. It also consists of three candles. The pattern starts with a bullish candle, followed by a small indecisive candle, and concludes with a bearish candle that closes below the midpoint of the first bullish candle. The Evening Star pattern indicates a possible reversal from an uptrend to a downtrend. 

Example 5: Doji Candlestick

The Doji is a single candlestick pattern that signifies market indecision. It has the same open and close prices, or their difference is extremely small. A Doji suggests that neither buyers nor sellers have a clear advantage, potentially leading to a reversal or continuation depending on the context. 

Applying Your Knowledge:

Understanding these patterns is essential, but applying them in real-time is where your trading skills shine. As you analyze forex charts, look for these patterns and consider their implications. Remember that no pattern guarantees a specific outcome; they provide probabilities that guide your decisions. 


What’s Next?

Congratulations on completing Lesson 1 of 5! But don’t stop now—there’s so much more to learn.

Most Traded

Trading Opportunities

How much longer can the kiwi sell off?

Bitcoin touches 64K: Has it found its footing?

Republican-led shutdown: What’s at Stake for the USD?

Major events in Euro Area and US on Friday

Limited offer:

Get Free

The TraderKeys keyboard can take your gold trading to the next level, with preprogrammed hot keys enabling you easily execute and modify trades.

Join Now