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Buy Signals With The Morning Star, Bullish Engulfing Pattern And The Tweezer Bottom!
Candlestick patterns can give great buy and sell signals. There are many candlestick patterns that can be identified and used to give trading signals but these three bullish candlestick patterns give great buy signals.
1)- Morning Star 2)- A Bullish Engulfing Pattern 3)- A Tweezer Bottom
These candlestick patterns when they appear on a 1 hour chart or a higher timeframe chart in a downtrend are a signal that the market is reversing and it is the best time to buy. If they appear in a uptrend these patterns should be ignored. If they appear on a smaller timeframe, again they should be ignore as they might only signal the end of a retracement on a larger timeframe.
Morning Star; A morning star is formed when a large bearish candlestick is followed by one or more candles with very small bodies which is followed by a bullish candle that forms 60% above the bearish candle. Appearance of a morning star signals that the bears are losing control of the market and investors are no longer selling.
More buyers have stepped in which has equaled the number of buyers and sellers. Soon the number of buyers will exceed the number of sellers in the market and the market is going to turn bullish. When traders spot the morning star pattern, they greedily start buying after the formation of the bullish candle starting a new rally in the market.
A Bullish Engulfing Pattern is formed when a large bullish candle is formed that engulfs the previous bearish candles. This is a strong signal that the market is about to reverse itself! When a Bullish Engulfing Pattern appear in the downtrend, it means the bottom of the downtrend has been reached and soon there will be more buyers in the market taking the prices up with them.
Tweezer Bottom: A tweezers bottom is formed when a bearish candle is followed by one, two, three or more candles with very small bodies and large wicks on the downside. A tweezer bottom is a sign of selling exhaustion in the market. An ideal Tweezer bottom is formed when the two candles with very small bodies with equal wicks are formed. However, this need not be the case always; these two small body candles can be a few candles away as long as the wicks are the same.
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