Types of Japanese Candlestick Patterns

 

 

Types of Japanese Candlestick Patterns

There are several types of Japanese candlestick patterns and below are some of the basic patterns.

Spinning Tops

Spinning Top

Spinning Tops

If the real body of a Japanese candlestick is very small with a long top and bottom vertical lines or shadows attached to it that candlestick is called spinning tops. Its color can either be red or green. This pattern shows a tight trading range between the opening price and the closing price. This indecision between the bulls and the bear also means that this particular trade is neutral.

When a spinning top is formed during an uptrend, the possibility of the reversal in direction could happen as there are less buyers and, when it is formed during a downtrend, the possibility of the reversal in direction could also happen as there are less sellers.

Marubozu

A Marubozu is a type of Japanese candlestick that does not have any vertical lines attached to the top and bottom side its real body. Since there are no vertical lines, the open and close are the same as its high or low depending on the colors of the candlestick’s body.

For a green colored Marubozu, its opening price is at the same level with the lowest price which is at the bottom of the candlestick body and the closing price is also at the same level with the highest price, the top of the candlestick body. This shows that the buyers are controlling the entire trading period from open to close and it is a bullish candle.

For a red colored Marubozu, its opening price is at the same level with the highest price which is at the top of the candlestick body and the closing price is also at the same level with the lowest price, the bottom of the candlestick body. This shows that the sellers are in total control of the trading period from open to close and it is a bearish candle.

Doji

Doji

Doji

Doji candlestick has a very small or thin line body. The length of the top and bottom shadows can vary and the doji tends to resemble a cross, an upside-down cross or a plus sign. There are four different types of doji candlesticks and they are the Long-Legged Doji, the Dragonfly Doji, the Gravestone Doji and the Four Price Doji.

Long-Legged Doji: Shape of a cross, its body consists of a long vertical line and a short horizontal line cutting cross it.
Dragonfly Doji: Shape of a capital letter ‘T’ with its long tail dropping down.
Gravestone Doji: Shape of an upside-down capital letter ‘T’ with its long tail pointing up.
Four Price Doji: Shape of a short thin horizontal line or a ‘dash.’

A doji can either be referred to the singular or plural form. It is created when the opening price and the closing price for the trading period are exactly the same or very close.

The size of the doji candle implies that there is a strong trading contest between the buyers and sellers. Prices move up and down the opening price level during the trading period but close at or very near the opening price. Both the buyers and sellers are evenly matched causing the price to stall and eventually ended in a neutral trade. Some technical analysts see this as a signal for a reversal. On the other hand, the buyers or sellers might find that this might be the opportunity to gain momentum for a continuation trend. Doji usually appears in the consolidation periods and can assist analysts to pin point potential price breakouts.

Save

Save

Save