The Japanese Candlestick Patterns

Spinning Tops Candlestick Patterns

Spinning tops are Japanese candlesticks with long lower and upper shadows and short bodies. This pattern shows that buyers and sellers are in a state of indecision. Should I buy… should I sell…. Mmmmmh… I should spin at the top.

Spinning Top

In this scenario, sellers and buyers are at a standoff; none has more control over the other.

The formation of a spinning top when the prices are rising (uptrend) shows that buyers are dormant or few. Thus, the market is likely to reverse, and selling would be suitable.

On the other hand, if the spinning top occurs when the market is on a downtrend, it means that sellers are few. In this case, there is a high likelihood that prices might go back up. Buying is a less risky decision in this scenario.

Marubozu Candlestick Pattern

This is a candlestick pattern in which there are no shadows emanating from the real body. The marubozu candlestick simply has a long body with no tail. A tailless monkey.

In Marubozu, the opening and closing prices are the same as the highs and lows. For instance, if the opening price is higher than the closing price in a marubozu candlestick, then the highest price is equal to the opening price, and the lowest price is equal to the closing price.

Note in the figure that:

  • There is no shadow.
  • High prices = opening price
  • Low price = closing price.
  • The period is bearish and the sellers are in control.

In a bullish session, the close price = the high price.

A white/hollow marubozu pattern shows that buyers are in control of the forex market during the given period.

On the other hand, a black or filled marubozu candlestick pattern shows that the sellers are in control.

The Doji Candlestick Pattern

A doji candlestick has the same opening and closing price. Thus, the body of a doji is practically non-existent or extremely small. Sometimes the body appears like a thin horizontal line.

Because the body is thin, the pattern of a doji exists in four categories:

  • Long-legged doji: the shape of a plus (+) sign
  • Dragon-fly doji: T-shaped.
  • Gravestone doji: inverted T
  • Four Price Doji – Shape of a dash (-)

The doji candlestick patterns are useful when read together with preceding candlesticks.

If a doji occurs after a succession of long white/hollow bodies, it means that the buyers are becoming weak. The buyers are exhausted and sellers are salivating for a reversal. Nevertheless, to confirm a reversal, a further selling strength is needed.

When a doji appears after long filled/black bodies, it means that sellers are feeling exhausted. Here, there are no more sellers and buyers are drooling for an upside – Checkmate. However, to confirm a reversal, a further buying strength is needed.

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