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Bar/Candlestick Patterns
In line with the study of price, short-term bar patterns like inside
bar, NR7, and key reversals emerged.
After Steve Nison introduced Japanese candlestick patterns to the
The upper and low shadows (or wick) of a candlestick show selling
and buying pressure respectively.
The candle body represents the resulting market sentiment. If the
bar closes higher than it opened, it is bullish. If not, it is bearish.
However, if the close is near to the open, the sentiment is unclear.
Such a candlestick is known as a doji.
The entire range (distance between high and low) signifies volatility.
Learn: How to Read Price Action Bar by Bar
Refer to these books to find out more about bar patterns and
candlestick patterns:
Japanese Candlestick Charting Techniques, Second Edition
(Steve Nison)
Pring on Price Patterns : The Definitive Guide to Price Pattern
Analysis and Intrepretation (Martin Pring)
Price Action Trading Primer 5
Bar-By-Bar Analysis
There are dozens of bar patterns and candlestick patterns. Given the
right market context, these patterns offer trading opportunities and
are known as trading setups.
These are some popular price action patterns:
Hikkake
Engulfing Candlestick
Price Action Trading Primer 7
Inside Bar
NR7
Pin Bar
Market Swings Trending Up
Market Swings
Price action traders also project support and resistance levels using
swing pivot points.
Support areas are likely to reject price upwards, and resistance areas
tend to prevent the market from rising above it.
Support and resistance are core price action trading concepts.
The key to successful price action trading lies in finding effective
support and resistance areas.
Learn: Improve Your Trading With Support/Resistance
Trend lines connect swing pivots to track trend, and serve as support
and resistance.
In a bull trend, trend lines are drawn by connecting pivot lows. In
a bear trend, trend lines are drawn with pivot highs.
By extending a parallel line from the trend line, we can form a
trading channel that is useful for anticipating support and resistance
areas.
Learn: How To Trade A Channel
Price Action Trading Primer 9
Price Action Trading
To learn more about price action trading, head over to our Price
Action section, where you will find price action trading strategies
and tips.
Whip out your charts now, and start paying more attention to price,
the most important variable.