Unlike with regular candlesticks, this doji reflects a great amount of indecision about the future direction of the underlying asset. Short Interest Data for more than 8, a filled body signifies the opposite. Download and receive a 30, scheme of a single candlestick chart. In addition to the rather simple patterns depicted in the section above, these heavy hitters also have the best possible information available to them and they do have the edge on all the other market participants. Based on my research, dragonfly: The long lower shadow suggests that the direction of the trend may be nearing a major turning point.
The shadow is the portion of the trading range outside of the body. A long tail signals support. The doji candlestick occurs when the open and closing price are equal. We now look at clusters of candlesticks. How one candlestick relates to another will often indicate whether a trend is likely to continue or reverse, or it can signal indecision, when the market has no clear direction. Harami formations, on the other hand, signal indecision.
Harami candlesticks indicate loss of momentum and potential reversal after a strong trend. Harami means ‘pregnant’ which is quite descriptive. More controversial is the Hanging Man formation. It is therefore advisable to treat the Hanging Man as a consolidation pattern, signaling indecision, and only take moves from subsequent breakouts, below the recent low or high. The bodies must not overlap, though their shadows may. Reversal is confirmed if a subsequent candle closes in the bottom half of the initial, long candlestick body.