So how can you use candlestick patterns to make money in this video I'm gonna go
over five different reversal patterns that can turn you into a winning trader
what's going on on this channel we talked all about trading the stock
market with the idea of allowing you to maintain a full-time job or trade as a
full-time job so if you're new here consider subscribing and today we're
going over candlestick reversal patterns so the whole idea with these reversal
patterns is that you are using them against a predetermined support or
resistance level and it doesn't matter what you make that support or resistance
level off of but the idea is that you've already established that you think that
the stock might have a reverse there and so using that level you look for these
patterns that we're gonna go over so when you see these candlestick reversal
patterns establish at those predetermined support or resistance
levels you can use those as a key to get into a trade with idea that the stock is
now going to reverse its direction and you can capture that move these patterns
can be used to trade in any market and on any time frame because these patterns
are based off of psychology and what investors and traders are feeling at the
time it allows you to use them in any different market it doesn't have to be
just for stocks because that's how stocks work this is just how psychology
of investors and traders works and that is why these are so powerful and they
allow you to use them in any different market all these patterns work either
going long and betting that the stock is gonna go up or shorting the stock and
betting that is it is gonna go down and first we're going to go over the bullish
engulfing which is a long reversal pattern so for the bullish engulfing
pattern the idea is that the stock is trying
down towards a predetermined support level and the idea is that at the
support level a huge green bullish candle happens that the next day or just
at that level somewhere and how this bullish engulfing candle has to form is
the open has to be lower than the close of the previous candle and the close
also has to be higher than the previous open so the idea that it's engulfing and
taking up the whole candle of the previous day or just previous candle and
the idea of that is it's a huge sentiment change in the stock and people
don't want to sell anymore people really really want to buy this stock now and
the idea that now this is gonna change a new trend and it's gonna start trending
upwards and then on the flip side you have a bearish engulfing candle and the
idea is you have a predetermined resistance level and that this stock is
trending up into this resistance level and then you would see a huge bearish
engulfing candle taking up the whole entirety of this previous bullish candle
with the open and the close being lighter than the open and close of the
previous candle and this would signal a huge sentiment shift in the stock and
start a new downtrend or this next pattern you need three candles to
confirm it and this is the doji pattern first we're going to go over the doji
top and the three candles you want to see is these three right here so you
want to see the trend initially that was going upwards and then you see the this
candle right here that's called the doji and then you want to see this bearish
candle afterwards that creates or is the initial start of the reversal and the
key to this pattern is that there is a gap between candles one and two and then
another gap between candles two and three so the idea that the stock was
super bullish before and so it gapped up the next candle or next day and then
people weren't as excited that day because here it let's say hey our
resistance level and the sentiment started changing the stock there was
much more sellers than there used to be and so the Stockton and moved that much
over that candle and then the next candle the stock then gapped down
meaning that this close right here was not at the same price level as the open
of the next candle so the next candle opened a lot lower than the close of
that doji top and so you want to see this gap here between both of the
candles and that allows you to really confirm that this pattern is going to
happen and then with the next candle being a big bearish candle that really
signals the start of this reversal so next we have a island bottom and the
whole idea of this one is that it's actually a lot like the doji bottom you
have this previous downtrend established into your support level and you actually
have this gap down as well and this gap up but the just the difference between
these is that the Chop period or the period where the price action over that
time is really not doing anything is a lot longer the price gaps down to that
support level and it takes a little while longer for the sentiment to shift
into a reversal but it still tells you that the centum
of the stock is not to sell off anymore it's more choppy and people are starting
to change their minds more buyers are coming into the market and that's why
this the stock or just the price of this market is not trending down anymore it's
more training sideways and then when you get this gap up right here to this
reversal candle that really signals that the the new trend is going to start and
this stock is going to start going upwards for the island top we just have
it in the reverse we have that resistance level we have this bullish
candle with this gap into our resistance zone and then we have a few days of chop
and then that gap down and to illustrate why this is just like the doji star you
can see that this would be the if we combine all four of these candles this
would be the opening price of that candle and then this would be the
closing price and so you we would have this would be the body of that candle
and then you would have the wick all the way down here and the top wick all the
way up here and you can see that this kind of makes a a doji stop and that is
why the island top and doji top pretty much worked the same way it's just
another way to look at it and that's really all these patterns are is ways to
look at candles and to understand what they mean and the sentiment that they
are giving you and what they're really telling you the next candle we have is a
bullish pin candle and that candle is this one right here and the idea behind
that candle is the stock sells out throughout that candle price sells all
the way down and maybe into our support level or around that zone and then at in
the same candle the price then reverses and the candle closes at around the same
price it doesn't have to be the exact same price but generally you want it to
pretty much look like this candle right here
and the idea then is it has that huge wick on it and this is signaling that
the sentiment has shifted and people are wanting to buy this stock because
previously you had many red candles trending down into this zone and now
you're getting a new type of candle that shows that people aren't willing to
really just sell sell sell there's people wanting to sell and buy
which is why the candle closed flat essentially it opened and then closed at
the same price and then you begin to see these green candles starting to form and
that shows you that we're gonna have a reversal and the stock is now going to
start turning up so for these bullish pins or bearish
pins there are a lot like doji tops and doji bottoms but they all have this
really long wick instead a doji top doesn't really have that and this really
signals that the price tried to keep going in the direction that it was and
now it is reversed and it is going the opposite and you an easy way to tell
which direction that this pin is pointing this one is being a bearish
because you can kind of essentially draw an arrow with it and it'll show you that
this is pointing downwards and the stock is going to reverse based on this candle
pattern developing so quite often when you're looking for a reversal pattern at
a support or resistance you will get a candle pattern like these two right here
that is really close to an engulfing candle candle but it's not close enough
so you can't use that pattern but this is a different pattern and it still
counts as a reversal pattern you just need to know how to look at it and
really what it's telling you so what we have here is we have a red candle that
is going into our support and then a green candle that it was reversing and
the idea behind these is that they are relatively similar in size
and it's showing you that the stock is was selling off and now it is reversing
and going back up and if you take both of these candles and combine them much
like our island top to a doji you create a bullish pin and just like a bullish
pin tells you that the stock is now gonna reverse and go up that's what
these tweezer bottoms and tweezer tops are telling you with all these patterns
a lot of them are just needing to know what they're telling you and maybe
sometimes combining them or knowing that you can combine them to make candles
that would look like something that is a stronger reversal pattern that can
really show you that you do have a reversal pattern even though maybe the
chart or the candle layout you have or time frame really doesn't necessarily
seem like it and so then if you become buying those two candles into this
bullish pin you would have this reversal pattern that just looks like a bullish
pain reversal pattern and that's really what a tweezer bottom is it is also just
a bullish pin in just another form the same goes for the tweezer top either you
can know that this is a reversal pattern alone or you can combine the two candles
to make this small body right here with this super-high wick and then the small
wick essentially making that arrow that we talked about telling you that the
pattern is going to reverse hey nice job getting to that video I know it was a
long one make sure to subscribe to the channel if you want to learn more about
reading stock charts it'd be awesome if you gave me a like and if you have any
questions make sure to ask them in the comments below I will get back to them
and I hope to see you in the next video