Candlesticks Confirming Support and Resistance

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Introduction

We’ve looked at some reversal patterns involving a series of candlesticks. Some, like doji and long shadow (small body) candlesticks need proceeding confirmation to confirm the reversal and some like the engulfing pattern, three white soldiers and Harami are patterns in there own right. All of these cndlestick patterns, doji and long legged (short body) candlesticks are also significant support and resistance level markers.

Candlesticks Confirming Resistance

The same buying and selling pressures apply here as they did in our sections “Candlesticks – The Basics” and “Candlesticks and the Reversal”. The engulfing, Harami, three black crows, dark cloud cover, evening star, shooting star, doji, long-legged, Marubozu and long filled candles can all mark resistance levels. 

I've included a couple of charts below to show some of these candlesticks and patterns forming good resistance. As we can see there are Bearish Engulfing, Bearish Harami, Shooting Stars, Doji, Spinning Tops, Inverted Hammer and various long-shadow candlesticks all helping to confirm resistance. It’s worthwhile familiarising yourself with these patterns in our glossary.  Notice in our first chart that a bearish engulfing can engulfs a shooting star.

Candlesticks and Candle Patterns Confirming Resistance (1)

Candlesticks and Candle Patterns Confirming Resistance (2)

Candlesticks Confirming Support

The bullish engulfing, bullish piercing, Harami, hammer, inverted hammer, morning star, doji, long-legged, Marubozu and long white candles can all mark support levels. I’ve highlighted some of these in the charts below. Notice in the second chart that the middle section of the chart bounces along support. We have many doji and small bodied candles here signifying a neutral stance and indecision. Confirming support can be seen in trends as well as in ranging markets. Just bear in mind that small small bodied candlesticks can be numerous in an "illiquid market".

Candlesticks and Candle Patterns Confirming Support (1)

Candlesticks and Candle Patterns Confirming Support (2)

To Sum Up

I hope you can see why the above support and resistance confirmations can be useful.  In any trading strategy it's important to understand these levels as they can act as important psychological barriers to price action and offer good entry, stop/loss and exit positions.  Why not go over the importance of support and resistance again?

Technical analysis is not an exact science and although these indicators, candlesticks and patterns can increase the probability of making the correct trade, many will go against you and large losses can be incurred. Your own trading strategy needs to be formed and hopefully you'll be on your way to achieving this on completion of this course.

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Introduction

We’ve looked at some reversal patterns involving a series of candlesticks. Some, like doji and long shadow (small body) candlesticks need proceeding confirmation to confirm the reversal and some like the engulfing pattern, three white soldiers and Harami are patterns in there own right. All of these cndlestick patterns, doji and long legged (short body) candlesticks are also significant support and resistance level markers.

Candlesticks Confirming Resistance

The same buying and selling pressures apply here as they did in our sections “Candlesticks – The Basics” and “Candlesticks and the Reversal”. The engulfing, Harami, three black crows, dark cloud cover, evening star, shooting star, doji, long-legged, Marubozu and long filled candles can all mark resistance levels. 

I've included a couple of charts below to show some of these candlesticks and patterns forming good resistance. As we can see there are Bearish Engulfing, Bearish Harami, Shooting Stars, Doji, Spinning Tops, Inverted Hammer and various long-shadow candlesticks all helping to confirm resistance. It’s worthwhile familiarising yourself with these patterns in our glossary.  Notice in our first chart that a bearish engulfing can engulfs a shooting star.

Candlesticks and Candle Patterns Confirming Resistance (1)

Candlesticks and Candle Patterns Confirming Resistance (2)

Candlesticks Confirming Support

The bullish engulfing, bullish piercing, Harami, hammer, inverted hammer, morning star, doji, long-legged, Marubozu and long white candles can all mark support levels. I’ve highlighted some of these in the charts below. Notice in the second chart that the middle section of the chart bounces along support. We have many doji and small bodied candles here signifying a neutral stance and indecision. Confirming support can be seen in trends as well as in ranging markets. Just bear in mind that small small bodied candlesticks can be numerous in an "illiquid market".

Candlesticks and Candle Patterns Confirming Support (1)

Candlesticks and Candle Patterns Confirming Support (2)

To Sum Up

I hope you can see why the above support and resistance confirmations can be useful.  In any trading strategy it's important to understand these levels as they can act as important psychological barriers to price action and offer good entry, stop/loss and exit positions.  Why not go over the importance of support and resistance again?

Technical analysis is not an exact science and although these indicators, candlesticks and patterns can increase the probability of making the correct trade, many will go against you and large losses can be incurred. Your own trading strategy needs to be formed and hopefully you'll be on your way to achieving this on completion of this course.

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