As discussed in a previous article on bullish candlestick patterns, trading using Japanese candlesticks is the nearly popular method for analyzing price action by crypto traders.

There are many patterns worth learning and understanding — some of the nearly essential surly patterns are discussed below. It is important to note, once again, that context and candle placement are essential in identifying patterns.

The same exact candlestick tin be bullish when located in a different identify on the chart.

Surly Harami

The Surly Harami is a two candle design that signals a likely reversal in price. In this design, the outset candle is big and greenish and is followed past a scarlet candle with a smaller body.

Bearish Harami

To be valid, the second candle must be completely inside the range of the body of the first candle. Another notable version of this pattern is the Bearish Harami Cross, where the second candle is a perfect doji.

In Japanese, the term "Harami" is the word for pregnant. In this pattern, the greenish candlestick is the "mother" and the small candlestick is the "baby."

Dark Cloud Cover

Price action post-obit this pattern is often every bit ominous as its name, Dark Cloud Cover. This is another two candle pattern that signals a likely bearish reversal at the height of a bullish movement. The starting time candle is generally large, e'er greenish, and is followed by a like red candle.

Dark Cloud Cover

The 2nd candle opens with a gap up to a fresh high but closes the session more than halfway into the body of the first solar day's candle. This is a signal that bears have dominated the session, pushing the price downward with the intention of following through on future candles.

The Evening Star

The Evening Star is a bearish reversal pattern that appears at the elevation of an uptrend with a big bullish candle, followed by a gap up to a modest-bodied candle and a gap downward to a blood-red candle that closes below the midpoint of the first day.

The Evening StarThe first candlestick in the evening star must be green and have a relatively large real body. The second candlestick is the star, which has a curt real trunk that does non bear upon the real trunk of the first candle — information technology is the gap between the real bodies of the two candlesticks that makes a doji or a spinning superlative qualify equally an evening star.

This pattern is confirmed by the candlestick that follows the star, which must be a cerise candle that closes well into the trunk of the first candlestick.

In legacy markets, there must exist gaps between each of the candles. Nevertheless, since crypto trades 24/7 and gaps are rare, some technical analysts fence that this pattern is even so valid without the gaps.

Shooting Star

Similar to the previously discussed patterns, the shooting star is a bearish reversal pattern. This two candle design appears during an uptrend and signals an upcoming reversal to a bearish bias.

Shooting StarThe first candle is dark-green, followed by a light-green or red candle that has a long upper wick and pocket-size torso. The second candle looks like an inverted hammer, which is bullish when located at the bottom of a trend.

The long wick as an indication that bulls controlled much of the session, before losing ground to bears, who pushed the cost back down to close near the daily open. This is a signal that price depreciation is likely and is confirmed when followed by a bearish candle.

Hanging Human

The Hanging Homo is a single candle pattern that indicates a likely reversal from bullish price action to bearish price action. This candle has a long lower shadow and a small trunk and appears at the summit of a trend or during an uptrend.

Hanging ManOne time again, when this candle is at the lesser of a downtrend, information technology is called a hammer and signals a bullish reversal — context matters. This candle shows that sellers were able to take control during a portion of the flow. It indicates that bears defended the electric current price and are probable to continue selling through the subsequent candle.

Get to know these candlestick patterns — they are essential to empathize every bit a crypto trader!

The views and opinions expressed hither are solely those of the author (@HorusHughes) and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You lot should conduct your own research when making a determination.