Three of the Oddest Candlesticks to Trade

When new traders first hear about candlesticks like dark cloud cover, evening stars, shooting stars, white soldiers, three black crows or even the abandoned baby bottom, the ADD kicks in and they’re completely lost.

At least, that’s what happened with me the first time I heard about them.

But after years of using some of the oddest candlesticks with the oddest names, I’ve found them very useful in determining potential direction of the herd.

Odd Candle No. 1 – Abandoned Baby

The Abandoned Baby is a rarity. It’s characterized by a gap followed by the doji star followed by a gap in the opposite direction. What’s nice about this candle is its reliability, especially at top or bottom of trend. Quite literally, it’s a rapid shift in momentum from bulls to bears, and sometimes bears to bulls. Resulting rallies can be swift following it.


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Odd Candle No. 2 – Three Black Crows

Three black crows is a term using to describe the start of a market downturn, typically unfolding over three trading sessions and consisting of three long candlesticks trending downward like a staircase. Each candle opens below the previous day’s open, dropping with each passing day. It can indicate a strong price reversal from a bull to bear market.

Odd Candle No. 3 – The Hanging Man

The Hanging Man is a bearish candle that can form at top of trend. It’s typically created when we find a significant sell off near the market open at top of trend. As the day progresses, buyers begin to force the stock higher to its initial opening prices.

So what it begins to look like in an upside down gravestone doji.

When we see this candlestick, it can be an indication that the bulls are just beginning to lose control and demand for the stock or other asset is starting to fall apart.

For example, in this chart of Micron Technology (MU) we spot a hanging man in July 2017. Shortly after forming we begin to see the stock start to breakdown.

Prior to the hanging man is what’s referred to as a “spinning top,” as well. These can suggest that the bulls are beginning to lose interest in an asset.

 

While these are just a few of the oddest candlesticks in existence, all must be confirmed with other technical indicators. The last thing you ever want to do is buy an asset based on the appearance of a candle. Confirm at all times.


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