Top Six Most Popular Double Candlestick Patterns

Here is everything you need to know about the top six most popular double candlestick patterns. In this article, you will also learn how to identify market reversals and using two candlesticks patterns.

Contents

Bullish Engulfing

Bearish Engulfing

Piercing 

Dark Cloud Cover

Tweezer

Tweezer Top


Bullish Engulfing, Bearish Engulfing

Bullish Engulfing and Bearish Engulfing by Let’s Forex

Bullish Engulfing Pattern

The bullish engulfing pattern is a bullish reversal or resistance signal that appears at the bottom of a preceding downtrend. Here below is a complete step by step guide to identifying, psychology and catching trade signals of the bullish engulfing pattern.

Identifying a bullish engulfing pattern

To identify a bullish engulfing pattern, the following conditions must be met.

    • First, identify a downtrend in the specific time frame or session.
    • Secondly, there must be a shorter bearish candlestick followed by a larger bullish candlestick.
    • The bullish candlestick must have its opening with a down gap and its closing with an up gap, which means the bullish candlestick completely engulfs the bearish candlestick.

The psychology behind the bullish engulfing pattern

The following bullets summarize the psychology behind the bullish engulfing pattern.

    • The bearish candlestick tells us the control of sellers following the prolonged downtrend.
    • The next candlestick`s opening with a down gap tells us the dominance of sellers.
    • In the same second candlestick, closing with up gap tells us about the lost dominance of sellers/bears with the revival of buyers/Bull`s control.

The trading signal of bullish engulfing pattern

    • Identify a bullish engulfing pattern at the bottom of a preceding downtrend.
    • Wait till the next candle makes its closing above the high of preceding bullish candle.
    • Open a buy/long position on confirmation.
    • Stop loss must be below the low of preceding bullish candlestick.

Bearish Engulfing Pattern

The bearish engulfing pattern is a bearish reversal or resistance signal that appears at the top of a preceding uptrend. Here below is a complete step by step guide to identifying, psychology and catching trade signals of the bearish engulfing pattern.

Identifying a bearish engulfing pattern

To identify a bearish engulfing pattern, the following conditions must be met.

    • First, identify an uptrend in the specific time frame or session.
    • Secondly, there must be a shorter bullish candlestick followed by a larger bearish candlestick.
    • The bearish candlestick must have its opening with an up gap and its closing with a down gap, which means the bearish candlestick completely engulfs the bullish candlestick.

The psychology behind the bearish engulfing pattern

The following bullets summarize the psychology behind the bearish engulfing pattern.

    • The bullish candlestick tells us the control of buyers following the prolonged uptrend.
    • The next candlestick`s opening with the up gap tells us the dominance of buyers.
    • In the same second candlestick, closing with a down gap tells us about the lost dominance of buyers/bulls with a revival of sellers/bear`s control.

The trading signal of bearish engulfing pattern

    • Identify a bearish engulfing pattern at the top of a preceding uptrend.
    • Wait till the next candle makes its closing below the low of preceding bearish candle.
    • Open a sell/short position on confirmation.
    • Stop loss must be above the high of preceding bearish candlestick.

Piercing, Dark Cloud Cover and Market Reversals

Piercing and Dark Cloud Cover by Let’s Forex

Piercing

The piercing pattern is a bullish reversal or resistance signal that appears at the bottom of a preceding downtrend. Here below is a complete step by step guide to identifying, psychology and catching trade signals of the piercing pattern.

Identifying a piercing pattern

To identify a piercing pattern, the following conditions must be met.

    • First, identify a downtrend in the specific time frame or session.
    • Secondly, there must be a bearish candlestick followed by a bullish candlestick.
    • The bullish candlestick (2nd candle) must have its opening with a down gap and its closing must be equal to or greater than 50% of the real body of preceding bearish candle.

The psychology behind the piercing pattern

The following bullets summarize the psychology behind the piercing pattern.

    • The bearish candlestick tells us the control of sellers following the prolonged downtrend.
    • The next candlestick`s opening with down gap tells us the about dominance of sellers.
    • The second candlestick`s closing above 50% of bearish candle tells us about the lost dominance of sellers/bears with a revival of buyers/bull`s control.

The trading signal of piercing pattern

    • Identify a piercing pattern at the bottom of the preceding downtrend.
    • Wait till the next candle makes its closing above the high of preceding bullish candlestick (2nd candle).
    • Open a buy/long position on confirmation.
    • Stop loss must be below the low of preceding bullish candlestick (2nd candle).

Dark Cloud Cover

The dark cloud cover pattern is a bearish reversal or resistance signal that appears at the top of a preceding uptrend. Here below is a complete step by step guide to identifying, psychology and catching trade signals of dark cloud cover pattern.

Identifying a dark cloud cover

To identify a dark cloud cover pattern, the following conditions must be met.

    • First, identify an uptrend in the specific time frame or session.
    • There will be two candlesticks in dark cloud cover, the first candle is bullish and the second candle is bearish.
    • The bearish candlestick (2nd candle) must have its opening with an up gap and its closing must be equal to or greater than 50% of the real body of preceding bullish candle.

The psychology behind dark cloud cover

The following bullets summarize the psychology behind the dark cloud cover pattern.

    • The bullish candlestick tells us the control of buyers following the prolonged uptrend.
    • The next candlestick`s opening with the up gap tells us the about dominance of buyers.
    • The second candlestick`s closing above 50% of bullish candle tells us about the lost dominance of buyers/bulls with the revival of sellers/bear`s control.

The trading signal of dark cloud cover

    • Identify a dark cloud cover pattern at the top of a preceding uptrend.
    • Wait till the next candle makes its closing below the low of preceding bearish candlestick (2nd candle).
    • Open a sell/short position on confirmation.
    • Stop loss must be above the high of preceding bearish candlestick (2nd candle).

Tweezer, Tweezer Top and Market Reversals

Tweezer

The tweezer pattern is a bullish reversal or resistance signal that appears at the bottom of a preceding downtrend. Here below is a complete step by step guide to identifying, psychology and catching trade signals of the tweezer pattern.

Identifying a tweezer pattern

To identify a tweezer pattern, the following conditions must be met.

    • First, identify an uptrend in the specific time frame or session.
    • There will be two candlesticks in tweezer, the first candle is bearish and the second candle is bullish,
    • Both candles having the same lows and no or negligible upper tail.

The psychology behind the tweezer pattern

The following bullets summarize the psychology behind the tweezer pattern.

    • The same level of lows tells us that the market refused to go further in a prolonged downtrend.
    • The formation of the second candlestick as bullish indicated the lost dominance of sellers/bears with the revival of buyers/bull`s control.

The trading signal of tweezer pattern

    • Identify a tweezer pattern at the bottom of a preceding downtrend.
    • Wait till the next candle makes its closing above the high of a tweezer.
    • Open a buy/long position on confirmation.
    • Stop loss must be below the low of a tweezer.

Tweezer Top

The tweezer top pattern is a bearish reversal or resistance signal that appears at the top of a preceding uptrend. Here below is a complete step by step guide to identifying, psychology and catching trade signals of the tweezer top pattern.

Identifying a tweezer top

To identify a tweezer top pattern, the following conditions must be met.

    • First, identify a downtrend in the specific time frame or session.
    • There will be two candlesticks in the tweezer top, the first candle is bullish and the second candle is bearish,
    • Both candles having the same high and no or negligible lower tail.

The psychology behind the tweezer top

The following bullets summarize the psychology behind the tweezer top pattern.

    • The same level of highs tells us that the market refused to go further in a prolonged uptrend.
    • The formation of the second candlestick as bearish indicated the lost dominance of buyers/bulls with the revival of sellers/bear`s control.

The trading signal of the tweezer top

    • Identify a tweezer top pattern at the top of a preceding uptrend.
    • Wait till the next candle makes its closing below the low of the tweezer top.
    • Open a sell/short position on confirmation.
    • Stop loss must be above the high of the tweezer top.

Key Terms:

Bullish engulfing, Bullish reversal, Bearish engulfing, Bearish reversal, Down gap, Dark cloud cover, Piercing, Long, Short, Tweezer, Tweezer Top, Up gap, Resistance

More related resources:  Introduction to Japanese candlesticks

                                              Most popular single candlestick patterns

Other helpful resources: What is forex?

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4 Responses

  1. Aqeela says:

    I found this really helpful , good job 👍

  2. Lonna Sefton says:

    Youre so cool! I dont suppose Ive read anything like this before. So nice to find somebody with some original thoughts on this subject. realy thank you for starting this up. this website is something that is needed on the web, someone with a little originality. useful job for bringing something new to the internet!

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