Candle Patterns

About Candle Patterns

The Candle Patterns indicator — part of the DS Essentials package — is an overlay in Technician that will identify bullish and bearish instances of 17 of the most popular candlestick patterns. You can select which patterns you wish to see (the default is for all of them to be active) and you can also select to see only bullish patterns or only bearish patterns. When a pattern is identified, the bars involved in the pattern are outlined and the region is shaded (you can toggle these features on/off) and the name of the pattern is drawn above a bearish pattern and below a bullish pattern.

 

The Candle Patterns indicator will operate on any bar interval/custom period available in Technician.

Once the indicator has been loaded, you can access the parameters dialog by selecting the indicator menu. You will see a pencil icon to the right of the Candle Patterns menu option:

The Edit/Delete dialog will now be displayed:

Click on the Edit button and the Candle Patterns parameters dialog will be displayed. See the Settings section for a complete description of all of the available parameters.

Candlestick Patterns

Breakaway

A five-candlestick pattern, occurs in both bull and bear markets. Usually forecasts a change in trend.

Three Line Strike

 

A four-candlestick continuation pattern that is most meaningful when seen in a clear up-trend or down-trend. Occurs in both bull and bear markets.

Three Outside

A three-candlestick reversal pattern beginning with an engulfing pattern followed by a close beyond the engulfing pattern. Occurs in both bull and bear markets.

Three Inside

A three-candlestick reversal pattern that confirms a bullish or bearish Harami pattern. Occurs in both bull and bear markets.

Gap

A three-candlestick continuation pattern. Occurs in both bull and bear markets (Upside and Downside Gap).

Tasuki Gap

A three-candlestick continuation pattern. Occurs in both bull and bear markets.

Tri Star

A three-candlestick (3 doji candles) reversal pattern.

Star

A three-candlestick reversal pattern. Occurs in both bull and bear markets (Morning Star and Evening Star)

Three Soldiers/Crows

A three-candlestick pattern that predicts the reversal of the current trend. Occurs in both bull and bear markets (Three Soldiers and Three Crows)

Kicking

A two-candlestick reversal pattern with no trend requirement. Bullish Kicking is a down marubozu followed by a up marubozu and vice-versa for a Bearish Kicking.

Engulfing

A very common two-candlestick reversal pattern where the second candle engulfs the first. Most meaningful if found after a sustained up-trend or down-trend. Occurs in both bull and bear markets.

Doji Star

A two-candlestick reversal pattern which occurs in both bull and bear markets. As with the engulfing pattern, it is more meaningful if found during a clear up-trend or down-trend.

Harami

A very common two-candlestick reversal pattern where the second candle is engulfed by the first candle. Indicates at least a short-term reversal in  trend. Occurs in both bull and bear markets.

Harami Cross

A two-candlestick reversal pattern where the second candle (a doji) is engulfed by the first candle. Occurs in both bull and bear markets.

Hammer/Hanging Man

A one-candlestick pattern consisting of a small body and a long shadow. Occurs in both bull and bear markets.

Shooting Star

A one-candlestick reversal pattern consisting of a small body and a long shadow. Occurs during an uptrend and indicates a potential reversal.

Spinning Top

A one-candlestick pattern consisting of a small body and two long shadows. Occurs in both bull and bear markets and can be a reversal OR a continuation pattern.

User Guide

The full Candle Patterns user guide can be found on the Divergence Software website here: http://www.sr-analyst.com/ChartIQHelp/index.html

Disclaimer

It should not be assumed that past performance is any guarantee of future results. Results obtained from the use of the DS Essentials Indicator Collection for ChartIQ indicators or any information provided in this User Guide are not guaranteed to be profitable. It should be understood that investing or speculating in the financial markets involves risk and may result in either a partial or total loss of one’s investment capital. The information presented in this User Guide is believed to be reliable, but cannot be guaranteed as to its accuracy or completeness.

Divergence Software, Inc. and/or its principals and employees will accept no liability whatsoever for any loss arising from any use of the DS Essentials Indicator Collection for ChartIQ indicators, or the information contained in this User Guide. Neither Divergence Software, Inc. nor ChartIQ offer trading advice of any kind and we are solely involved in the business of financial software development and education.

Reproduction, duplication, or redistribution of the indicators or any material in this User Guide, in any form, without prior written permission from Divergence Software, Inc. is strictly prohibited.

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