If you have already dipped your toes into the ocean of Forex analytics, you must know about candlestick graphs. After learning the basics about these graphs, a trader needs to know about the different patterns it uses to indicate different market conditions. Before trusting your skill in perceiving these patterns, you will have to really be assured of your knowledge of those patterns. A little learning is tremendously dangerous even for a Forex trader. Just ensure that you know all about single, dual and all the other basic and advanced level patterns that emerge in a candlestick graph.
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Different Dual Candlestick Patterns
Once you learn the single candlestick pattern and search for an even better method, say hi to the dual formation. In this article, we will discuss and dive deep into the detail of this particular pattern. Without further ado, let’s start digging into the core subject material.
To recognise a Japanese dual pattern, a trader must look for specific information and more certain formations that comprise of two bars in total. There are two types of formation: Engulfing candles and Tweezer Tops and Bottoms.
1. Engulfing Candles
Engulfing candles, or bars are formation as they provide comparatively more reliable signals than any of the single pattern bars. Though they are a bit difficult to recognise on a graph, they can be highly rewarding and help you make more money.
There are two types of engulfing stick available. One is bearish and the other is bullish.
A bearish candle occurs when an upward stick is immediately followed by a downgrading one and the latter one engulfs the former one entirely. If you know enough about these upward and downward movement’s underlying meaning, you should have debunked the inner meaning of a bearish engulfing candle. These who are dealing with product futures, can easily predict the key reversal with the help of this engulfing pattern.
When an upward movement, which means the domination of buyers, gets overhauled by a downward movement, or the domination of sellers, then a bearish candle emerges. It indicates a strong fall in the trend.
On the other hand, a bullish engulfing candle, which is the total opposite of a bearish candle, is two reversal patterns that indicate a robust incoming upward move.
A bullish engulfing happens when a bearish or downward candle gets immediately followed by a bigger bullish or upward bar. It means the buyers’ domination on the market has overpowered the seller’s domination. So, when the bullish bar entirely engulfs the bearish one, it means that a strong rebound is imminent.
2. Tweezer Tops and Bottoms
Tweezer patterns consist of two reversal patterns. Such formations are usually spotted immediately after a prolonged downtrend or uptrend. All these patterns signal of an upcoming reversal of the present situation.
It can take two forms. One is Tweezer Top, and the other one is Tweezer Bottom. While looking at that, you should pinpoint how the sticks’ formation resembles a couple of tweezers. Note that these tweezer tops and bottoms are usually traded in the higher time frame. So, if you find these patterns in a lower timeframe, try to ignore the trade signals.
For the most ideal and useful Tweezers, we need to look for some particular characteristics. The first bar will be identical to the overall trend. If the rate moves up, the first bar will be bullish, and if the price goes down, the bar will be bearish.
The second bar is the total opposite of the overall movement. When the price goes up, the second bar goes down. The wick of these bars will be of similar length. The difference between the Tweezer Bottoms and Tops is, tops have similar highs, while the Bottoms have identical lows.
So, this is all the necessary information about the dual candlestick patterns. To learn more about them, you can research a bit more, or look them up in any in-depth course.