Especially when there are so many different ways, methods, strategies out there.
The most popular way to look for trading opportunities is by looking for candlestick patterns.
The problem here is that are are 30+ candlestick patterns to learn from memory.
If you are like the rest of us, learning 30+ candlesticks and instantly recognising them in real-time can be a headache when you are starting out.
That is why we have designed this awesome Japanese candlestick pattern cheat sheet. It’ll save you time and money (on painkillers).
IF you are looking to find something that can quickly help you instantly recognise these 30+ patterns in real-time, then you should read on because we have a few helpful tips further down this article.
(For your reference, you can either bookmark this page or download the candlestick cheat sheet further down for free).
Now before you get your hands on this cheat sheet, let’s go through the absolute basics…
What is a candlestick pattern?
There are several types of charts that traders will use to find trading opportunities.
Most commonly these are:
Point and Figure charts
There are plenty of different types to help analyse the markets, but you are here to learn about the candlestick patterns – so let’s focus on that.
The candlestick pattern is favoured due to its simplicity and ease of analysis at a glance.
You can easily identify whether it was a Buy candle or a Sell candle.
You can easily identify its highs and lows during the session.
You can easily tell the strength of the markets through the candlestick too.
The above also gives you different patterns and shapes that give a leading indicator of where the market may go.
Compared to the line charts which just plot the close price after each session.
To put it another way, using candlesticks compared to line charts is like watching a movie in HD vs. black and white.
HD gives you every little detail and colour to inspire your imagination, whereas in black and white it gives you enough imagery to tell the story.
We want things in HD.
So that is why we look at candlesticks.
(It’s still a personal preference at the end of the day)
So let’s look at the structure in more detail:
Here are the key points:
Open – This is at the point where the session opened. On a bullish candle, the open is at the bottom of the body. On a bearish candle, the open is at the top of the body.
Close – This is at the point where the session closed. On a bullish candle, the close is at the top of the body. On a bearish candle, the close is at the bottom of the body.
High – This is the market reached it’s the highest price during the trading session. This gives you an idea of how high the market moved in one trading period.
Low – This is the market reached it’s the lowest price during the trading session. This gives you an idea of how low the market moved in one trading period.
Alphaex Pro Tip: Execution Rules -> Read our article on how to execute a trade properly based on the candlestick patterns
Now you’ve locked in the idea of what candlestick patterns are, let’s dive straight into the different segments of the forex candlestick pattern cheat sheet.
Bullish Candlestick Patterns
Below we have the candlestick patterns that may signal a bullish move in the markets.
These are really-effective to know because when these patterns are showing themselves, you can quickly adjust your trading ideas to either continue or reverse your trading bias.
These are great examples of bullish candlesticks that you can reference to now and then to familiarise yourself with the patterns.
Alphaex Pro Tip: As you get started, don’t try and focus on ALL patterns at once. Instead, focus on the most recognisable ones such as the Bullish Engulfing and Hammer patterns.
This will allow you to identify them easily, and gain experience quickly in how to utilise them effectively.
Moving on, it’s time to review the patterns when the market turns bearish…
Bearish Candlestick Patterns
Trading means you don’t have a preference whether the market goes up or down.
As traders, we should always be looking for new opportunities.
That’s why these bearish candlestick patterns can help you identify bearish momentum, quickly and effectively.
Follow these patterns and gain experience with them.
Once mastered, each day will present a new trading opportunity.
And now you are armed with the patterns that can help identify bullish and bearish movements.
Reversal Candlestick Patterns
We’ve grouped the bullish and bearish price action patterns here to identify the ones that are reversal indicators.
This is a good idea to learn it like this as well because you can see that these patterns show you a potential entry and/or exit from a trade.
Allowing you to lock in the profits, or enter on the other side.
This is for your quick reference too.
Continuation Candlestick Patterns
In addition to reversals, the candlesticks can also identify when the markets are ready to continue their trend.
The patterns placed here are great for opportunities to:
Enter in a trend you may have missed out from earlier
Add to your current trading position, increasing your position size to take advantage of the trend
Exit a trade for profit, or realise a loss if the trend is going against you.
These continuation patterns are:
Download the Candlestick Pattern Cheat Sheet PDF for Free
You can grab this Japanese candlestick pattern cheat sheet pdf for free. This contains all candlestick patterns in their natural habitats and collected in one single image for your reference.
You can do as you like with it, but most commonly most people print it out or save it as a desktop wallpaper.
After going through this forex candlestick pattern cheat sheet you will have gained a visual aid that will help you establish and gain experience with these price action patterns.
Forex trading isn’t meant to be easy.
By focusing on learning to become better, practising the patterns and testing them out – only then you will gain an edge that is needed to conquer the markets.
After reading this article and downloading our cheat sheet, you’ll have the right tools to improve and evolve your candlestick trading.
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