Candlesticks charts are commonly used by traders. They represent the price changes using candles with wicks. You can clearly see the opening and closing prices or the highs and lows within a certain period. The candlesticks tend to form some patterns that are likely to repeat themselves over time. All these provide very useful information that can help in making trading decisions. Today we will see into one of the formations of the candlestick, which is known as the Stalled Candlestick Pattern.
The Stalled Pattern on Binomo
The Stalled candlestick pattern usually can be observed during the uptrend. Very rarely, you will see it in a downtrend. It represents indecision in the market and a probable change in the price direction.
Three consecutive candles comprise a pattern. They are all bullish and each candle’s opening and closing lie higher than those of the previous one. The last candle in the pattern has a significantly smaller body and a long upper wick. Moreover, its opening falls close to the second candle’s closing.
Once you spot a Stalled candlestick pattern on your chart, wait for the development of the next candle. You may enter short trade when the candle following the pattern crosses below the low of the last candle from the pattern. There is also a possibility to use the formation in order to close the existing position.
The Stalled pattern typically appears at the end of the uptrend. However, the bearish reversal will not occur with 100% certainty. You may always use an extra method to confirm the trading signals received.
Summary
Candlesticks form different patterns on the chart. They often mark crucial moments in the price behaviour. There are continuation and reversal patterns. The formation described in today’s article belongs to the reversal group of patterns, which means the price is likely to change direction after its appearance. The Stalled candlestick pattern can be observed more frequently during the uptrend. Bullish Stalled pattern is rare to see and even when you spot it, be careful because it is not so strong as its bearish version.
The Stalled pattern is formed by three candles, where each successive candle opens and closes higher than the previous one. Furthermore, the last candle has the smallest body of all three candles. Remember that all three candles need to be green, which means their closing prices are higher than opening prices.
The trading signal is obtained when the candle which follows the pattern moves below the third candle of the pattern.
It is always a good idea to use an additional technical analysis tool to make sure your trading decision is right.
Binomo offers a free demo account. This account is supplied with virtual cash, so you will not risk losing your own money there. In addition, there is no time limit for using it, so you can practice there any time you need to. Go there to check how good you are at reading the Stalled candlestick pattern. Come back whenever you wish to test a new strategy or to introduce some changes to the one you are currently using.
All the best!