CANDLESTICS PATTERNS
I will discuss about reversal pattern, reversal is a change in the direction of the price of an asset. Reversals can occur up or down.An uptrend, which is a series of higher swing highs and higher lows, reverses into a downtrend by changing to a series of lower highs and lows. A downtrend, which is a series of lower highs and lower lows, reverses into an uptrend by changing to a series of higher highs and higher lows.
Reversals are based on the overall price direction and usually not based on one or two periods / bars on the chart. Certain indicators, such as moving averages or trendlines, can help isolate trends as well as spot reversals
Double Top
The double top is a very bearish reversal pattern. Formed after the asset hit a high price twice in a row with a moderate decline between the two highs. It was confirmed after the asset price fell below a support level equal to the low between the two previous highs.
If a double top occurs, the second peak will usually be slightly below the first one indicating resistance and fatigue. Double tops can be a rare occurrence with their formation often indicating that investors are looking to profit from a bullish trend in the end
However, traders must be patient and identify critical support levels to confirm the identity of the double top. Basing a double top solely on the formation of two consecutive peaks can lead to false readings and lead to exiting a position earlier.
Double Bottom
The double bottom pattern is basically the opposite of the double top pattern. A double bottom is formed following a single bottoming pattern which can also be the first sign of a potential reversal. This pattern will usually occur at the end of an extended bearish trend.
