Complex candlestick formations are an easy to use, yet highly effectively tool to find trading opportunities. The short time frames of binary options are perfect to utilize the high potential of complex candlestick patterns.
Complex candlesticks can provide you with reliable trading opportunities in every kind of market environment. Please be aware, though, that there are so many more complex candlestick formations that we could fill volumes of books.
This article will present the most common and most important complex candlesticks formations. It will ignore rare candlestick formations and especially large candlestick formations, which can sometimes include 50, 100, and more candlesticks. We will focus on these large formations in separate articles.
Let’s start by understanding the most important complex candlestick formations first. If some expressions are new to you, please take a look at our article on simple candlestick formations, which is the basis for this article.
The Bearish Harami is an upwards Big Candle, followed by a Doji or a smaller downwards candlestick contained within the Big Candle. In an uptrend, the Bearish Harami is considered a bearish formation.
The exact opposite of a Bearish Harami, the Bullish Harami is considered a bullish pattern.
The Bearish 3-Method Formation is a downwards Big Candle followed by a number of smaller candlesticks contained within the Big Candle and another downwards Big Candle that breaks out of the first. In a downtrend, the Bearish 3-Method Formation is considered a bearish continuation pattern.
The opposite of the Bearish 3-Method Formation is considered a bullish continuation pattern in an uptrend.
The Dark Cloud Cover is formed by an upwards Big Candle followed by a downwards candlestick that opens above the high of the Big Candle but closes well within its body. After an upwards movement the Downwards Cloud Cover is considered a reversal pattern.
The Engulfing Bearish Line consists of a small upwards candlestick contained within a downwards Big Candle. Near the top of a movement it is a very important reversal signal.
The Engulfing Bullish Line, the exact opposite of the Engulfing Bearish Line, is considered a strong signal for a reversal when near the bottom of a movement.
The evening star consists of one upwards big candle followed by a smaller candlestick in either direction and a downwards Big Candle closing well within the range of the upwards Big Candle. In an uptrend, the evening star is considered a reversal signal, starting a bearish movement.
he exact opposite of the Evening Star, the Morning Star, indicates a reversal pattern to a bullish movement after a bearish movement.
The Falling window consists of a candlestick opening significantly below the low of the preceding candlestick. With the gap strategy, you can decide whether this gap is likely to close or whether it will start a new, strong movement. Either way, you can trade the prediction with a binary option.
When they appear near the top of a movement, three downwards Big Candles with consecutively lower closing prices indicate a bearish reversal.
Three upwards Big Candles with consecutively higher closing prices indicate a bullish reversal when they appear in a downwards trend. In an upwards trend, the same formation indicates that the trade is doing well and will like fasten.
The Piercing Line is a downwards candlestick followed by an upwards candlestick that opens lower but closes within the downwards candlestick. Near the bottom of a downwards movement it is considered a reversal sign to a bullish movement.
All of the formations listed above can help you to predict market movement. As the description of many complex candlestick formations implies, where a complex candlestick pattern occurs is important for its prediction.
Some formations indicate a reversal if the market is in a downtrend, but the same formations do not necessarily indicate a strengthening trend if they occur in an uptrend. While some traders are willing to accept the risk and invest in complex candlestick formations whenever they occurs, you can create better results by combining complex candlestick formations with trend analysis.
By understanding the trend the market is currently in, you can also understand complex candlestick formations better. This increased understanding will help you to make better predictions and trade more profitable.
Most importantly, this understanding can help you to understand whether the market has the potential to reach the target price of a one touch option, which would create a higher payout for you, or whether you should play it safe and stick with a high / low option.
Such nuances are the key to successful trading.