Using candlestick patterns
Candlestick patterns are important. They depict potential turning points by identifying a change in market sentiment, but only in certain instances. These patterns give defined entry points and easily identifiable stop loss areas. They are rule-based and therefore are simple to identify. They define emotion in the market, when combined with some easy to follow rules.
The bullish hammer and bearish shooting star are important single candle patterns when they are observed in well defined areas. The bullish morning star and bearish evening star are important three candle patterns that give strong warnings of a potential change in sentiment.
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