In this Trading Talk, Rey will focus on two common candlestick patterns: the Rising Sun and the Dark Cloud Cover.
Candlestick patterns are a popular tool used by traders to analyze price movements in financial markets. The patterns are based on the shapes of the candlesticks and can provide insight into market sentiment and potential changes in direction of the markets, with some patterns showing strength, and some showing weakness.
The Rising Sun Pattern
The Rising Sun pattern is a bullish pattern that occurs at the end of a downtrend. The pattern is characterized by a long red candlestick followed by a long green candlestick. The green candlestick opens lower than the close of the previous day but then closes above the midpoint of the red candlestick. This pattern indicates a shift in sentiment from bearish to bullish, with buyers taking control of the market.
The Dark Cloud Cover Pattern
The Dark Cloud Cover pattern, on the other hand, is a bearish pattern that occurs at the end of an uptrend. The pattern is characterized by a long green candlestick followed by a long red candlestick. The red candlestick opens higher than the close of the previous day but then closes below the midpoint of the green candlestick. This pattern indicates a shift in sentiment from bullish to bearish, with sellers taking control of the market.
Using the Trade View X Trading Platform, traders can reference the Rising Sun formation pre-built into a blocks in which you can reference and automate so you never miss the rising sun formation again.
For example, the below algo will enter a buy trade if there is a Rising Sun pattern above the Moving Averages.
In conclusion, the Rising Sun and Dark Cloud Cover patterns combined with Trade View X automation can increase your chances of finding potential candlestick patterns in the markets.
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