≈ When Sellers Strike. ≈

Traders,

Yesterday we looked at the most common bullish reversal candles. Today we’re headed to the bears’ den to see what it looks like when sellers strike.

Bearish reversal candles form at resistance zones and signal that supply is overwhelming demand. They reveal the baton is passing from buyers to sellers. Bulls have control going into the session, but bears have it going out. In terms of price, resistance is up, up, down. But how up shifts to down can vary. Thus, there are many different types of reversal formations.

Here are three common examples:

A shooting star candle boasts a small body with no lower wick and a long upper wick. It forms when prices rise significantly early in the day but fall back aggressively before the closing bell. It shows that bulls had the upper hand in the morning, but bears fought back and took control of the intraday trend by the end. It is the bears’ version of the hammer candle.

A bearish engulfing candle pattern involves two consecutive candles. The first is an up day showing buyers in complete control. The next day has prices opening higher, hinting at continuing the previous session. But sellers swarm to push prices lower all day long. Notably, the candle body completely envelopes the previous day, effectively trapping any bulls who entered. This is the bears’ version of the bullish engulfing candle.

A bearish abandoned baby candle pattern consists of three candles. The first is an up day that closes near the high. The second starts with an up gap and ends with a narrow body showing momentum slowing. Finally, the third begins with a down gap and ends with a bearish close, confirming sellers have wrested control of the short-term trend. This is the bears’ version of the bearish abandoned baby.

🛑 Upcoming Webinar – Technical Analysis 101: The Basics of Candlesticks Analysis with Coach Tyler Craig | January 17th, 2022 at 8:30 PM EST on YouTube

You don’t want to miss this webinar. Set an alert, clear your calendar, and get ready for an insightful discussion on technical analysis that will help you take your chart reading and your trading skills to the next level.

In this webinar, you are going to learn:

✅ Why Candlesticks are our preferred form of charting.
✅ How to craft a candlestick
✅ The basics of bullish reversal candles
✅ The basics of bearish reversal candles
✅ Understanding candlesticks in the context of the trend

Click on the button below to go to YouTube and set a reminder so you won’t miss it when Coach Tyler goes LIVE.

Video of the Day: Trading Concept Check: Candle Patterns (With Examples)

Trading Concept Check: How to interpret candlesticks in context and spot buying and selling opportunities.

Chart of the Day: Candlestick Cheatsheet: The Bears [sneak preview]

[sneak preview] Check out this visual of popular bearish candlestick patterns. How many do you recognize? Download the cheat sheet in PDF format by clicking on the button below.

Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

The Coaches Show Replay

If you missed last night’s episode where Coaches Tyler Craig and Greg Holmes talked about Finding Trades With The Tackle 25 or would like to watch it again, check it out here.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

Trade Masters 7:00 PM EST

Every Wednesday at 7 PM EST join us on the Trade Masters where two Coaches go head-to-head to see who can find the best trading setup.

Trading Justice 459: The Basics of Candlestick Analysis

In this episode, Coach Matt and Tim discuss the basics of candlestick analysis in reading charts.

Candlesticks are built through a few simple data points – the open, high, low, and close/last – but are incredibly powerful visually for traders who want to interpret data quickly to make decisions about what is happening in the price action of a chart. Listen in to the coaches discuss candlestick analysis, and how you can use it in your trading.

Listen to the episode in the player below:

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