The Hammer and the Hangman Candlestick Patterns are Important Reversal Signals

Illustration: Currency

The hammer, the hangman and the doji are some of the few most important candlestick patterns that every trader should recognize. Both the hammer and the hangman have a small real body and a long lower shadow with almost no upper shadow. To be a hammer or a hangman, the shadow should be at least two times the body (the longer the shadow the more significant the pattern). However, it is very easy to confuse hammer with the hangman.

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Combining Doji Candlestick Patterns with Bollinger Bands and Stochastic

Illustration: Forex Chart

Doji is considered to be one of the most important candlestick patterns. Appearance of a Doji signals the beginning of a minor or an intermediate trend reversal. Failing to recognize the Doji pattern, means you run the risk of buying at the top or staying far too long in a trade. As a trader, you must be able to immediately recognize the four different type of Dojis. The four type of Dojis are:

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Doji Candlestick Patterns

Illustration: Doji Candlesticks

There are certain Candlestick Patterns that are vital to your trading. They are vital because they identify possible trend reversals. Why should you identify these candlestick patterns? Because they can make you money! Failure to spot these candlestick patterns can lead to costly trading mistakes.

Ask any trader who uses candlesticks in trading, which of all the candlestick patterns is the most important to recognize. He or she will unhesitatingly say a Doji. Appearance of a Doji Candlestick Pattern is often a signal for the beginning of a minor or an intermediate trend.

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