Author : Ahmad Hassam

Trend trading is one of the most profitable trading strategies You must have heard the oft repeated quote that Trend is your friend But trend can only be your friend if you know how it is going to behave in the future If you don’t know that the trend is going to reverse soon, you are going to end up with a heavy loss Candlestick charting is one of the ways to predict the future of a trend whether it is going to reverse itself in the near future or continue for sometime Bullish Necklines is a candlestick pattern that can help you know whether the trend is continuing or not It is a trend confirmation pattern There are types of Necklines Patterns; one is the In Neck and the other is the Out Neck Pattern

The candle formed on the setup day should be a long bullish candle that shows a lot of buying On the signal day a bearish candle either long or short is formed with its closing price very near the close of the setup day

Now,there can be two types of Neckline Patterns depending on the closing prices on the signal and the setup days If the closing price on the signal day is alost near the closing price on the setup day, it is an On Neck Pattern In case, if the closing price on the first day is little lower than the closing price on the signal day, it is a In Neck Pattern

You might be thinking that this is not much of a difference Well, this is true but nevertheless, you should be aware of this slight difference between the In Neck and the On Neck Patterns Both these patterns are telling the same thing that the uptrend is going to continue in the near future So even if you are not able to differentiate between the In Neck and the On Neck, don’t worry much You must at least be able to identify that a Neckline Pattern has been formed

Now, let’s talk about a trend reversal candlestick pattern; The Bearish Meeting Line On the first day or what you call the setup day, you will find a long bullish candle What this means is that heavy buying took place throughout the day On the second day or what you call the signal day, you will find a gap opening This gap entices the sellers to start selling that continues throughout the day This will result in a long bearish candle on the second or what you call the signal day This long bearish candle should have a close very near the open of the low of the day as well as the close should be very near to the close on the first or what you call the setup day This is a Bearish Meeting Line Trend Reversal Pattern What is means is that the trend is about to reverse itself soon!

Another trend reversal pattern is the Bearish Piercing Ling Pattern This candlestick pattern is formed when on the first or the setup day, a bullish long candle is formed meaning that the bulls have been in control of the market throughout the day The second day or what you call the signal day, there will be a bearish candle formed This bearish candle should have an opening higher than the first day’s high This means that on the second day or what you call the signal day, the sellers started selling pushing the price action down past the opening price to the midpoint of the first day candle

When this Bearish Piercing Line Candlestick Pattern is formed, it means that the price action has lost it’s momentum This pattern usually occurs in the last stages of an uptrend and when it happens, it means that the trend is about to reverse itself

Mr. Ahmad Hassam has done Masters from Harvard. Master Candlestick Charting with this 82 page PDF FREE Candlestick Guide! Get this 49 page Quantum Swing Trading Report FREE!

Syndication Source: Thought Search Articles

Filed under: Finance

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