Japanese candlesticks - Reversal patterns

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What is a Japanese candlesticks reversal pattern?

Reversal patterns in Japanese candlesticks herald a reversal of the current trend. For a bullish trend, a reversal pattern gives us a signal to sell if we have justgot stuck in a resistance zone or if we are at the highest. Conversely, with a bearish trend, a reversal pattern gives us a signal to buy if we have just got stuck in a support zone or if we are at the lowest.Reversal patterns in Japanese candlesticks must only be taken into account close to strategic areas (support and resistance lines in chart patterns, technical indicator lines, etc.).

It should be noted that these reversal patterns have an average success rate of 50%.Indeed, many patterns in this category can be classified as indecision figures, as Steve Neson shows in his book "Japanese Candlestick Charting Techniques". You should therefore use reversal patterns with extreme caution.This is why it is essential to carry out a more detailed technical analysis and not only take a position on the detection of reversal patterns in Japanese candlesticks. You should consider the buy/sell signals along with signals given by more traditional technical analysis (chart patterns, resistances and supports, technical indicators, etc.).

Japanese candlestick reversal patternsare first and foremost a way to improve the quality of your signals by avoiding false signals and optimizing your input points.