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. How to know when it is the best time to ride the trend and when it is the best time to get out of a trend? Candlestick charting and candlestick patterns can help you in this regard. There are a number of highly profitable candlestick patterns that you can use to predict when the trend is about to reverse itself and when it is going to continue. One such candlestick pattern is the Bullish Necklines. This is a highly profitable trend continuation pattern. There are types of Necklines Patterns; one is the In Neck and the other is the Out Neck Pattern. Master these Candlestick Patterns with this 82 page PDF FREE Candlestick Guide. Learn this powerful Fibonacci Retracement method FREE that pulls 500+ pips per trade! Download this 1 Minute Forex Trading System that makes money instantly anytime you want! This system is very simple to use and can be used even by those who have never traded forex before, so give it a try, you will like it!
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 Bullish Necklines. If the closing price on the signal day is almost equal to the closing price on the first day or what you call the setup day, this pattern is called the On Neck Pattern. However, in case the closing price on the second day or what you call the signal day is a little higher than the closing price on the first day or what you call the setup day, you have what you call an In Neck Pattern . Not much of a difference but you should nevertheless know this difference. Both on neck and in neck pattern tell the same story, so even if you are not able of distinguish between them, doesn’t make much of a difference. When this pattern appears in an uptrend, it means that the uptrend will continue in the future.
Now, let’s talk about a trend reversal candlestick pattern; Bearish Piercing Line 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.!
Now this is a trend reversal pattern that you will find right at the very end of a trend. So when you spot this trend reversal pattern simply get out of the trend. There are many more highly profitable trend continuation and trend reversal candlestick patterns. When you combine these trend continuation and trend reversal patterns with technical indicators, you get a highly profitable combination.
