Smart Exit Strategies Using Advanced Candlestick Patterns
Discover How To Make Clearer Exit Decisions With These Advanced Patterns
Candlestick patterns can be used to identify when to buy a share as was covered in Candlestick
patterns for professional traders. They can also be used when tracking your shares to identify possible points to
sell the share at. The following candlestick patterns are common patterns that can be used to identify when to sell
your shares.
Shooting Star
The shooting star has a small body with a long upper shadow at least two to three times longer
than the main body. The colour of the pattern can be either red or green and the candle can be open or solid. The
shooting star is one of the most common candlestick patterns that are found in the market and very reliable. The
shooting star indicates that a share is likely to go down when seen after a strong rise in the share price.
The shooting star shows that the share price rose strongly early in the day to reach a new high
level. At the top of the shadow the profit takers stepped in to sell the share back down, near to where it opened.
This wave of selling has stalled the up trend and it is now time to consider selling.
Hanging Man
The hanging man looks the same as a hammer. The difference between the two patterns is dependent
on their location. A hammer is found after a share price has been falling while a hanging man is seen after a share
price has been rising. The hanging man consists of a small body with a long lower shadow which must be at least two
to three times the length of the main body for the pattern to be considered legitimate.
The candle can be red or green, open or solid. The Hanging Man shows that there has been a large
sell off of shares during the day and this may have exhausted the up trend. If the next day’s opening price is less
than the Hanging Man day’s close, prices will usually fall. If the next day’s price opens even, or above, then
prices will usually crab sideways.
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