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Models of Japanese Candles Double Part II

22-08-2017 | No Views : 390

Is a binary form consisting of two candlesticks that comes at the end of the uptrend indicating weakness of purchasing power and the approaching trend of prices to fall, which is always coming in the stock market, and rarely appear in the foreign exchange market, or the appearance is distorted not complete.
The form consists of two candlesticks, the first candle is ascending, and the second is descending to half the body of the first candle or more than half, and if not closed down the middle of the first candle you need to confirm a candle low, and the second candle close is near the lowest price.

Dark cloud model

Conditions of dark cloud model:

1- The opening of the second candle shall be higher than the highest price of the first candle, so that the opening shall be a gap to the top.
2- It comes at the end of a bullish trend, or at the top in a cross-direction.
3- The black bearish candlestick is more than half the size of the former white label.
4- The higher the actual body size of the descending candlestick, the stronger this evidence is of the market forces appearing in the market and a sign of a possible reversal.

The absence of the first requirement to open the second candle on a gap causes a distorted pattern, but can be relied upon in the foreign exchange market (Forex), due to lack of gaps.
The pattern is also widely seen in the stock market, where gaps are frequent due to price trading only 8 hours per day, unlike the currency market where prices are traded 24 hours a day. 

Some factors increase the strength of the model during trading:

  • The more the second candle goes into the first candle, the more likely the model will succeed.
  • The second candlestick opens above the resistance and then the downside is to close below it.
  • If both candles form without tails.
In this way, we have finished explaining the rules of the dark cloud pattern, applying the rules of this model on the Japanese candlestick chart, along with the consolidation with another type of technical analysis, which reaches the highest ratios for the success of your trades during trading.
Models of Japanese Candles Double Part I

Learn price models in technical analysis Models of Japanese Candles Double Part I
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