Are you trading in Olymp Trade with candlestick patterns? Do the instant signals of the price make you interested during trading? How do you know which is the most reliable within the series of reversal candlestick patterns? If you are in need of the answers to the above questions, then this article is for you.
Today, I will share with you the secret of the candlestick pattern. Which patterns are best and how to get the most out of this particular price signal in trading.
Statistics of reversal candlestick patterns within 2 weeks in Olymp Trade
Before writing this article, I spent 2 weeks to statisticize the appearances and the probabilities of candles and reversal candlestick patterns in Olymp Trade. I statisticized the EUR/USD pair in the 5-minute Japanese candlestick chart.
The statistics give me a more comprehensive and accurate view of those trading patterns. And especially, how precise each pattern is. I believe in price action and exceptional candlestick patterns. Let’s see what the statistics tell us.
When prices follow the trend, wait for the stars
This is the first result I want to talk about from my stats. The stars here mean the Morning Star and the Evening Star reversal candlestick patterns. These are the two best signals that prices will continue to follow the trend once they appear.
Specifically, when the price goes uptrend and the Morning Star pattern appears, it is a good omen to open UP orders. Let’s look at the following typical example.
On the contrary, when the price is in a downtrend, wait for the Evening Star to open an order. It yields a win rate of up to 80-85%. This is a very good signal for you to open DOWN orders following the trend. Let’s take a look at a typical example of the power of Evening Star when prices go in a downtrend in Olymp Trade.
Pin Bar – Catching a trend is never too late
Following those two stars are Pin Bar candlesticks. Bullish Pin Bar is for bullish trends and Bearish Pin Bar is for bearish ones. This is also a 1-candle pattern with very high reliability when trading in the trend. Let’s take a look at some examples in the past 2 weeks in Olymp Trade. When there was a Pin Bar, there was trend continuation.
Bullish Pin Bar is a very obvious price rejection in an uptrend.
Sideways market – Wait for Engulfing and Harami
These are arguably the 2 most powerful candlestick patterns when the price is sideways. And they give more accurate reversal signals than any candlestick that you may know.
The trend development and continuation signals are also very reliable when Engulfing appears.
Engulfing can be said to be a very powerful price signal in many types of markets. It offers a win rate of up to 83% when the price goes sideways. Please pay special attention when it appears. Using this signal to confirm transactions is a smart and safe idea.
Harami candlestick patterns in a sideways market
Next in the group of best reversal candlestick patterns is the Harami candlestick pattern. This is the name I want to mention right after Engulfing. Although it appears less, the effectiveness that Harami candlestick patterns bring about is great. Here are some examples in Olymp Trade these days.
Or, in this example, the price would turn around as soon as the Harami candlestick pattern was completed.
Pin Bar candlesticks when prices go sideways
In this case, the Pin Bar acts as the Shooting Star and the Hammer. It shows price response to special price zones followed by a reversal. The win rate of these 2 candlesticks is 75-80% according to my statistics. This is a signal that is reliable enough for you to make reversal trades when the price goes sideways.
Other candlestick patterns
In addition to the above 4 types of candlestick patterns, I also statisticized other candlestick patterns. However, most of them did not bring many positive results.
Details are as follows:
+ Three White Soldiers, Three Black Crows, Dark Cloud Cover: were less frequent and the accuracy was not too high.
+ Tweezer Bottom, Tweezer Top, Three Inside Down, Three Inside Up: appeared much but didn’t bring much effect. Their signals significantly deviated.
So, in summary, we have 4 candlestick patterns with the highest accuracy. They are in turn Engulfing, Harami, Morning Star (Evening Star), and the Pin Bar candlestick. These will be the best price signals you need to pay particular attention to as they appear.
Notes on using candlestick patterns for trading in Olymp Trade
Note 1: Candlestick patterns are vulnerable to the news. This is true not only for candlestick patterns but also for technical analysis. When news hits, everything will be decided by the news.
Note 2: If you want to know if a candlestick pattern is a signal of a trend reversal, consider other factors such as indicators, price zones where the candlestick pattern appears, etc. The candlestick pattern is only a warning signal. Sometimes, it appears only as a pullback of price during a mainstream trend. On the contrary, the reversal pattern, signaling a continuation signal, is a very good signal to trade.
I have shared with you how I learned about trading patterns. If you want to verify, try with a Demo account or do the statistics yourself. Of course, 2 weeks is not long enough for the results to be absolutely accurate. But more importantly, I understood them better. I will definitely use them better than I used to. And you, what is your opinion? Please leave your comments in the comment section. We will discuss it together. Love.