Inverted HammerTimeframe: 5 Hours
Reliability: Low
A reversal pattern.
During a downtrend, the open is lower, then it trades higher, but closes near its open, therefore looking like an inverted lollipop.
It needs bullish verification on the next candlestick.
Engulfing BearishTimeframe: Daily
Reliability: Moderate
A reversal pattern.
Occurring during an uptrend, this pattern characterized by a large black real body, which engulfs a white real body (it doesn’t need to engulf the shadows). This signifies that the uptrend has been hurt and the bears may be gaining strength. The Engulfing indicator is also the first two candles of the Three Outside patterns.
It is a major reversal signal.
Factors that are increasing this signal’s reliability:
1) The first candlestick has a very small real body and the second candlestick a very large real body.
2) The pattern appears after a protracted or very fast move.
3) Heavy volume on the second black candlestick.
4) The second candlestick engulfs more than one real body.
Falling Three MethodsTimeframe: 15 Minutes
Reliability: High
A continuation pattern.
During a downtrend, a long black candlestick occurs, following by three candles of small real bodies that fall into a short uptrend. On the fifth candle, the bears come in strong to close at a new low. This small uptrend, in between two long black candles, is consistent with investors taking a break. The downward should continue.
