Market Technician Level 2: Candlestick Patterns

Reversal Patterns:
- Hammer: bullish reversal, long lower shadow, small body
- Shooting Star: bearish reversal, long upper shadow, small body
- Inverse Hammer: bullish reversal, long upper shadow, small body
- Hanging Man: bearish reversal, long lower shadow, small body
Continuation Patterns:
- Falling Three Methods: bearish continuation, three black crows
- Rising Three Methods: bullish continuation, three white soldiers
- Side by Side White Lines: bullish continuation, two white lines
- Side by Side Black Lines: bearish continuation, two black lines

Reversal Patterns:
- Head and Shoulders Top: bearish reversal, neckline breakout
- Head and Shoulders Bottom: bullish reversal, neckline breakout
- Inverse Head and Shoulders: bullish reversal, neckline breakout
- Wedge: bullish/bearish reversal, converging lines
Continuation Patterns:
- Rectangle: neutral, price consolidation
- Triangle: bullish/bearish continuation, converging lines
- Channel: bullish/bearish continuation, parallel lines

Defining a Trend:
- Up trend: higher highs and higher lows
- Down trend: lower highs and lower lows
- Sideways trend: trading range
Trend Strength:
- Measured by slope and price action
- Strong trends: steep slope, few corrections
- Weak trends: shallow slope, frequent corrections

Trend Indicators:
- Moving Averages (MA): smooths price action, shows trend
- Relative Strength Index (RSI): measures overbought/oversold conditions
Oscillators:
- Stochastic Oscillator: measures overbought/oversold conditions
- Momentum Indicator: measures rate of change

Volume and Price:
- Confirms price action: high volume on price moves
- Diverges from price action: low volume on price moves
Volume Indicators:
- On Balance Volume (OBV): accumulates volume on up/down days
- Accumulation/Distribution Line: measures money flow

Reversal Patterns:
- Hammer: Indicates bullish reversal; characterized by a long lower shadow and a small body at the top.
- Shooting Star: Reflects bearish reversal; features a long upper shadow and a small body at the bottom.
- Inverse Hammer: Suggests bullish reversal; has a long upper shadow with a small body at the bottom.
- Hanging Man: Signals bearish reversal; displays a long lower shadow with a small body at the top.
Continuation Patterns:
- Falling Three Methods: Indicates bearish continuation; consists of three black crows.
- Rising Three Methods: Represents bullish continuation; composed of three white soldiers.
- Side by Side White Lines: Demonstrates bullish continuation with two consecutive white lines.
- Side by Side Black Lines: Shows bearish continuation with two consecutive black lines.

Reversal Patterns:
- Head and Shoulders Top: Marks bearish reversal; identified by a neckline breakout.
- Head and Shoulders Bottom: Indicates bullish reversal; characterized by a neckline breakout.
- Inverse Head and Shoulders: Represents bullish reversal; confirmed at the neckline breakout.
- Wedge: Can signify either bullish or bearish reversal; recognized by converging lines.
Continuation Patterns:
- Rectangle: Neutral pattern; indicates price consolidation within a defined range.
- Triangle: Suggests bullish or bearish continuation; defined by converging lines indicating price compression.
- Channel: Indicates bullish or bearish continuation; characterized by parallel lines depicting consistent price movement.

Defining a Trend:
- Up Trend: Identified by higher highs and higher lows.
- Down Trend: Characterized by lower highs and lower lows.
- Sideways Trend: Reflects a trading range with no significant upward or downward movement.
Trend Strength:
- Evaluated based on slope and price action dynamics.
- Strong Trends: Indicated by a steep slope with few corrections.
- Weak Trends: Display shallow slopes with frequent corrections.

Trend Indicators:
- Moving Averages (MA): Smoothens price action, providing clarity on the underlying trend direction.
- Relative Strength Index (RSI): Assesses overbought or oversold conditions in the market.
Oscillators:
- Stochastic Oscillator: Measures the extent of overbought or oversold conditions, helping to identify potential reversals.
- Momentum Indicator: Tracks the rate of price change to signal potential trend continuations or reversals.

Volume and Price:
- High volume during price moves validates the strength of the trend.
- Low volume on price changes may indicate weak price action or potential reversals.
Volume Indicators:
- On Balance Volume (OBV): Summarizes volume flow, accumulating on days with price increases or decreases.
- Accumulation/Distribution Line: Measures the overall money flow to help gauge buying and selling pressure in the market.