Japanese Candlestick charts have been around since the 1700's, primarily used by rice traders. These charts have grown in popularity over the years as one of the best technical analysis tools available for choosing price direction. Below, we will list some candlestick patterns and their meaning.
The Abandoned Baby chart pattern is usually a strong bullish indicator. At the end of a downtrend, the stock increases a bearish trend with a black candle day with the second day being a gap down open on the second day. The second day candle trades in a tight range the entire session and closes near the session open. The second day shows that a struggle between bulls and bears took place with no clear winner on the day but does signal that a rally is possible.This scenario definitely shows the potential for a rally, as many positions have been changed. Reversal is confirmed on the third day by a gap opening and long white candle to the upside. This is a powerful chart pattern with very good reliability and should be considered when scanning penny stock charts.