Penny Stock Charts And Patterns

Learning to recognize penny stock charts with unique patterns can help traders and investors pick entry points and increasing the chance of profitable trades. Candlestick charts are probably the best choice when choosing a type of chart to use in trading and investing.

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.

Abandoned Baby

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.

Engulfing Bullish Pattern

This pattern will show up on penny stock charts in a downtrend. The Engulfing Bullish Pattern shows a new low at opening followed by a high that closed above the previous day, engulfing the previous day's candle. This shows in most cases that the penny stock has lost it's downward momentum and a reversal may be coming in the next session. This chart pattern on penny stock charts has a moderate chance of success.

Doji Star Bullish
When penny stock charts are in a downtrend, this pattern shows up as the selling continues and forms a long black candle and gaps down even further the second day. However, the second day is a struggle for sellers as buyers come in to buy the stock forming a doji star at the end of trading. This pattern shows that their may be a potential for a rally the next session, especially so if the next trading day shows confirmation and trend reversal with a higher open on the third day.
Candlesticks are powerful tools when used in conjunction with other indicators. Learning to identify and read chart patterns can only enhance your trading ability and enhance your skill as a trader and as a investor. Penny stock charts with candlesticks should be a tool in every traders arsenal.
1000 Penny Stocks and Penny Stock Charts