Day 3: The Power of Candlestick Patterns at Key Levels

Welcome to Day 3! Now that you understand support/resistance (S&R) and candlesticks, let’s combine them for high-probability trade setups.

🔥 Today’s Breakthrough Skill:
Spotting reversal patterns at S&R levels – where big traders place their orders.


Step 1: The 3 Most Reliable Reversal Patterns

1. Hammer (Bullish Reversal)

  • Looks like: A candle with small body + long lower wick

  • Where it works best: At support levels

  • Psychology: Sellers pushed price down, but buyers aggressively reversed it

2. Shooting Star (Bearish Reversal)

  • Looks like: Small body + long upper wick

  • Where it works best: At resistance levels

  • Psychology: Buyers pushed price up, but sellers slammed it down

3. Engulfing Pattern (Strong Reversal Signal)

  • Bullish: Green candle completely "eats" previous red candle

  • Bearish: Red candle engulfs previous green candle

📌 Action Task:

  1. Open your chart from Day 2

  2. Find 1 hammer at support AND 1 shooting star at resistance

  3. Screenshot them (we’ll analyze these tomorrow)


Step 2: How to Trade These Patterns

The 3-Step Confirmation Method:

  1. Identify S&R level (from Day 2)

  2. Wait for reversal pattern (today’s lesson)

  3. Confirm with next candle (price moving in expected direction)

Example Trade Setup:

  1. Price approaches established support

  2. Forms a hammer candle

  3. Next candle starts moving up → Valid buy signal


Homework for Day 4

Tomorrow: We’ll analyze volume – the secret confirmation tool!


Final Thought

"Patterns at key levels are where retail traders lose and smart traders profit."

🔗 Follow Live Examples: