Today's candlestick pattern in indicative of a reversalAs I foresaw in a
previous post a reversal was initiated at $1.37, based on Fibonacci Retracement.
Now, today's candle pattern - a Piercing Line (look it up), confirms the reversal.
Find the chart here: https://1drv.ms/u/s!AlTSnSehnek0hroN_Ev9oczUX1oraQ?e=gN3QpQ
In a nutshell, here is the spychology behind this pattern:
- A long black candle forms in a downtrend which maintains the bearishness of the trend.
- Then, a gap to the dowbnside on the next day's open further perpetuates this bearishness. However, the market rallies all day and closes much higher. In fact, the close is above the midpoint of the body of the long previous black candle.
- This action causes concern to the bears and a potential bottom has been made.
Note: The more the penetration into the prior day's black candle (which is the case here), the more likely it will be a successful reversal pattern.
