Comparison and Analysis of Shape Differences between Peak Candlestick and Reverse Candlestick

Candlestick:

In addition to the common patterns introduced earlier, there are also some patterns encountered in trading that reflect market psychology that are also worthy of attention.

A spike high is a period in which the price high is significantly higher than the period before and after. In contrast, a spike low is a period in which the price low is significantly lower than the period before and after. Spike patterns usually signal a possible reversal in the current trend, and they often resemble hammer and hanging lines in appearance.

The significance of a high or low spike depends on the size of the gap between it and the high/low of the previous period - the larger the gap, the stronger the signal. In addition, the significance of a high spike increases when the market is in an uptrend; when the market is in a downtrend, the significance of a low spike increases.

Inverted candlestick:

A reversal high day is when the price makes a new high above the previous day, then falls back and falls below the previous day's closing price. Similar to the piercing pattern, the reversal low day is its mirror image - the market hits a new low and rebounds to close above the previous day's closing price. Like the piercing pattern, the reversal day is further enhanced when it occurs in an uptrend (reversal high day) or a downtrend (reversal low day).

While reversal days are widely watched and attract the attention of many traders, they are also prone to generating false signals. As a result, many traders, including Pakatan Harapan, judge a high reversal day more willing to see prices not just fall below the previous day's close, but also below the previous day's low. This represents a stronger reversal in the market, indicating that the sellers are in control, and this may be the time to consider entering the market short.