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Figure 1. Black Candle (basic candle).
Forecast: reversal or continuation of a trend
Trend prior to the pattern: n/a
Opposite candlestick: White Candle
Construction:
- black body
- upper and lower shadows required
- none of the shadows can be longer than the body
- appears on as a long line
The Black Candle often appears on the candlestick charts. In a downtrend it should be treated mostly as a signal of the strength of a trend which we can expect to continue. A candle of this kind can also be a part of a bullish reversal pattern (e.g. Last Engulfing Bottom, Piercing, Bullish Harami). The Black Candle may also appear during an uptrend and then it is important to analyze the broader market context. First of all, as with White Candles, attention should be paid to the liquidity of the market. At low liquidity, the series of Black Candles in an uptrend may signal that market participants use the last phase of the trading session to sell assets consistently, which in turn may cause a major breakdown. This, however, is an extreme situation in markets with low liquidity. More often, the Black Candle in an uptrend may be the part of a bearish reversal pattern (e.g. Dark Cloud Cover).
Figure 2. A Black Candle being part of bullish reversal patterns: Piercing pattern and Bullish Tasuki Line. Long black bodies before the Piercing pattern create a strong resistance zone. The chart shows accurately for how long the resistance zone lasted. Attention should be also paid to the last candle on the chart, Long Black Candle and Black Candle, as their bodies do not differ much in height. On the Long Black Candle classification a big impact has a low market volatility before its occurrence.
