Daily Bearish Candlesticks
This scan identifies stocks that experienced a recent uptrend on the daily chart and, on the prior trading day, opened and closed at the same price. Additionally, the stock experienced current weakness and moved lower following the Doji or same open and close price. This indicates a reversal and potential pressure to the down side.
Bearish Engulfing patterns occur when a stock closes higher than its opening price during the trading day. The previous trading day had a pattern of a higher high and lower low during the trading day, but closed below the prior day's low. When these two consecutive trading day patterns are met, the stock lands on the Bearish Engulfing scan list and is a potential sell candidate.
A large candlestick followed by a much smaller candlestick whose body is located within the vertical range of the larger candle's body defines a bearish harami trend. Such a pattern indicates that the previous upward trend is coming to an end. A bearish harami may be formed from a combination of a large red or green candlestick and a smaller red or green candlestick. The smaller the second candlestick, the more likely the reversal. Typically, a large white candlestick followed by a small red candlestick is a strong sign that the trend is ending.
Dark Cloud Cover
Dark cloud cover is a candlestick pattern that indicates a potential downtrend. This pattern occurs over two trading days. In the first trading day, a stock closes above its open for the period. During the next trading day, the stock opens above the prior day's close and closes both below the current day's open and the mid-point of the prior day's range. This indicates a potential short selling opportunity.
This trend is defined by a bearish candlestick pattern consisting of three candles that have demonstrated the following characteristics:
- The first bar is a large green candlestick located within an uptrend.
- The middle bar is a small-bodied candle (red or green) that closes above the first green bar.
- The last bar is a large red candle that opens below the middle candle and closes near the center of the first bar's body.
Evening star formations can be useful in determining trend changes, particularly when you use the formations in conjunction with other indicators. Many traders use price oscillators and trend lines to confirm this candlestick pattern.
The hanging man is a bearish reversal pattern that can mark a top or resistance level. A hanging man forms after an advance and signals that selling pressure is starting to increase. The hanging man chart pattern confirms that sellers pushed prices lower during the session. Even though the bulls regained their footing and drove prices higher by the finish, the appearance of selling pressure raises the yellow flag. As with the hammer, a hanging man requires bearish confirmation before action. A sharp sell off after this pattern will trigger a stock to make this scan list.