Glad to have you here at Joyful Dividends! You are reading a blog series on Introduction to Candlesticks. Today, we introduce you to the Black Candlestick, which represents extreme bullishness. If you will like to check out a series of candlesticks to help you invest profitably, please head over to Basic Candlesticks for a full list!
The body of this candlestick is black with normal length. Both upper and lower shadows are required, however, both shadows cannot be longer than the body.
The Black Candlestick implies normal selling pressure. Prices fell throughout the day from open to close and sellers were mostly in control of the price action.
Joyful Dividends Explains:
The black candlestick is a basic candle and appears often on the candlestick charts. As it reflects only one day’s trading, it is not enough to determine bearishness or direction of the market. It may indicate a continuation of the current trend or a reversal.
In a downtrend, the black candlestick should be treated as a signal that the downtrend may continue. This candle can also be part of a bullish reversal pattern such as the Last Engulfing Bottom, Piercing, or Bullish Harami patterns.
In an uptrend, the liquidity of the market should be monitored as well. A series of black candles in an uptrend may mean that the market is selling consistently, which can cause a bearish reversal pattern such as the Dark Cloud Cover.