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A bearish candlestick happens when the market opens higher, but closes lower-it's red candle. The visual presentation reveals that in that session, sellers outnumbered buyers, and this may not have ended there.
Bearish candlestick patterns indicate a market controlled by sellers and may fall shortly; therefore, these are important signals for the trader. Upon recognition, these patterns could cue you to sell or abstain from buying as prices fall.
The Bearish Engulfing and the Shooting Star are the two most frequently occurring patterns. The Bearish Engulfing pattern occurs when a larger red candle engulfs the smaller green candle of the previous day, which generally means there has been a high shift toward selling pressure. The Shooting Star shows up after a price rally with a small body and a long upper wick, meaning buyers tried to take prices up but failed, and it is now the sellers' stage.
Of course, learning to recognize these patterns puts you ahead of the market curve. However, it is always wise to couple this knowledge with other tools from technical analysis to get a complete view. Used correctly, bearish candlestick patterns can assist you in moving better through these market changes, thus ensuring a more positive outcome for your trades.
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