1 Stock Market Reversal Candlestick Pattern You Need To Learn Now

One of the most powerful tools in a trader’s arsenal is the reversal candle pattern.

The stock market constantly goes up and goes down. It always will, no matter if we are in a bullish cycle or bearish cycle. Learning this stock market reversal candlestick pattern will dramatically help you find a great place to enter back into the markets.

Right now there is panic in the markets. Many traders are asking us questions like, “what are the best recession candlestick patterns, or best bearish candlestick formations when the stock market is collapsing.”

In this article today, we’ll be going through our #1 reversal candlestick for markets that are falling fast.

This candlestick we call the daily green giant candlestick pattern, or we like to call it, the DGG candlestick pattern.

What is the Daily Green Giant bullish reversal candlestick? That is the question we’ll be answering in this best reversal candlestick stock strategy.

Before we get into this, the daily green giant candlestick can be traded when the markets falling fast and you are looking to get in a buy to the upside.

If you are here today, the markets are probably experiencing one of these factors as the reason why it is moving down so fast:

Factors Leading to Rapid Downward Movement in Stocks

1. Economic Recession:
   • A broad economic downturn leading to decreased consumer and business spending.
2. Market Corrections and Pullbacks:
   • Natural market movements where stocks adjust after periods of gains.

3. Negative Earnings Reports:
   • Companies reporting earnings below expectations, causing investors to sell off shares.
4. Interest Rate Hikes:
   • Increases in interest rates by central banks, making borrowing more expensive and reducing disposable income.
5. Geopolitical Tensions:
   • Events like wars, trade disputes, and political instability affecting investor confidence.

6. Corporate Scandals:
   • Incidents of fraud, management misconduct, or other unethical behaviors leading to loss of investor trust.
7. Changes in Regulations:
   • New laws or regulations that negatively impact specific industries or companies.
8. Market Sentiment Shifts:
   • Changes in investor sentiment, often driven by fear or uncertainty, leading to widespread selling.

9. Global Economic Events:
   • Events like a global financial crisis, impacting economies and markets worldwide.
10. Technological Disruptions:
    • Innovations or technological advancements that render existing business models obsolete.
11. Pandemics or Health Crises:
    • Outbreaks of diseases leading to economic slowdowns and reduced business activity.

12. High Debt Levels:
    • Companies or countries facing difficulties in servicing their debt, leading to investor concerns.
13. Commodity Price Volatility:
    • Significant fluctuations in prices of key commodities like oil, affecting industries dependent on them.
14. Currency Fluctuations:
    • Rapid changes in exchange rates impacting companies with significant international exposure.

15. Inflation Concerns:
    • Rising inflation eroding purchasing power and increasing costs for businesses and consumers.
16. Market Manipulation:
    • Actions by individuals or groups to artificially inflate or deflate stock prices for personal gain.
17. Technological Failures:
    • Issues like cybersecurity breaches or significant system failures impacting company operations.

18. Natural Disasters:
    • Events like earthquakes, hurricanes, or floods causing economic disruptions.

These patterns serve as crucial indicators, signaling potential shifts in market direction and offering traders the opportunity to make informed decisions.

In this article, we will get into the intricacies of a specific reversal candle pattern, exploring its formation, significance, and practical application.

Whether you’re a seasoned trader looking to refine your strategy or a beginner trader.

The Most Powerful Reversal Candlestick for Stocks

There are several different types of candlestick formations.

Some are bearish, some are bullish.

Many traders love to stick with one candlestick formation and trade that on all the different time frames. We also recommend you check out our best candlestick formation guide. if you want to learn other great candlestick patterns today.

This strategy is simple.

You wait for a stock market collapse. You mainly will be focused on the daily chart.

Some may prefer to call it a “recession” whenever there’s a dip, but whatever term you choose, you wait for this to happen.

If you’ve spent any time in the financial world, you’ve probably encountered them—the doomsayers who perpetually predict an impending recession.

No matter the economic climate, their gloomy forecasts remain unchanged.

While they’re busy stocking up on canned goods and gold bars, savvy traders know that market downturns and upturns are a natural part of the trading landscape.

Instead of fearing the inevitable, let’s arm ourselves with the knowledge to navigate these cycles.

This is where the Daily Green Giant candle steps in to help us get in and make money, while these doomsayers are all sitting there doing nothing!

Best Bullish Stock market reversal candlestick Pattern – Strategy rule #1: Downtrend started on Daily chart

Rule #1 is simple.

Just look on the daily time frame. Do you see nothing but red downward candles?

Refer to the list above. It could be a caused by several different things.

But, remember, stocks will always go up, and they will always go down.

Never just assume it will always go up because that is when you can get yourself in big trouble!

So let’s go and move on to the very next step.

Best Stock market reversal candlestick Pattern – Strategy rule #2: wait for the daily green giant candlestick pattern

Once the downward move started, you keep your eye on the daily chart.

Then once this candlestick formation happens, you make your move.

What is the daily green giant candlestick and how do you spot it?

The daily green giant candle is essentially a hammer stick reversal candle.

This is what it would look like on the chart:

We can go into how candlestick patterns are formed, but for the sake of keeping things on track we can refer you to this article on our website at this teaches you all about candlesticks and how they are formed.

In a nutshell, you need to see a wick at the bottom, followed by a big GREEN giant body.

That is what we call the daily green giant candle!

You only want to spot these candlesticks on the Daily time frame.

Do they appear on other time frames? Yes, of course, but on the daily is the most reliable and is relevant to this strategy.

Best Stock market reversal candlestick Pattern- Strategy rule #3: Buy when price breaks above the candle

The entry for this strategy is simple. Once price breaks above the daily green giant candlestick pattern, you get into a buy position.

This example is the Amazon ($AMZN) chart.

You see here just how powerful the daily green giant candle can be for a reversal in the stock market.

This best reversal stock candlestick pattern works great on major stocks like $AMZN, $AAPL, $TSLA, $GOOG. You can even use this strategy on $SPY and other ETFs.

Now you just set your Stop loss and Take Profit levels.

To find these targets you can practice a 1:1 RR.

In trading, a “1:1 RR” refers to a risk-to-reward ratio where the potential profit (reward) is equal to the potential loss (risk). This means that for every unit of risk taken, the trader aims to make one unit of profit.

Set your stop just below the daily green giant candlestick.

Because if it breaks below, there is probably more room to head to the downside.

Here is where the stop loss and take profit targets could be located:

That is it!

Now you simply wait for price to hit your stop loss target or take profit target.

Here is the result of this daily green giant Amazon trade:

Some of the best times to trade this strategy is when there is major news that is a huge overreaction.

Current Buy setups for stock market in August 2024 market collapse

If you are reading this article in August 2024, turns out that there are setups waiting for you right now!

Here are some current daily green giant candlestick alerts for you to check out.

AAPL buy reversal setup:

AMZN buy setup confirmed:

We will have to update these when they finish.

Now we need some participation in the comments today!

We want to know what you find.

Add a comment below with the chart ticker that you spotted a potential daily green giant candle!

At the end of this month, we’ll pick a winner and get you access to one of our favorite intraday S&P500 trade alert system we call… Hot Shot Alerts.

Hot shot is a new algo that predicts when the S&P500 will reverse. Both to the upside and downside!

It looks like this:

Click here to learn more about these alerts!

Or, if you cannot find a daily green giant trade, just comment something below and you’ll be entered!

YouTube Video of the Best Stock market reversal candlestick Pattern

Conclusion

With the daily green giant candle pattern, you now have a powerful tool for spotting reversals in the stock market.

This pattern is particularly effective for major stocks such as $AMZN, $AAPL, $TSLA, and $GOOG, as well as for ETFs like $SPY.

By setting your stop loss just below the green giant candle and targeting a 1:1 risk-to-reward ratio, you can strategically manage your trades to maximize potential profits while minimizing risks.

Remember, the key to success with this strategy is disciplined execution. Stick to your predefined stop loss and take profit levels, and remain vigilant for any signs of the market moving against you.

With practice and experience, you can leverage this reversal pattern to enhance your trading outcomes and navigate the markets with greater confidence.

Happy trading!