What is Long Lower Shadow Candlestick?

Candlestick patterns can be used to help traders predict the price movement for an asset. Single candlestick patterns, which are the easiest and most straightforward to interpret and read among the many patterns that can be seen on charts, are the best. They are also very accurate. A single candlestick pattern is one that's only formed in a single trading session. This allows you to interpret and read the candle. This is the long shadow candlestick with lower shadows, which we'll be discussing in this article.

Longer lower shadow candlestick pattern An overview

A long lower shadow candlestick can be used by traders as a technical indicator to detect a market trend reversal. This pattern has a shorter body at the top of a candle and a longer shadow at the bottom. The candle's lower shadow is usually at least twice as long as the body. A trend reversal is indicated by a long shadow candlestick.

A long, lower shadow candlestick that appears at the top end of a bullish trend is called the "hanging man" and is considered to be an indicator of a bearish trend turning. Similar to the above, a long, lower shadow candlestick at the bottom a bearish trend is called the "hammer" and is considered an indicator of a bullish turn.

Longer shadow candlestick pattern An example

Let's now see how the long shadow candlestick looks.

The body of the candlestick, as you can see from the figure above, is much smaller than its lower shadow. Depending on market movements, the candle could end up being bullish or bearish. The long lower shadow candlestick may also have an extended upper shadow, or none at all.

Hammer pattern – an example

This candlestick chart shows Nifty 50 clearly what a long shadow candlestick looks when it appears at bottom of a bearish (hammer) trend.

This candlestick chart clearly shows that prices are in a downtrend in all three of the marked instances. This shows that the bears have complete control of the market. The bearish trend ends with the appearance of the long shadow candlestick.

This pattern's long shadow signifies that sellers are trying to control the price movements but are unable due to sudden and unexpected entry of bulls. With their strong buying interest, the bulls manage to push prices up to close at the opening of the day. The hammer pattern is a sign that the trend has changed from bearish to bullish. This can be clearly seen in 's candlestick chart .

Hanging Man Pattern - An example

Let's now take a look on a candlestick chart. It clearly shows how a long shadow candlestick appears when it appears at top of a bullish pattern ( hanging guy).

This candlestick chart again shows that prices are in an upward trend in the marked instance. This shows that the bulls are running the market at the moment. The bullish trend ends with the appearance of the long shadow candlestick.

The long shadow at the lower end of the chart indicates that sellers are trying to control the price movement but are not able to do so because the bulls are resisting their efforts to drive it down. However, the sudden influx sellers in the market causes a complete reversal of the trend. The hanging man pattern is a sign that the trend has changed from bullish to bearish. This can be seen clearly in the candlestick chart.

How do you use the long shadow candlestick pattern?

Here are some important points to remember before you start a trade based upon the long, lower shadow candlestick pattern.

Identifying a trend is the first step. It can be either bullish or bearish.

- After identifying the trend, you can check to see if a candle has a longer shadow.

- The long, lower shadow candlestick may be bullish or bearish. It can also have a short shadow or none at all.

After spotting the pattern, it is highly recommended to wait until a candle confirms that the trend is inverted before entering into trades. If the long shadow pattern is located at the top end of a bullish trend and is visible for a while, it is best to wait until the next candle is bearish before entering into trades.

- Once you see the confirmation candle, the trade can be completed.

Conclusion

The long shadow candlestick pattern with lower shadows is a reliable technical indicator that will help you to time your trades correctly. You can combine this pattern and other technical indicators to reduce the chance of your trading decisions taking an unexpected turn.