CMT Candlestick Analysis Flashcards

Which candlestick pattern consists of three consecutive bullish candles with each candle closing higher, signaling strong upward momentum?

Answer: Three White Soldiers

Three White Soldiers is a bullish pattern of three consecutive long bullish candles each closing near their high, demonstrating sustained buying pressure.

The 'Inverted Hammer' candlestick pattern at the bottom of a downtrend suggests:

Answer: Potential bullish reversal requiring confirmation

An Inverted Hammer at a downtrend low has a long upper shadow and small body, suggesting buyers attempted to push prices higher and a reversal may be forming pending confirmation.

A 'Gravestone Doji' most commonly appears at:

Answer: The top of an uptrend as a bearish reversal signal

A Gravestone Doji has a long upper shadow and open/close at the low, indicating that buyers initially pushed prices up but sellers completely reversed the gains by close.

What does a 'Long-Legged Doji' indicate about the market?

Answer: Extreme indecision with high volatility during the session

A Long-Legged Doji has long upper and lower shadows with the open and close near the midpoint, reflecting extreme intra-session volatility and strong indecision.

In candlestick analysis, which of the following increases the reliability of a reversal pattern?

Answer: Confirmation from the following session's candle

Confirmation from the next session — such as a follow-through candle in the reversal direction — significantly increases the reliability of any candlestick reversal pattern.

A 'Dragonfly Doji' pattern, appearing at the bottom of a downtrend, signals:

Answer: Potential bullish reversal

A Dragonfly Doji has a long lower shadow with the open and close at the top of the range, showing that sellers pushed prices down but buyers fully recovered losses by the close.