The Takuri candlestick pattern was discovered by a Japanese trader named Osamu Takahashi, who first introduced it in the market in the early 1990s.
What is the Takuri Candlestick Pattern?
The Takuri candlestick pattern is a bullish reversal signal that is identified by a single candle with a small body and a much longer lower wick, but no upper wick. This pattern shows that bulls are starting to gain control over bears during a downtrend and the price closes near its high. The color of the candle is not important, it can be either black or white.
It is similar to the Hammer candlestick pattern, but with a key difference. In the Hammer pattern, the lower wick cannot be more than twice the length of the body, whereas in the Takuri pattern, the lower wick must be at least three times the length of the body. This makes the Takuri pattern a stronger reversal signal than the Hammer pattern.
Characteristics of the Takuri Candlestick Pattern
- The pattern is formed when a long white candlestick appears after a prolonged downtrend.
- The long white candlestick should have a small or no upper shadow.
What does the Takuri candlestick pattern signify for traders?
The Takuri candlestick pattern communicates to traders the possibility of an upward shift in market trend, revealing that buyers are gaining dominance and driving prices upward. This pattern is identified by a single candle with a small body and a much longer lower wick, but no upper wick. It serves as a bullish reversal signal and can be used to confirm other bullish reversal indications or as an independent trading strategy.
What is the strategy for utilizing the Takuri candlestick pattern in trading?
Specialists in technical analysis highlight the significance of examining the context of the Takuri pattern’s formation. They view it as a trustworthy signal only when it occurs at a vital support level or during an obvious downtrend. This pattern is considered more robust when it appears after a break in prices. Professionals advise waiting for extra confirmation through the following few candles before making a trade, yet some more assertive traders may choose to initiate a trade right after the next candle opens following the break in prices to take advantage of the potential upward movement.
Takuri Candlestick Pattern Strategy
Bullish Takuri Candlestick Pattern
- The long white candlestick suggests that buyers are in control of the market, and they are driving prices higher.
- The small or no upper shadow indicates that buyers are aggressively pushing prices higher, and there is little resistance from sellers.
Takuri Candlestick Pattern Pros & Cons
Pros
- The Takuri pattern is straightforward to identify and understand.
- It can serve as confirmation for other bullish reversal indications.
- It can be employed independently as a trading approach.
Cons
- The Takuri pattern is not frequently seen and may be hard to spot during a downtrend.
- It is exclusively a buy signal and cannot be used to indicate a sell.
- It may not be appropriate for traders who aim for short-term gains.
Conclusion
The Takuri Candlestick pattern is a useful tool for traders who are looking for potential changes in the market trend. It is a bullish reversal signal that is identified by a single candle with a small body and a much longer lower wick, but no upper wick. The pattern can be used to confirm other bullish reversal signals or as a standalone trading strategy. However, it is crucial to evaluate the context in which the pattern appears, as it is only considered a credible signal when it occurs at a key support level or during a clear downtrend and is deemed stronger when it appears after a gap in prices. Despite it may not be as common or suitable for short-term traders, the Takuri Candlestick pattern can offer valuable insight for those looking to enter long positions in the market.
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