Candlestick Umbrella

Candlestick Umbrella pattern is a kind of a doji with no upper shadow but a long lower shadow. The lower long shadow shows the evidence for buying pressure. The low price position indicates that plenty of sellers still are around. Umbrella candle pattern is interpreted as a reversal pattern.

Umbrella candlestick is recognized with a horizontal line .Although there is no upper shadow, the lower shadow is long. Umbrella indicates that sellers were the main dominants during the day trading, thus driving the prices lower. But the end of the day saw the buyers resurfacing and successfully pushing the prices back to the opening level and to the day high.

Umbrella candlestick pattern has the potential to signal a bullish reversal at the bottom and a bearish reversal at the top. Let us now try to understand the Inverted Umbrella candle.

An Inverted Umbrella pattern has no lower shadow and but has a long upper shadow. The long upper shadow communicates the evidence for selling pressure, but the presence of high price signals that there are still plenty of buyers around.

The real body in the Inverted Umbrella candle is a horizontal line with no lower shadow. The upper shadow is however long. Inverted Umbrella exhibits that while the buyers were dominating the trading and driving the prices higher during the day, the sellers gained their position by the end of the day pushing the prices back to the opening price level and thus to the day’s low.

Although the Inverted Umbrella candle points out evidence for buying pressure, it may show a failed rally and indicate a potential bearish reversal if it appears after a long uptrend. Hence, bearish or bullish confirmation is required in both situations.