The second sequence reflects more volatility and some selling pressure. These are just two examples and there are hundreds of potential combinations that could result in the same candlestick. Candlesticks still offer valuable information on the relative positions of the open, high, low and close. However, the trading activity that forms a particular candlestick can vary. In his book, Candlestick Charting Explained , Greg Morris notes that for a pattern to qualify as a reversal pattern, there should be a prior trend to reverse.
Bullish reversals require a preceding downtrend and bearish reversals require a prior uptrend.
A downtrend might exist as long as the security was trading below its down trendline, below its previous reaction high or below a specific moving average. The length and duration will depend on individual preferences. A candlestick that gaps away from the previous candlestick is said to be in star position. The first candlestick usually has a large real body, but not always, and the second candlestick in star position has a small real body. Depending on the previous candlestick, the star position candlestick gaps up or down and appears isolated from previous price action.