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This pattern as indicated by its name is a bearish signal. It is formed when the opening, closing and the low prices are all the same on a given day.
This appears at the top of a trend. It is a bearish signal because it shows that although the bulls pushed the price to a big high, it did not stay that way.
The bears were able to drive down the price all the way to the low of the day and this is where it closed. This indicates the bears have more control than the bulls and therefore it is a bearish signal.
Please click on picture above to get a larger picture
Most candlestick patterns should appear close to previous resistance or support levels depending on what type it is. You should only trade a candlestick pattern if it's near these levels.
Don't trade using these patterns if it's not at the top or bottom of a trend. These patterns appear a great deal so you have to make certain you only trade at the right level.
This is very important as you will end up over trading them and you will end up losing more money than you imagined.
