Forex Japanese Candlestick Patterns: Frypan Bottom and Dumpling Top

In this article, we will give an overview of two opposite Japanese candlestick patterns to enter Forex trades.

Frypan Bottom (a buy signal)

Requirements for the strategy:

Timeframes: H1, H4, D1;

Currency pairs: all available in the terminal;

Conditions to enter:

  1. The pattern forms at the end of a downtrend.
  2. At some point, the downtrend slows down and the price is flat.
  3. A series of candles with small bodies and shadows appear. The lows of these candles resemble a frying pan or a rounded «v» letter.
  4. Wait for a white signal candle having maximum prices above those of the pattern candles, or above the "frypan lid". Enter once the next candle appears or set a Buy Limit at the "lid" price level, as in most cases prices return back to test the formed combination pattern.
  5. Stop Loss is placed at the minimum price of the candles that have formed a buy combination.
  6. Take Profit is set depending on a timeframe you choose to enter a trade. From 80 to 120 pp for H1-H4, from 100 to 200 pp for D1. At the same time, as this is a reversal pattern, you can close the trade and exit once a reversal buy pattern is formed.

Dumpling top (a sell signal)

Requirements for the strategy:

Timeframes: H1, H4, D1;

Currency pairs: all available in the terminal;

Conditions to enter:

  1. The pattern forms at the end of an uptrend.
  2. At some point, the uptrend slows down and the price is flat.
  3. A series of candles with small bodies and shadows appear. The lows of the candles resemble a rounded top.
  4. Wait for a black signal candle having the minimum prices below those of the pattern candles`, or below the combination top. Enter once the next candle appears or set a Sell Limit at the combination top, as in most cases prices return back to test the formed combination pattern.
  5. Stop Loss is placed at the maximum price of the candles that have formed a sell combination.
  6. Take Profit is set depending on a timeframe you choose to enter a trade. From 80 to 120 pp for H1-H4, from 100 to 200 pp for D1. At the same time, as this is a reversal pattern, you can close the trade and exit once a reversal sell pattern is formed.