The candlesticks analysis was invented by a Japanese named Munehisa Homma, used for analysing the rice trade. One of the patterns which come under the Candlesticks analysis is the Engulfing Pattern. The Engulfing patterns are broadly classified into two categories called the Bullish engulfing and the Bearish Engulfing Pattern. The theory o Bullish engulfing pattern has been applied on the Company ‘Bajaj Finance’ by taking the intra-day analysis into consideration. The factors to be taken into consideration for determining whether the chart has disclosed a Bullish engulfing pattern are as follows :
1. The recent price fall should be witnessed.
2. The latest bullish body should cover the previous days Bear body.
3. There needs to be a good volume of stocks traded during the bullish engulfing pattern formation.
Therefore, in agreement with the above principles, there appears a bullish engulfing pattern during the period of August 2017 between the 8th day to the 16th day. Since the pattern is bullish, the trader is advised to take a long position, and enter the market at Rs 1733.40.
