The Candlesticks analysis is broadly classified into two categories i.e., the bullish engulfing pattern and the bearish engulfing pattern. In the above shown chart, the theory of Bearish Engulfing pattern has been applied on the company’ HDFC Bank’ during the period from 12th of December 2017 to 19th December 2017. The intraday charts are taken into consideration for determining the pattern. To confirm whether a Bearish engulfing pattern has emerged it is necessary to fulfill the following criterias which are :
1. There should be a recent rise in prices of the stock.
2. The latest Bearish body should cover the previous day’s Bull body.
3. There has to be a good volume of stocks traded during the engulfing pattern.
Therefore, it can be concluded that the bearish engulfing pattern has been formed during the period of December 2017 between the above-said dates. The respective stop loss, target price and the entry price have been appropriately quoted. Since the outlook appears to be bearish, the trader is advised to take a short position, and sell the stock at the entry price, and exit his position at the best target price.
