Candle Stick is a type of Charting Pattern used in Technical Analysis and was originated inJapan during 17th Century.
It has upper & Lower Shadow and real Body. Upper shadow indicates High,Lower Shadow Indicates Low and Body indicates Open & Close.
Candle stick analysis is used to read trend reversal and generally volume should be high for analysis.
engulfing pattern:
*) Trend reversal should be seen and there should be fall in price (Bullish Engulfing)
*)Latest Bullish body should engulf / cover previous bearish candle completely
*) Slight increase in Volume has to be seen.
The above points says about expected bullish trend
To Buy: Long Position – Bullish candle high point and stop loss at bullish candle low point
piercing pattern
*)Trend reversal should be seen and there should be fall in price (Bullish Piercing)
*)It is incomplete engulfing
*)Body should cover previous body low and 50% of prev. body.
*)Upper Tail should be small.
Buy: Bullish Piercing – Long position at when it crosses previous body high and stop loss at current Bullish body low.
DOJI:
*) Appear after significant fall
*)volume should be high
*)Shows Trend reversal
*) DOJI sideways should be ignored.
Morning & Evening Star:
Morning Star:
*) This is Bullish Pattern.
*)After bearish candle , a smaller bullish candle is formed followed by big bullish candle
Buy: Long position, Bullish Candle day high, Stop loss Bullish candle day Low and sell at targer or SL.
Evening Star:
*)Opposite to morning star
*)Shows bearish trend
*)Small Bullish candle followed by big bearish candle.
Short position at Day’s low and stop loss at days high
Hammer/Hanging man
Hammer :
*)Long lower shadow
*)Small real body at top
*)This type of formation at the bottom of downward trend is hammer.
Hanging mam
*) It also tells about trend reversal
*)It says expected bearish trend by coloured hammer sized candle.
