Candle Stick patterns

Candle stick analysis is a type of daily price pattern in which the high, low, open and close of the stock is marked. If the close is more than the open, the candle stick is marked as bright and the stock is bullish. If the close is less than the open, the candle stick is marked as dark and the stock is bearish. Candle stick patterns are reliable if the trend is reversal. Candle stick analysis is developed by Japanese rice merchants and it is applied in short term trading. Engulfing pattern is a type of candle stick pattern where the previous day body is wholly covered by the next day’s body with the reversal color. There are 2 types: 1. Bullish engulfing and 2. Bearish engulfing. In Bullish engulfing, when the price value goes above the previous high, long position can be created. In Bearish engulfing, when the price value goes below the previous low, short position can be created. Morning star is a sign of ending of the downward trend and Evening star is a sign of ending of the upward trend. The morning star is characterized by three candles, where the first candle is long dark candle followed by a second doji and then the third long bright candle. It is a bullish reversal sign. Long positions can be considered. The evening star is characterized by three candles, where the first candle is long bright candle followed by a second doji and then the third long dark candle. It is a bearish reversal sign. Short positions can be considered.