We learnt more about candle stick analysis , its role, Engulfing pattern, piercing pattern, DOJI , its use, Hammer, Hanging man etc…….
when to buy & sell during these patterns….
- : Candlestick is a technical analysis used to determine the price movement of the stocks. This analysis provides short term trend analysis & studies in detail based on the daily candlestick patterns. we can analyse even a small portion & hence used for weekly trading. The daily candlestick contains the markets's open high low & close of a day.
- : The general forecasting in candlestick analysis is week or two.
- : Short term traders who is ready to buy & hold those shares for a week or two can use candlestick analysis as a tool. The Volume in candlestick can give a signal in advance of much other market action. they can be leading indicator of market activity.
- : Its a pattern in candlestick analysis & it signifies the trend reversal. Conditions : the recent candle should cover the entire body of the previous candle & the volume may be high during the engulfing days but its not mandatory. The previous trend should be up & not sideways trend. If its bullish engulfing we can buy when the price going above the previous 2 candles high price. we can set stop loss at the lower of the 2 candles. The target should be equal to the risk taken. If its bearish engulfing we can sell.
- : Its also a reversal trend like engulfing. Conditions : The latest candle should cover the lower tail & more than 50% of the prev. candle. there should be a trend prior to the formation of piercing pattern. the volume should be high on the piercing day. we can buy when the third candle forms & moves above the previous 2 candles high price if its bullish piercing. We can sell when the price goes below the last 2 candles if its bearish piercing.
- : DOJI candlestick looks like a cross or plus sign. Generally, the Doji with high volume indicates Trend Reversal. Appearance of Doji after a significant rally / fall indicates temporary pause & Doji followed by a sideways movement may not be considered.
- : Morning Star: Doji formation after a dark night i.e down trend it signifies the trend reversal then we can create long position if the volume supports the signal on the next day of doji formation. we can buy if the price goes above the doji is high. Evening Star : Doji formation after a bright day i.e up trend in the market which signifies the sell signal if it is supported by the volume on the next day. we can sell the share if the price goes below the doji is low.
- : Hammer is a reversal trend with the recent price fall. Hammer lower tail should be two times of its body size and the upper tail should be almost invisible. Green color with a high volume indicates bullish movement. Buy when the price exceeds the days high & stop loss below the days low. Hanging man - sign of negativity body should be red in color . upper tail should be 2 times of the real body. lower tail should be nil. Sell when the price goes below the days low.