Compared to traditional bar charts, many traders consider candlestick charts more visually appealing and easier to interpret. Each candlestick provides a simple, visually appealing picture of price action; a trader can instantly compare the relationship between the open and close as well as the high and low. The relationship between the open and close is considered vital information and forms the essence of candlesticks. Hollow candlesticks, where the close is greater than the open, indicate buying pressure. Filled candlesticks, where the close is less than the open, indicate selling pressure.
- : 17th century people from Japan started using Candlesticks while trading rice. This idea proliferated through various people and across countries, getting modified, getting refined and evolved into its present form today. Candlestick charts are used to determine possible price movement based on past patterns. and useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies. Provide a much more detailed description of the occurrences and happenings in the market, and interactions between buyers and sellers as compared to traditional charts which provide minimal information. Candlestick Patterns are highly accurate in predicting market trends.
- : Candlestick analysis can be used for weekly forecasting, buying and selling within the week time. Candlestick analysis is very effective for a weekly forecasting and it is very useful tool for the positional traders. Forecasting can be done for 4-5 days using the candlestick pattern. Successful trading also requires waiting for the confirmation of a pattern before an act of buying or selling, even in cases in which the patterns have a high success ratio of reversal prediction. This patience is required because sometimes a pattern can emerge as a result of a very short trend or a horizontal move and it may never be confirmed. In such cases of non-confirmation, it is better to wait in order to avoid a
- : Candlesticks observed at significant support and resistance levels particularly deserve serious consideration as bullish or bearish reversal signals. However, due attention to the direction of the prior trend is always warranted. Candle stick analysis can be used by a position trader. Candle stick being a reversal pattern, Volume plays a key role in deciding the direction of the movement, we can confirm the reversal movement if and only there is a huge volume of stocks are traded.
- : Bullish engulfing pattern is a two-candle reversal pattern. The second candle completely ‘engulfs’ real body of first one, This pattern appears in a downtrend and is a combination of one dark candle followed by a larger hollow candle. On the second day of the pattern, price opens lower than previous low, yet buying pressure pushes the price up to a higher level than the previous high, it is advisable for buyers to enter a long position when the price moves higher than the high of the second engulfing candle Bearish engulfing pattern that signals lower prices to come. it consists of an up (green) candlestick followed by a large down (red) candlestick that "engulfs" the smaller up candle. The pattern can be important because it shows sellers have overtaken the buyers and pushing the price more aggressively down than the buyers were able to push it up.
- : Piercing Pattern is a reversal candlestick pattern which is bullish in nature and appears at the end of a down trend. It is a complex pattern made of two candle lines. The first candle is bearish in nature and the second is bullish in nature. It has its name because the prices pierces up through the falling market. Conditions to qualify piercing pattern:- The body should cover the previous day's low, Today's body should cover at least 50% mark of previous body, The Upper tail should be small in size. we can create a long position if the body covers more than 50% of previous days bearish candle, provided a significant volume is noticed during the formation of piercing pattern.
- : DOJI are neutral pattern. this candlesticks look like a cross, inverted cross or plus sign. candlestick forms when a security's open and close are virtually equal for the given time period and generally signals a reversal pattern for technical analysts. Depending on where the open/close line falls, a doji can be described as a gravestone, long-legged, or dragonfly.
- : Morning Star candlestick pattern is a reversal pattern in technical analysis and the pattern has three candles which forms at the bottom of a downtrend. The first candle is any long and bearish candle. The second candle is a small and indecisive candlestick(Doji) and the third candle is any long and bullish candle. We can create a long position when the third candle opens higher than the previous close of the second candle(Doji) with good volume. Evening Star candlestick pattern is also a reversal pattern in technical analysis and the pattern has three candles which forms at the top of a uptrend. The first candle is any long and bullish candle. The second candle is a small and indecisive candlestick(Doji). The third candle is any long and bearish candle. We can create a Short position when the third candle opens lower than the previous close of the second candle(Doji) with good volume
- : Hammer: It 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 invisible. Green in color with a high volume indicates bullish movement. Buy when the price exceeds the days high and stop loss below the days low. Hanging man: It is a reversal trend with the recent increase in price. Hanging man upper tail should be two times of its body size and the lower tail should be invisible. Red in color with a high volume indicates bearish movement. Sell when the price goes below the days low and stop loss above the days high.