For short duration traders the Candlestick analysis is recommended. This analyses the reversal patterns and so ideal for weekly traders. Some of the Candlestick patterns used by traders are Engulfing patterns, Piercing patterns, DOJI, Hammer and Hanging Man patterns.
- : This was started by the Japanese. This is a pattern which indicates a reversal for a few days of between four to five days. Along the daily rates the days opening and closing rates are marked with a small dash. These are then joined to form a candle. The body of the candle is then coloured. Red colour indicates price fall and green price rise. This is ideal for a weekly trader. In the case of bullish trend the latest green body should cover the previous red body. The trading volume will increase during the engulfing days.
- : Since it indicates a reversal pattern it lasts for four to five days.
- : A weekly trader should use candle stick analysis. Since this is a reversal pattern the volume gives a good indication of the trend. If there is heavy buying after a price fall and the price rises it indicates a bullish trend and vice verse for bearish pattern.
- : In the case of bullish engulfing the pattern should appear after a price fall. The bullish body should cover the previous days bearish body. The volume should be high. The buying point should be highest of two days A. The stop loss should be the recent bottom B. The difference between A and B should be the target on the upside.
- : It is a reversal pattern which occurs very rarely. The green body should cover the previous days low. The bull body should cover at least 50% of the previous day. The upper tail should be small in size. One should buy if the price goes above the highest of the last two days. Stop loss is the lowest point of the last two days. This is generally the previous days low. The difference between A and B should be the target on the upside.
- : This is a Japanese word for neutral. When the stock price opens and closes at the same level it appears like a star and is known as a DOJI. The appearance of a DOJI after a significant price fall indicates a bullish trend. The volume should be high to indicate reversal. If you see a DOJI after a rally it indicates a bearish trend and if we see a DOJI after a significant price fall it indicates a bullish trend.
- : When the volume is high and the DOJI appeared after a significant fall it is a Morning Star or bullish DOJI and vice versa for Evening Star. If the price crosses the DOJI day high buy A. The stop loss limit B is the DOJI day low. The target price is 1.5 to 2 times difference of A and B.
- : This pattern is reliable and rarely appears. Hammer is a sign of strength and bullish, hanging man the opposite. Hammer should appear after a significant price fall. The price falls for many days and suddenly increases. The lower tail should be minimum two times of body size with no upper tail. Body should be green. Trading volume should be high. Buy if the price crosses the previous days high A. Stop loss lowest of the day B. Target is two times the difference between A and B.