What is candle stick analysis, forecasting duration, role of volume, engulfing and piercing ,DOJI, morning and evening star, hammer / hanging man
- : Candlestick analysis is a technical analysis which provides an investor the past movements (short term trend) in multiple time frames. It is Japanese technology adopted by the western world in 20th century. It will help you to analysis the weekly movement with better clarity compared to other charts.It also gives you in detail the day's movement. For weekly traders observing day candle is recommended.
- : The general forecasting duration using candlestick analysis is one week.
- : Candlestick analysis is useful for short term investors and weekly positional traders etc. If the trend is reversing then the traded volume must be high.
- : Engulfing pattern is the reversal pattern which is good for weekly traders. The latest green body should cover the previous red body and the high trading volume is visible during this day. Buy when the price breaches the highest top on the engulfing candle, stop loss at the lowest bottom and sell it when the price covers the risk gap between A to B (high and low).
- : Piercing patterns follows the engulfing pattern. It appears very rarely and indicates trend reversal. The green body covers the low of the previous day and covers 50% and above in the upward trend and the upper tail should not be very big. Buy once the price breaches the highest of the past two days high, stop loss at the lowest bottom and sell it when the price covers the the risk gap between A to B (high and low).
- : Doji is a neutral position which signifies that a share has opened and closed at a similar price. If a doji is appearing during the sideways trend we need to ignore it. If a doji appears after a significant price fall then its a good doji on a bullish side. It is when we need to create long position to make use of it. Volume should be high during the doji days to indicate price reversal.
- : Morning star is a visual pattern that consist of 3 candlesticks that is bullish in nature which appears after the price fall. Evening star is opposite to morning star that predicts future price declines. You go long once the price breaches the previous day doji high and stop loss at bottom of the doji and when it comes to selling, sell one the price reaches the two times of the risk taken.
- : Hammer and hanging man are powerful and reliable trend indicators which rarely appear. The hammer man is a bullish in nature and hanging man is bearish in nature. Hammer man appears after after a significant price fall and hanging man appears after a significant price hike. The lower tail of hammer man should be two times of the body size and the upper tail should be barely visible. High trading volume is the indicator. Buy if the market opens or breaches above the high of the previous day hammer man, stop loss will be tail end of the previous day hammer man and sell one the price reaches the two times of the risk taken.