In this section we learnt about the Candlestick analysis and its uses in studying the market trend. We also studied about the various candlestick patterns like the japanese DOJI, pattern, piercing pattern, engulfing pattern, Hammer and hangman pattern.
- : Candle stick analysis is used to study one particular data point in detail i.e one particular top and bottom.It was discovered by Japanese people and later adopted by Western people.
- : Candlestick analysis is used for weekly forecasting.
- : weekly traders can use candle stick analysis.
- : Engulfing is nothing but covering. It is very reliable pattern and appears very frequently. It is a reversal pattern. For bullish engulfing, the bullish trend should completely cover the previous days bear. we should go for long position above the highest of the two days and sell at the lowest of the two days.
- : It appears very rarely and it indicates the trend reversal.It is good for weekly traders. The green body should cover the low of the previous day. It should cover more than 50% of the previous day and upper tail should be smaller. we have to buy above the highest of the last two day and sell below the lowest of the last two days.
- : DOJI means neutral. It indicates trend reversal. If the DOJI appears after the fall in price , it indicates bullish trend and if the DOJI appears after the ralley it indicates the bearish trend.
- : Doji appearing after the price fall is called morning star. Doji appearing after the ralley is called evening star.We have to buy when the price goes above the DOJI day high. Selling below the lowest point of DOJI.
- : Hammer is the sign of strength and indicates bullish trend. The bearish variant is the hanging man . Hammer should appear after a significant price fall and indicates trend reversal. wecan buy above the highest point of the hammer and sell below the lowest point of hammer.