CandleStick analysis

  • A candlestick analysis is a technical analysis used to determine the price movement of the stocks/securities.
    It is very much helpful for the positional traders in determining the price movement and entry point for the trade

  • Weekly forecasting. Positional trading

  • position trader
    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.

  • Piercing Pattern is a reversal candlestick pattern which is bullish in nature and appears at the end of a down trend

    1. The body should cover the previous Day’s low.

    2. The current day body should cover at-least 50% of previous body.

    3. The upper tail should not be very big.

    We can create a long position if the body covers more than 50% of the previous days bearish candle, provided a significant volume is noticed during the formation of piercing pattern.

  • 1. The recent fall in price should be witnessed.

    2. The bullish body should cover the previous days bear body.

    3. There should be significant volume should be noticed during the formation of engulfing.

    We can create a long position after the bullish engulfing pattern is formed with significant volume.

    Bearish engulfing
    1. The recent uptrend should be witnessed.

    2. The bullish body should cover the previous days bear body.

    3. There should be significant volume should be noticed during the formation of engulfing.

    We can create a short position after the bearish engulfing pattern is formed with significant volume.

  • Doji is a commonly found pattern in a candlestick chart,it is characterized by being small in length
    Doji is a key trend reversal indicator, if it appears at the top of a trend, in an overbought area, we can create short position and if is is seen at the bottom of an extended downtrend we can create long position.

    After the Doji is formed we need to wait to get the confirmation of the reversal trend before taking positions.

  • Bullish and Bearish DOJI is called as morning and evening star by western. the star should be seen after rally and not at sideways. Star indicates the reversal pattern.
    Morning Star: After significant price fall, if DOJI(starting and ending price is almost same at the center) appears with green body and high volume, it can be identified as morning start.

    When to buy: Long position can be created when the price goes above the highest price of star(A) and stoploss is the lowest price of the star(B). Risk = A~B and Target: A+(1.5 or 2 times of risk). Selling should happen at the target or stoploss( price goes below B).

    Evening Star: After significant increase in price if DOJI(thin body) appears with red body and high volume, it can be identified as evening star.

    When to Sell: Short position can be created when the price goes below the lowest of the star(A) and stop loss is the highest price of the star(B). Risk = A~B and target :A+(1.5 or 2 times of risk). Selling should happen at the target or at stop loss(Price goes above B)

  • Hammer: It appears after significant price fall. Lower tail should be at least 2 times of the body and upper tail should be very small and body should be green with high volume.

    When to Buy: Long position can be created when the price increases above the upper tail(A) and stop loss is the lowest price of hammer(B). Risk = A~B, Target: A+ (1.5 or 2 times of risk). Selling should happen when price reaches the target or at stop loss(price goes below B).

    Hanging Man: It appears after significant increase in price. Upper tail should be atleast 2 times of the body and lower tail should be invisible or small. Body should be red with high volume on that day.

    When to Sell: Short position can be created when the price goes below the lower tail(A) and stop loss is the highest price of the hanging man(B). Risk = A~B; Target: A+(1.5 to 2 times of risk). Buying should happen when the price reaching the target or at stop loss(price goes above B).

1 Comment
  1. Naresh 2 months ago

    Hi,
    Nice work! we really appreciate your efforts.

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