Candlestick charts are used by traders to determine possible price movement based on past patterns. Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies. Forecasting can be done for 4-5 days using the candlestick pattern. Traders use candlesticks to make trading decisions based on regularly occurring patterns that help forecast the short-term direction of the price.
A bullish engulfing pattern occurs in the candlestick chart of a security when a large white candlestick fully engulfs the smaller black candlestick from the period before. This pattern usually occurs during a downtrend and is thought to signal the beginning of a bullish trend in security.
A piercing pattern is a bullish reversal pattern that can be found at the end of a downtrend. This candlestick pattern is used as an indicator to enter a long position or exit the sell position. A DOJI 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.
The hanging man and the hammer are both candlestick patterns that indicate trend reversal. The only difference between the two is the nature of the trend in which they appear. If the pattern appears in a chart with an upward trend indicating a bearish reversal, it is called the hanging man. If it appears in a downward trend indicating a bullish reversal, it is a hammer.

  • : Candlestick charts are used by traders to determine possible price movement based on past patterns. Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies. These charts are used by traders to determine possible price movement based on past patterns. Candlestick analysis provides short-term trend analysis and studies in detail based on the daily candlesticks patterns and analyzes a small portion, hence this can be used for weekly trading.
  • : Candlestick analysis can be used for weekly forecasting, i.e buying and selling within the week time. Candlestick analysis is very effective for weekly forecasting and it is a very useful tool for positional traders. Forecasting can be done for 4-5 days using the candlestick pattern.
  • : Traders use candlesticks to make trading decisions based on regularly occurring patterns that help forecast the short-term direction of the price. Volume determines the width of the candlestick. Wide candlesticks form when the volume is high, while narrow candlesticks form when the volume is low.
  • : A bullish engulfing pattern occurs in the candlestick chart of a security when a large white candlestick fully engulfs the smaller black candlestick from the period before. This pattern usually occurs during a downtrend and is thought to signal the beginning of a bullish trend in security. Condition for bullish engulfing: Fall in price trend for few days observed & Latest green body is covering the previous red body with significant volume. When to Sell: Create a short position when the price goes below the latest red body’s lowest price(A). Buying should happen at the target or at stop loss (price goes above B).
  • : A piercing pattern is a bullish reversal pattern that can be found at the end of a downtrend. This candlestick pattern is used as an indicator to enter a long position or exit the sell position. As the market is already in a downtrend, the opening price is high and the selling activity continues. At the end of the trading session, the closing price reaches the bottom and thus a bearish candle is formed. Conditions to qualify: Firstly, the trend should be a downtrend, as the piercing pattern is a bullish reversal pattern. Secondly, the length of the candlestick plays an important role in determining the force with which the reversal will take place. The gap down between the bearish and bullish candlesticks indicates how powerful the trend reversal will be. Fourthly, the bullish candlestick should close more than the midpoint of the previous bearish candlestick. Lastly, the bearish, as well as the bullish candlestick, should have larger bodies. When to Buy: When the price goes above the previous day’s highest point(A). Stop Loss: Latest Green body’s lowest price(B). Risk = A~B and Target = A+Risk. Selling should happen at the target or at stop loss(Price goes below B)
  • : A DOJI 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. A Doji is used to illustrate market indecision and serves as a signal for a reversal in a market that is either upward or downward trending. A Doji does not occur frequently and is therefore not reliable or a trustworthy indicator on its own. It must be used with other chart pattern analysis techniques in order for a trader to make an informed decision. It does not always symbolize an extended trend reversal. The direction of the prominent trend may change; however, the longevity of the new direction cannot be guaranteed. Because candlesticks do not necessarily make a provision for price targets, making use of a DOJI to produce an informed trade will not guarantee any estimation on the possible gains that can be earned in the trade. The trade must make use of other technical analysis techniques to determine entry and exit points for trades.
  • : An evening star is a stock-price chart pattern used by technical analysts to detect when a trend is about to reverse. It is a bearish candlestick pattern consisting of three candles: a large white candlestick, a small-bodied candle, and a red candle. The Morning Star pattern is also a trend-reversal pattern, which is bullish and gives a buying signal. Morning star: When to buy: Long position can be created when the price goes above the highest price of the star(A) and stop-loss 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 stop loss( price goes below B). 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)
  • : The hanging man and the hammer are both candlestick patterns that indicate trend reversal. The only difference between the two is the nature of the trend in which they appear. If the pattern appears in a chart with an upward trend indicating a bearish reversal, it is called the hanging man. If it appears in a downward trend indicating a bullish reversal, it is a hammer. When a hanging man forms in an uptrend, it indicates that buyers have lost their strength. While demand has been pushing the stock price higher, on this day, there was significant selling. While buyers managed to bring the price back to near the open, the initial sell-off is an indication that a growing number of investors think the price has peaked. For believers in candlestick trading, the pattern provides an opportunity to sell existing long positions or even go short in anticipation of a price decline.
1 Comment
  1. Naresh 1 month ago

    Hi,
    Thanks for Crystal Clear Explanation… You did that very well

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