Candlestick Definition and Tactics

  • : -Candlesticks show that emotion by visually representing the size of price moves with different colors. Traders use the candlesticks to make trading decisions based on regularly occurring patterns that help forecast the short-term direction of the price.
  • : General forecasting duration of candlestick analysis is daily to weekly basis.
  • : -Traders can use candle stick analysis -Volume plays a important role in the pattern behavior and confirms the strength of the pattern.
  • : - The second candle completely ‘engulfs’ the real body of the first one. - For Bullish Engulfing - Recent fall in price should be witnessed. - The Latest Bullish Body should cover the previous days bear body. - Slight increase in trading volume is expected during any of the last two days. - Buy at High of the Engulfing Body, Sell at reversal. Vice versa for Bearish Engulfing.
  • : - A piercing pattern can serve as a potential indicator for a bullish reversal. - For Bullish piercing - Recent fall in price should be witnessed. - The Body should cover the Previous Days' LOW. - Today's Body Should cover at least 50% mark of previous body. - The upper tail should be small in size. - Buy at previous candle High and sell at reversal.
  • : - It is a star shaped candle formation, the body of the candle is almost nil which means opening and closing price are almost equivalent which signifies the demand and supply is almost neutral in the market. It is useful if the prior trend should be upwards or downwards If the prior trend follows a sideways then it is not useful it is not a signal The volume should be high on the next day of doji formation.
  • : Morning Star: Doji formation after a dark night that is down trend it signifies the trend reversal we can take long position if the volume supports the signal on next day of doji formation. We can buy if the price goes above the doji high. Evening Star: Doji formation after a Bright day that is up trend in the market which signifies the sell signal if it is supported by the volume on the next day. We can sell the share if the price goes below the doji low.
  • : - Hammer candlesticks indicate a potential price reversal to the upside. - Hammers have a small real body and a long lower shadow. - Hammers occur after a price decline. - The lower shadow should be at least two times the height of the real body. - Trades are typically taken after the confirmation candle, not before. A hanging man is a bearish reversal candlestick pattern that occurs after a price advance. The advance can be small or large, but should be composed of at least a few price bars moving higher overall. - The candle must have a small real body and a long lower shadow that is at least twice the size as the real body. There is little or no upper shadow. - Traders typically exit long trades or enter short trades during or after the confirmation candle, not before.
1 Comment
  1. Naresh 3 years ago

    Hi,
    your answers are well framed and appropriate.

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