Candlestick pattern is a simple and powerful analytical tool. It requires basic understanding of demand and supply. It provides short term trend.
- : A candlestick is a way of displaying information about assets price movement .Its a technical tool which helps traders to interpret price movement quickly. Its developed by Japanese in the18th century. Candlestick has a wide part which is called body. Range between open and close).Just above and below the body are the shadows which represents high and low prices depending upon the time frame
- : It represents trading pattern over short period of time .General forecasting is within a week.
- : It is used by short term traders. High volume indicates the increased interest of the traders to enter or exit the position of that stock
- : Engulfing pattern means the latest bullish body should cover the previous days bear body. Conditions- recent fall in price -increase in trading volume in the last 2 days Buy- when price crosses above the high of last 2 days Sell- When price goes below the previous 2 days low
- : Its a trend reversal pattern . Conditions-In this pattern body should cover the previous days low -current body should cover at least 50% mark of previous body. - the upper tail should be small in size. Buy- highest of last 2 days Stop loss- low of last 2 candles
- : Doji is a single candlestick pattern , which shows indecisiveness. Doji in an uptrend or downtrend with high volume shows trend reversal. It has opening and close at nearly same level
- : Both are three candlestick pattern .They are trend reversal pattern. Morning star- -it forms at the bottom of down trend -first candle is bearish candle, 2nd is doji and 3rd candle is long bullish candle -buy- Bove the high of bullish candle stop loss-Low of the bullish candle Evening star- - It forms at the top of an uptrend -first candle is bullish candle, 2nd candle is doji and 3rd candle is long bearish candle -sell- when price crosses the low of bearish candle and stop loss high of bearish candle
- : Both are trend reversal pattern, its a single candlestick pattern. Hammer- -bullish variant - should appear after significant fall -body should be green - upper tail should be invisible or small in size - volume should be high in hammer day - buy- high end of hammer stoploss- lower end of hammer Hanging man- - appears in uptrend -small body, lower shadow at least twice the size of the body