Candlestick Analysis is introduced by Japanese to identify demand and supply. Oldest and worthy analysis till date. Candle stick analysis is used to trade within a week where as Dow and price patterns are for longer time.
Candlestick studied things in detail and examine the movement better and easier compared to bar or line charts. Studies only few days and provide very short term trade positions. Use Daily chart for Analysis
Engulfing pattern : Covering previous candle body, appears frequent, reliable, easily recognizable Reversal pattern.
Condition for Bullish Engulfing:
1) Latest Green body should cover the previous Red body.
2)Appear in the downtrend
3)Volume should be high(moderate but not necessarily)
4) The entry is at highest of those two high, SL at the recent bottom, Target is whatever the Risk taken.
Piercing pattern : appears rare, reversal pattern with high chance, useful for weekly trade.
Condition:
1)Latest Green body should cover low of previous red day.
2)Green body should cover at least 50% of previous red day body.
3)More volume in piercing day.
4)The upper tail should be small in size.
5)The entry is at highest of those two high, SL at the recent bottom, Target is whatever the Risk taken.
Doji Pattern : Means neutral, Open and close at same place, appears rare but powerful
Condition:
1)Appearance of Doji after significant price fall is bullish, Trend reversal
2)Doji day volume should be high
3)Sideway Trend Doji says NOTHING. Named bullish doji as morning star, Bearish doji as evening star.
4)The entry is above Doji high, SL is low of Doji, Target is 2 times the risk taken.
Hammer Pattern :Sign of strength, Bullish, rarely appears but powerful.
Condition:
1)Appears after significant price fall (4-7 days)
2)Lower tail should be 2 times of the body and upper tail should not be visible(or lesser)
3)Body should be GREEN
4)The entry is above hammer high, SL is low of hammer, Target is 2 times the risk.
