Represents the movement of stock or security prices over time and is represented in such a way that we can get some information from it. A candle consists of a body, a candle wick (upper and a lower wick (optional). Candle body: Using these four prices, a candle stick is dipped in such a way that the range of the opening price and closing price is called a candle (rectangular structure). The greater the difference between the opening and closing price, the greater the length of the candle. The width of the candle is greater than the width of the standard line and is generally placed this way. That it is quite easily visible.
Candle Wick (Shadow): The wick of the candle is a thin line at the top and the bottom line starts from the center of the top and bottom part of the candle. a) Upper-Wick: It is a thin vertical line drawn from the center of the upper body to the day's highest price. b) Lower-Wick: It is a thin vertical line sinking from the center of the lower end of the body to the lowest price of the day.
Hammer (Bullish Pattern)
The hammer candle pattern forms at the bottom of a downtrend during a decline or near potential support. Basically, it is made of a candle. A hammer is a type of bullish reversal candlestick pattern made up of just one candle. A candlestick with little or no upper wick. For a candle to be a valid hammer most traders say that the lower wick must be twice the size of the candle's body and the body. When you see the hammer form in a downtrend it is a sign of a potential reversal in the market as the long lower wick represents a period of trading where sellers were initially in control. But buyers were able to reverse that control and drive prices to close near the day's high, thus the short body at the top of the candle. After seeing this chart pattern in the market, most traders will wait for the next period's opening to be higher than the previous period's close to confirming that buyers are indeed in control. Two additional things that traders will look for to place more importance on the pattern are a longer lower wick and an increase in volume for the period that created the hammer.
Doji in downtrend
Doji candles are patterns with similar open and close prices or the open and close of the candles being very close to each other. Doji is an important reversal indicator or specific trend change signal. *Doji is a typical trend change signal *Charts will not work properly if there are too many Doji. Doji below in a downtrend may indicate that a change is about to occur but needs confirmation later, such as the immediate next candle should be bullish.
Doji – Doji at the top of an uptrend can indicate that a change is about to occur but needs confirmation later, such as the immediate next candle should be bearish.
Bullish Piercing
The piercing Line chart pattern is a bullish candle reversal pattern of good reliability and is formed on a downtrend or at potential support. This pattern is made up of 2 candles.
First: The first candle is a continuation of the downtrend hence bearish in nature and it does not matter that it is formed in a downtrend.
Second: The second bullish candle is formed, which covers almost half of the bearish candle formed on the first. This pattern needs to be valid: the open price of the second candle is lower than the close of the first candle. The closing price of the second candle should be above 50% of the body of the first candle.
Bearish Bastard
The Bearish Harami pattern is formed near a resistance or at the end of an uptrend. This pattern is a trend reversal type and has the least reliability that I have seen alone. However, if considered along with other technical indicators it could be a strong signal for investors. This pattern is made up of two candles formed on two consecutive days or hours.
First candle: A long bullish candle is formed, shown in green.
Second candle: A short bearish candle is formed, shown in red The pattern got its name because in Japanese: Harami means pregnant. Or within the body. This pattern involves the formation of a small bearish (red) candle on the second day or hour, within the body of a bullish (green) candle formed earlier.
a. The open price of the Day 2 candle is lower than the close price of the Day 1 candle.
b. The close price of the second candle is higher than the open price of the first candle. The Bearish Harami pattern is considered a sign of a trend reversal, signaling to investors that the bulls are weakening and likely to give the bears a chance to take over the market.
A large bullish candle and a comparatively smaller bearish candle of the second represent a strong trend reversal. Similarly, if the bearish candle on the second is located near the bottom of the bullish candle on the first then one can say that the downtrend may be slow, but if it is near the top of the bullish candle then one can say that the reversal is strong. Is or more confident.
Bullish Bastard
The Bullish Bastard pattern forms at the bottom of a downtrend or near an important support. This pattern is made up of two candles or we can say that this pattern takes 2 days/2 hours to form.
First candle: A long bearish candle is formed, shown in red.
Second candle: A short bullish candle is formed, shown in green below. The pattern got its name because in Japanese: a Bastard means pregnant or within the body. In this pattern, a small bullish candle is formed on the second which is inside the body of the bearish candle formed earlier. Or people say that the first big bearish candle represents a woman and the second smaller bullish candle represents that woman's bulging baby bump.
a. The open price of the second candle is higher than the closing price of the first candle.
b.The close price of the second candle is lower than the open price of the first candle. The Bullish Harami pattern is considered a trend reversal pattern, signaling to investors that the bearish market is over and the bulls are taking over. The size and location of the second bullish candle will tell more about the magnitude of this pattern. Dayal's large bearish candle and the other's comparatively smaller bullish candle represent strong trend reversals. Similarly, if the bullish candle formed on the second is located near the bottom of the bearish candle formed on the first then one can say that the uptrend may be slowing down, but if it is in the middle or above the bearish candle then one can say The reversal is moderate to strong.
Two Candle Pattern
The patterns given below are two candle patterns, the information of which we are going to see in detail further.
a.Bullish Engulfing
b.Bearish Engulfing
c.Bullish Harami
d.Bearish Harami
e.Bullish Piercing
Shooting Star
Is in an uptrend. The real body can be black or white. The upper wick should be twice the length of the body. There should be no lower wick or very short lower wick. Body color does not matter. A red body usually indicates bearishness. The signal needs to be confirmed with a bearish day the next day.
Candle Analysis
One Candle Pattern
a.Hammer
b.Hanging Man
c.Inverted Hammer
d.Shooting Star
Two Candle Pattern -
a.Bullish Engulfing
b. Bearish Engulfing
c.Bullish Harami
d.Bearish Harami
e. Bullish Piercing
f.Bearish Piercing
Three Candle Pattern
a.Evening Star
b.Morning Star
c.Doji
Bearish Engulfing
The bearish engulfing candle pattern usually forms at the end of an uptrend, or near potential resistance. The bearish candle pattern is a reliable reversal pattern and since it forms at the top of an uptrend it is also known as a top reversal or bearish reversal pattern. Basically, this pattern is made of two candles or we can say that this pattern takes 2 days or 2 hours to form.
First- First, a small bullish candle is formed.
Second – The second candle is a large bearish candle which is formed in such a way that the body of the bearish candle completely covers or surrounds the body of the bullish candle formed on the first candle. For this pattern to form it is very important that: The open price of the second candle is higher than the close price of the first candle.
The close price of the second candle is lower than the open price of the first candle. The strength of this pattern increases with the size of the engulfing candle, the larger the engulfing candle the more significant it is. The first small bullish candle may look like a continuation of an uptrend but its smaller size may show that the bullish signal is weakening. This is confirmed by the long bearish candle formed the next day. The large candle tells a lot about the market sentiment that the bears are taking over the bulls.
Bullish Engulfing
The bullish engulfing candle pattern is usually formed at the bottom of a downtrend, during a decline or near potential support. Basically, it is made of two candies. Daily or Hourly Basis.
1. First Candle (Small Bearish Candle): The first candle, a small bearish candle (the open price is higher than the close price) is shown as a red candle in the picture.
2. Second Candle (Large Bullish Candle): A bullish candle (open price which is lower than the close price) is formed which completely covers or engulfs the body of the bearish candle formed from the first candle, which is shown below. Shown as a green candle in the picture. The name of this pattern is derived from the fact that the second candle completely surrounds the first candle.
The open price of the second candle is lower than the close price of the first candle b. The close price of the second candle is higher than the open price of the first candle. The Bullish Engulfing Candle pattern is a very common trend reversal pattern. It is easy to pick up and if done correctly one can easily catch trend reversal/buy signals, and it is highly profitable. The strength of this pattern increases with the size of the adjacent candles. The larger the candle, the more important the pattern. The first small bearish candle may look like a continuation of the downtrend, but regardless of its small size, it may show that the bearish signal is weakening. This is confirmed by the long bullish candle formed the next day. The large candle tells a lot about the market sentiment that the bulls are taking over the bears.
