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    Candlestick Patterns

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    aarjavservices

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    Candlestick Patterns

    Uploaded by

    aarjavservices
    51 views91 pages

    Original Title

    Candlestick Patterns (1)

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    51 views91 pages

    Candlestick Patterns

    Uploaded by

    aarjavservices

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    © All Rights Reserved
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    Candlestick patterns

    Hammer
    The hammer candlestick pattern is formed of a short body with a long lower wick, and is found at the bottom
    of a downward trend.
    A hammer shows that although there were selling pressures during the day, ultimately a strong buying
    pressure drove the price back up. The colour of the body can vary, but green hammers indicate a stronger bull
    market than red hammers.
    Inverse hammer
    A similarly bullish pattern is the inverted hammer. The only difference being that the upper wick is
    long, while the lower wick is short.
    It indicates a buying pressure, followed by a selling pressure that was not strong enough to drive the
    market price down. The inverse hammer suggests that buyers will soon have control of the market.
    Bullish engulfing
    The bullish engulfing pattern is formed of two candlesticks. The first candle is a short red body that is completely
    engulfed by a larger green candle.
    Though the second day opens lower than the first, the bullish market pushes the price up, culminating in an obvious win
    for buyers
    Bearish engulfing
    A bearish engulfing pattern occurs at the end of an uptrend. The first candle has a small green body that is
    engulfed by a subsequent long red candle.
    It signifies a peak or slowdown of price movement, and is a sign of an impending market downturn. The lower the
    second candle goes, the more significant the trend is likely to be.
    Morning star
    The morning star candlestick pattern is considered a sign of hope in a bleak market downtrend. It is a three-stick
    pattern: one short-bodied candle between a long red and a long green. Traditionally, the ‘star’ will have no overlap
    with the longer bodies, as the market gaps both on open and close.
    It signals that the selling pressure of the first day is subsiding, and a bull market is on the horizon.
    Evening star
    The evening star is a three-candlestick pattern that is the equivalent of the bullish morning star. It is formed
    of a short candle sandwiched between a long green candle and a large red candlestick.
    It indicates the reversal of an uptrend, and is particularly strong when the third candlestick erases the gains
    of the first candle.
    Shooting star
    The shooting star is the same shape as the inverted hammer, but is formed in an uptrend: it has a small lower body,
    and a long upper wick.
    Usually, the market will gap slightly higher on opening and rally to an intra-day high before closing at a price just
    above the open – like a star falling to the ground.
    Hanging man
    The hanging man is the bearish equivalent of a hammer; it has the same shape but forms at the end of an
    uptrend.
    It indicates that there was a significant sell-off during the day, but that buyers were able to push the price up
    again. The large sell-off is often seen as an indication that the bulls are losing control of the market
    Doji
    When a market’s open and close are almost at the same price point, the candlestick resembles a cross or plus
    sign – traders should look out for a short to non-existent body, with wicks of varying length.
    This doji’s pattern conveys a struggle between buyers and sellers that results in no net gain for either side.
    Alone a doji is neutral signal, but it can be found in reversal patterns such as the bullish morning star and
    bearish evening star.

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