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Candlestick Patterns

Candlestick patterns provide a visual representation of market activity and price movements that can help traders understand when to enter, exit, or avoid the market. Some key candlestick patterns discussed in the document include: 1) Engulfing patterns which indicate a reversal when they occur at the end of a trend, as they show one group (buyers or sellers) taking control. 2) Doji candles which show indecision between buyers and sellers as the open and close prices are nearly equal. 3) Hammer and hanging man patterns which can foreshadow reversals at the end of a trend. 4) Harami candles which as continuation or reversal patterns depending on where they occur in a trend

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199 views33 pages

Candlestick Patterns

Candlestick patterns provide a visual representation of market activity and price movements that can help traders understand when to enter, exit, or avoid the market. Some key candlestick patterns discussed in the document include: 1) Engulfing patterns which indicate a reversal when they occur at the end of a trend, as they show one group (buyers or sellers) taking control. 2) Doji candles which show indecision between buyers and sellers as the open and close prices are nearly equal. 3) Hammer and hanging man patterns which can foreshadow reversals at the end of a trend. 4) Harami candles which as continuation or reversal patterns depending on where they occur in a trend

Uploaded by

khatrimanish9813
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Candlestick

Introduction
What is candlestick ?
• The language of the trading.

• A visual representation of what is going on in the market for analysis, and gives
us an idea about the price movement
Why candlestick ?
• Help to understand what the big boys/whales are doing, and will
show you when to enter, when to exit, and when to stay away from
the market

Big Boys / Whales ?


- Banks
- Professional Traders

These guys trade millions of dollars every day, they can move
the market whenever they want.
Why candlestick ?

• Even if we can trade one hundred thousand dollars trading account,


you can’t move the market; you can’t control what is going in the
market

• They can take your money easily if you don’t understand the game
Why candlestick ?

• When to enter ?
• When to exit ?
• When to stay away from market ?
Bullish Candle
$115 Upper wick • Open
Opening price in the market

• Close
closing price in the market
$110 close
• Upper wick
Highest Price (High)

• Lower wick
$100 open Lower price (Low)

$90
1.Buying pressure in market
Lower wick
2.Buyer in control
Barish Candle Stick
Upper wick

$105

$100 open
1. Selling Pressure
2. Seller are in control
$90 close

$80

Lower wick
Bullish / Barish Candle Stick
Engulfing Bar
Bearish Engulfing Bar

• In case of a bearish engulfing bar,


sellers are in control of the market.
• When this pattern occurs at the end of
an uptrend, this indicates that buyers
are engulfed by sellers which signals a
trend reversal.
Bullish Engulfing Bar

• In case of a Bullish engulfing bar, this pattern


tells us that buyer are in control of the
market.

• When a bullish engulfing candle forms at the


end of a downtrend, the reversal is much
more powerful as it represents a capitulation
bottom.
Doji Candle
High - $110

Open price - $100 Close price - $100

Low - $90

Market opens and closes at the same price which means that there is
equality and indecision between buyers and sellers, there is no one in
control of the market
Dragon Fly Doji

• The formation of the dragonfly Doji with the long lower tail shows us that there
is a high buying pressure in the area.
• Bullish Candle
• Bullish Reversal
Dragon Fly Doji
Gravestone Doji

• The formation of the dragonfly Doji with the long upper tail shows us
that there is a high selling pressure in the market.
• Bearish Candle
• Bearish Reversal
Gravestone Doji
It can also be used as an entry signal if it is combined with other
technical analysis
• The Hammer candlestick is created when the open high and close are
roughly the same price
• Bullish Pin Bar
• In down trend, it indicates Bullish Reversal
• High buying pressure
• Bearish Candle
• Selling Pressure
• In upper trend, it indicates Bearish Reversal
• Selling Pressure
• smaller body closes inside of the first bigger candle.
• It is considered as a reversal and continuation pattern,
• buyers and sellers don’t know what to do, and there is no one in control of
the market.
Harami Candlestick
• When this candlestick pattern happens during an uptrend or a
downtrend, it is interpreted as a continuation pattern which gives a
good opportunity to join the trend.
• And if it is occurred at the top of an uptrend or at the bottom of a
downtrend, it is considered as a trend reversal signal.
• The tweezers top formation is considered as a bearish reversal
pattern seen at the top of an uptrend, and
• The tweezers bottom formation is interpreted as a bullish reversal
pattern seen at the bottom of a downtrend.
Are you familiar with these terms now ?
• Bearish
• Bullish
• Uptrend/Bullish reversal
• Downward/Bearish reversal
• Buying pressure
• Selling pressure
• Candle psychology
Thank you!!

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