CANDLESTICK PATTERNS

PRESENTED TO: DR.KIRAN MEHTA

PRESENTED BY:Jaspreet KaurAarzoo Dua

CHART

• Charts are the working tools of technical analysts. Investors use charts to plot the price movements of a stock over specific time frames. It’s a graphical method of showing where stock prices have been in the past.

TYPES• CHART

LINE BAR CANDLESTICK

Candlestick

• Candlestick charts provide visual insight to current market psychology.

• A candlestick chart can be created using the data of high, low, open and closing prices for each time period that you want to display.

• Each candlestick provides an easy-to-decipher picture of price action. Immediately a trader can see and compare the relationship between the open and close as well as the high and low.

•ONE CANDLESTICK PATTERN

HAMMER

FORMED AFTER A LONG DOWN TREND

BULLISH TREND REVERSAL CANDLE

SHADOW FORMED IS 2-3 TIMES LARGER THAN THE BODY

BOTTOM IS HAMMERED, PRICES TO GO UP

THE FOLLOWING DAY NEEDS TO CONFIRM THE HAMMER SIGNAL WITH A STRONG BULLISH DAY

BANK OF INDIA

Hanging Man

• Prior Trend: Upward

• Potential: Down

• View: Prices will go down

• Position: short and after confirmation

• Identification: after peak of uptrend

INVERTED HAMMERAPPEARS IN THE DOWN TREND

SMALL BODY, LONG UPPER SHADOW(2-3 TIMES)

BUYERS ARE BACK IN THE MARKET, SELLERS ARE EXHAUSTED

THE DAY AFTER THE INVERTED HAMMER SIGNAL OPENS HIGHER

SHOOTING STARAPPEARS IN THE UP TREND

SMALL BODY, LONG UPPER SHADOW(2-3 TIMES)

SELLERS ARE BACK IN THE GAME, BUYERS ARE EXHAUSTED

THE DAY AFTER THE SHOOTING STAR SIGNAL OPENS LOWER.

INVERTED HAMMER & SHOTING STAR

BULLISH ENGULFING

• Prior Trend: Down

• Potential: Up

• View: Prices will go up

• Identification: at end of downward trend

• Must confirm it

BEARISH ENGULFING

2 CANDLESTICK PATTERN: 1ST CANDLE BULLISH, ND CANDLE BIG BEARISH, ENGULFS COMPLETELY THE 1ST

BULLISH CANDLE

FORMED AFTER AN UPTREND

POWRFUL SIGNAL AFTER A LONG UPWARD TREND…… IN BETWEEN TRENDS IT JUST SHOWS MOMENTARY BUYING

SELLING OPPORTUNITY…PRICES MAY FALL NOW

ACC LTD. BEARISH ENGULFING

•TWO CANDLESTICK PATTERN

PIERCING

• Prior Trend: Downward

• Potential: indicates uptrend

• View: may prices will go up

• Identification: 1st candle is bearish and forms a low in a downtrend and 2nd candle opens little bit lower but closes above 1st candle’s mid point.

BULLISH HARAMI

• Prior Trend: downward

• Potential: indicates market can be in uptrend

• View: prices can go high

• Identification: 1st candle is bigger and bearish near a bottom/after downtrend and 2nd candle has small body contained within 1st candle.

• Wait for confirmation

BEARISH HARAMI

FORMED NEAR A TOP, AFTER AN UPTREND

1ST CANDLE IS BIGGER AND BULLISH

2ND CANDLE IS BEARISH AND HAS SMALL BODY, CONTAINED WITHIN THE FIRST CANDLE

FOR A REVERSAL SIGNAL, CONFIRMATION IS NEEDED. THE NEXT DAY SHOULD SHOW WEAKNESS

THE UPTREND HAS BEEN APPARENT. A LONG BULLISH CANDLE OCCURS AT THE END OF THE TREND

BOSCH- BEARISH HARAMI

•THREE CANDELSTICK PATTERN

MORNING STAR

• Prior Trend: downward

• Potential: Uptrend

• View: prices will go up

• Identification: 1st candle is bearish candle, 2nd is small body (situation of indecision) and 3rd candle is bullish which closes more than half size of 1st candle.

EVENING STAR

3 CANDLESTICK PATTERN

1ST CANDLE BULLSIH

2ND CANDLE SMALL BODY-INDECISION

3RD CANDLE BEARISH- CLOSES BELOW MID-POINT OF 1ST CANDLE

CONDITION- STRONG AFTER AN UPTREND

INTERPRETATION- THE BEARS ARE READY TO TAKE THE PRICES DOWN

HCCL- EVENING STAR

DOJI

REPRESENTS INDECISION

NO BODY- REFLECTS A BALANCE BETWEEN BUYING AND SELLING

TREND COMING TO END

IDEA CELLULAR- DOJI