Candlesticks patterns

Candlestick Basics
• Candlestick Basics
• Candlestick charts are an effective way of visualizing price movements. There are two basic
candlesticks:
• Bullish Candle: When the close is higher than the open (usually green or white)
• Bearish Candle: When the close is lower than the open (usually red or black)
 Important parts of candles

• There are three main parts to a candlestick:

• Upper Shadow: The vertical line between the high of the day and the
close (bullish candle) or open (bearish candle).
• Real Body: The difference between the open and close; colored
portion of the candlestick.
• Lower Shadow: The vertical line between the low of the day and the
open (bullish candle) or close (bearish candle).
 Candlestick Patterns

• Bullish and Bearish Engulfing Pattern

• Dark Cloud Cover
• Doji
• Evening Star
• Morning Star
• Hammer
• Hanging Man
• Harami
• Inverted Hammer
• Piercing Line Pattern
• Shooting Star

• Candlestick Charts is with multiple candlesticks forming reversal and

continuation patterns.
 DOJI CANDLE

• The open and close are very close together, creating a very small body
• It represent indecision between the bulls and the bears.
 Hammer
• The Hammer candlestick formation is a significant bullish reversal candlestick
pattern that mainly occur at the bottom of downtrends.
• It has a long lower shadow twice the length of the upper body.
 Inverted Hammer Pattern
• Generally, an inverted hammer is a type of candlestick pattern treated as a possible
trend-reversal signal. As it is a well-known bullish reversal pattern, it mainly
occurs at the end of a downtrend. The inverted hammer has a remarkable shape
and clear-cut chart position make it recognizable among the others.
 Hanging Man
The Hanging Man candlestick formation is a bearish sign. This pattern occur mainly
at the top of uptrends and is a warning of a potential reversal downward.
There is a long lower shadow, which should be at least twice the length of the real
body.
 Shooting Star

• The Shooting Star candlestick formation is a significant bearish reversal

candlestick pattern that mainly occur at the top of uptrends.
• There is a long upper shadow, generally defined as at least twice the length of the
real body.
 Bullish or Bearish Engulfing Patterns
• Engulfing patterns have one bearish and one bullish candle.
• The second candle must fully cover the first candle.
• Bullish or bearish, according to the second candle.
 Morning Star
• It is a bullish candlestick pattern that consist of three candles.
• The first candle is a large bearish candle located within a defined downtrend.
• The second candle is a small bodied candle (bullish or bearish)that closes below
the first red bar.
• The last candle is a large bullish candle that open above the middle candle and
close near the middle of the first candle.
 Evening Star
• An evening star is a bearish candlestick pattern consisting of three
candles.
• The first candle is a large white bullish candlestick located with an uptrend.
• The middle one is a small bodied candle(bullish or bearish) that close
above the first candle.
• The last candle is a large bearish candle that open below the second
candle and closes near the first candle’s center.
 Bearish Harami
• A trend indicated by a large candlestick followed by a much smaller candlestick
with that body is located within the vertical range of the larger candle's body.
• Such a pattern is an indication that the previous upward trend is coming to an end.
 Bullish Harami
• A candlestick chart pattern in which a large candlestick is followed by a smaller
candlestick whose body is located within the vertical range of the larger body.
• In terms of candlestick colors, the bullish harami is a downtrend of
negative-colored (RED) candlesticks engulfing a small positive (GREEN)
candlestick, giving a sign of a reversal of the downward trend.
 Piercing Pattern
• The Piercing Pattern is a bullish candlestick reversal pattern, There are two
components of a Piercing Pattern formation:
• Bearish Candle(day 1)
• Bullish Candle (day 2)
• Piercing pattern will often end a minor downtrend.
• Green candle will close above the midpoint and opening of the bearish candle ,i.e.
more than halfway up the Red candle.
 Dark cloud cover
• A pattern where a black candlestick follows a long white candlestick. It can be an
indication of a future bearish trend.
• Essentially, the large black candle is forming a "dark cloud" over the preceding
bullish trend. The dark cloud must have a closing price that is:
• within the price range of the previous day.
• But below the mid-point between open and closing prices of the previous day.
 Technical Analysis
• Technical Analysis is the study of market action, primarily through the use of
charts, for the purpose of forecasting future price trends.
• They are looking for trends and patterns in the data that indicate future price
movements.

Three Types of trends

• Up Trend
• Down Trend
• Side Ways
 Up Trend
• It describes the price movement of a stock when the overall direction is upward. A
formal uptrend is when each successive peak and trough is higher than the ones
found earlier in the trend.
 Down Trend
• Describes the price movement of a stock when the overall direction is downward.
A formal downtrend occurs when each successive peak and trough is lower than
the ones found earlier in the trend.
 Side ways Trend
• It Describes the horizontal price movement that occurs when the forces of supply
and demand are nearly equal. A sideways trend is often regarded as a period of
consolidation before the price continues in the direction of the previous move.
 Head & Shoulder
• This formation is characterized by two small peaks on either side of a larger peak.
• This is a reversal pattern, meaning that it signifies a change in the trend.
 Double Top And Double Bottom
• These formations are similar to the H&S formations, but there is no head.
• These are reversal patterns with the same measuring implications as the H&S.
• The Double Top is a frequent price formation at the end of a bull market. It
appears as two consecutive peaks of approximately the same price on a
price-versus-time chart of a market.
• The Double Bottom describes as the drop of a stock a rebound, another drop to
the same level as the original drop, and finally another rebound.
 Triangle Patterns
• Triangles are continuation formations.
• Symmetrical
• Ascending
• Descending
• Typically, price should give break out near the apex, and typically breakout would
be in the direction of the prior trend.
 Falling Wedge
• The falling wedge pattern is a continuation pattern formed when price bounces
between two downward sloping, converging trendlines . It is considered
a bullish chart formation but can indicate both reversal and continuation patterns –
depending on where it appears in the trend.
 Flag Patterns
• The Flag is a trend continuation pattern that gives you the opportunity to enter the
market in the middle of a trend.
• It occurs when the price of an asset moves up or down in a strong trend that
suddenly pauses
THANK YOU