If we look at the same company with a candlestick chart , we can gain more valuable insight on what happened. For each day, we can determine the open price, close price, high price, and low price. In order to understand the candlestick chart, it is first good to understand the basic concept of a candlestick. A candle shows the opening, closing, high, and low price for a certain time period.
When a candle goes up in a time period, it is colored green and if it goes down, it is colored red. An example of this is given in the illustration below. Notice the lines above and below the main body of the candle. This is where the price fluctuated even though it did not open or close at those prices. Candles do not have to be set at a specific span of time. They can be set to represent a single day, a whole month, or even as low as a single minute. You will notice that the candles take on many different forms and sizes.
Identifying different types of candles can help with spotting trends. Ready to start trading stocks? If you want to do it right, check out Timothy Sykes , the leading name in swing trading penny stocks.
Here is a segment of a candlestick chart that has an example of a big candle compared to a small candle. The important thing to note is that big candles are drastic changes in price whether it be increasing or decreasing.
A candle tells us about the current supply and demand during the lifespan of the candle. A big candlestick that decreases in price means that during that time, supply was much higher than demand. If the candle increases in price, then demand was higher than supply.
For example, this chart has an exceptionally large drop on this day and is marked by a big red candlestick. We know right away that supply was much higher than demand on this day- but why such a large drop? We can assume that there might have been some news or information that caused such a drastic change in price. A doji is a candle that fluctuates in price during a certain period but opens and closes at the same price.
The period could be 1 day, 1 hour, or even one minute. The synopsis is still the same- which is that there is uncertainty in the market. At one point, buyers were winning and at one point sellers were winning but it ended up closing at the same price as when it opened. If the candle wick is large, then that simply means that there is higher indecision than a doji with a small wick. Dojis by themselves tell us that there is indecision on the price but does not tell us much beyond that.
Although, if using them with other candle stick patterns, you might be able to learn more about how the stock price is going to move. Two of patterns are the morning doji star and the evening doji star. These patterns use the doji to mark a possible trend reversal. If the candles are moving down and then hit a doji and begin moving up, this would be an example of the morning doji star.
The opposite pattern where the doji marks a trend reversal going down, then that would be an example of an evening doji star. But, if you have already chosen a stock based on your strategy, this pattern will help tell you the best timing to enter the market. Also, do not get caught up on searching for a doji that has an exact match with the opening and closing price.
It could also have a small body with similar opening and closing prices. The point is to have the knowledge of being able to identify the pattern for market entry. This is an example of a good time to enter the market. The small candle at the bottom is an indicator that the pattern is shifting and there is a trend reversal. It would likely be a good time to purchase after the stock bottomed out and showed promise for growth.
These two forms of a candle are like the doji in that they open and close at the same price, but they only fluctuate in one direction: increasing or decreasing. Similar to the doji, they will not be very helpful by themselves but using them with other candle forms can help predict the future of a stock.
A shooting star is where the stock opens at a price and goes up and then goes down to close just above where it opened. It is almost identical to the gravestone but instead closes just above the opening price rather than closing at the same price. The same goes for the hammer. The hammer is where the price opens and the goes down a bit and back up to close just below the opening price.
This pattern is closely related to the dragonfly candle type. These patterns consist of a large candle followed by a smaller candle that is contained within the body of the first candle. The bearish harami signals a reversal pattern to the downside while the bullish harami signals to the upside.
This pattern strongly suggests that the current situation will reverse. Here we see that the demand was higher than supply for a good streak.
The buyers were winning. Then once it reached a certain price, the next opening price was lower and the closing price decreased from there. This is a strong indicator that there is going to be a trend reversal and the stock is going to change direction. This tells us that once the stock reached a certain price, it got exhausted and sellers were able to take over the market.
It opens within the body of the previous candle and closes The counterattack candlestick pattern is a reversal pattern that indicates the upcoming reversal of the current trend in the market. There are two variants of the counterattack pattern, the bullish counterattack pattern and the bearish counterattack pattern. The breakaway candlestick pattern is a five bar reversal candlestick pattern. It can be bullish or bearish. The first candle must be a long candle.
The next three candles must be spinning tops. The second candle must also create a gap between the first and The ladder bottom candlestick pattern is a 5-bar bullish reversal pattern. It forms following these characteristics:The first three long black candlesticks, resembling three black crows formation, with successive lower opens and closeThe fourth is also a black The three white soldiers candlestick pattern is a 3-bar bullish pattern.
It has 3 long green candles, each making new higher high. Each candle's body should be approximately the same size. Statistics to prove if the Three White Soldiers pattern really works The advance block candlestick pattern is a 3-bar bearish reversal pattern. It has three long green candles with consecutively higher closes than the previous candles. Each candle has a shorter body than the previous one.
Statistics to prove if the Advance Block pattern The unique three river bottom candlestick pattern is a bullish reversal pattern. It occurs during a downtrend in the market.
Statistics to prove if the Unique Three River pattern really works What is the unique three river The downside gap three methods is a 3-bar candlestick pattern. It appears during a downtrend. The first two candles have a gap down between them while the third candle covers the gap between the first two. Statistics to prove if the Downside Gap Three Methods pattern The harami candlestick pattern consists of two candlesticks.
The first candle is a big one and the second candle is a doji, contained within the first one's body. Statistics to prove if the Harami Cross pattern really works What The Tasuki gap candlestick pattern is a three-bar continuation pattern.
The first two candles have a gap between them. The third candle then closes the gap between the first two candles.
Statistics to prove if the Tasuki Gap pattern really works The matching low candlestick pattern is a 2-bar bullish reversal pattern. It occurs during a downtrend. As his name suggests, both lows from the 2 candles are equal. Statistics to prove if the Matching Low pattern really works The upside gap two crows candlestick pattern is a 3-bar bearish reversal pattern.
It appears during an uptrend. Statistics to prove if the Upside Gap Two Crows pattern really works What is the upside gap two crows candlestick The down-gap side by side white lines candlestick pattern is a 3-bar bearish continuation pattern. The up-gap side by side white lines candlestick pattern is a 3-bar bullish continuation pattern.
The first and second lines are separated by a bullish gap. The Ladder Top candlestick pattern is a 5-bar bearish reversal pattern that appears at the end of a bullish trend. You can identify it with the following characteristics: The first three candles are always white with long real bodies opening and closing above the open The identical three crows candlestick pattern is a 3-bar bearish reversal pattern.
It occurs during an uptrend. It is made of three consecutive bearish candlesticks. The Thrusting candlestick pattern is a two-bar pattern. Statistics to prove if the Thrusting pattern really works What is the Thrusting The Closing Marubozu is a 1-bar continuation candlestick pattern. It's a long candle close at it's high bullish or low bearish. The upside gap three methods candlestick pattern is a 3-bar bearish continuation pattern.
It has 2 green candles and a red one. The second candle gaps above the first one. The Two Crows candlestick pattern is a three-line bearish reversal pattern.
How to identify the pattern:The market must be in an uptrend. The first candle must be a long white candle. The second candle is a short black candle that starts with an An Island Reversal Pattern appears when two different gaps create an isolated cluster of price. It usually gives traders a reversal biais. What is the Island Reversal candlestick pattern? The Island Reversal candlestick pattern is a fantastic candlestick pattern that The Takuri candlestick pattern is a single candle bullish reversal pattern.
It has a very small body with a much longer lower wick and without an upper wick. This pattern illustrates how a downtrend is opposed by the bulls and the candle eventually closes near its The Spinning Top candlestick pattern is a versatile single candle pattern. It is versatile and mysterious because of its formation that can occur at the peak of an uptrend, in the very middle of a trend, or at the bottom of a downtrend.
It is a small candlestick A Long-Legged Doji pattern is the one that has a closing and opening price happening at or in the middle of the shadows. The high and low prices are far apart and make very long A Piercing line candlestick pattern is a two-day bullish candlestick reversal pattern that appears in a downtrend. It signals a potential short term reversal from downwards to upwards. It consists of two major components, a bullish candle of day 2 and a bearish candle Candlestick patterns are becoming more and more popular these days for charting prices.
Traders can enter a long position if next day a bullish candle is formed and can place a stop-loss at the low of the second candle. The Morning Star is multiple candlestick charts pattern which is formed after a downtrend indicating bullish reversal. It is made of 3 candlesticks, first being a bearish candle, second a Doji and the third being a bullish candle.
The first candle shows the continuation of the downtrend, the second candle being a doji indicates indecision in the market, and the third bullish candle shows that the bulls are back in the market and reversal is going to take place.
The Three White Soldiers is a multiple candlestick pattern that is formed after a downtrend indicating a bullish reversal. These candlestick charts are made of three long bullish bodies which do not have long shadows and are open within the real body of the previous candle in the pattern. The White Marubozu is a single candlestick pattern that is formed after a downtrend indicating a bullish reversal. This candlestick has a long bullish body with no upper or lower shadows which shows that the bulls are exerting buying pressure and the markets may turn bullish.
At the formation of this candle, the sellers should be caution and close their shorting position. The Three Inside Up is multiple candlestick pattern which is formed after a downtrend indicating bullish reversal. It consists of three candlesticks, the first being a long bearish candle, the second candlestick being a small bullish candle which should be in the range the first candlestick.
The relationship of the first and second candlestick should be of the bullish harami candlestick pattern. The Bullish Harami is multiple candlestick chart pattern which is formed after a downtrend indicating bullish reversal.
It consists of two candlestick charts, the first candlestick being a tall bearish candle and second being a small bullish candle which should be in the range of the first candlestick.
The first bearish candle shows the continuation of the bearish trend and the second candle shows that the bulls are back in the market. The Tweezer Bottom candlestick pattern is a bullish reversal candlestick pattern that is formed at the end of the downtrend.
It consists of two candlesticks, the first one being bearish and the second one being bullish candlestick. Both the candlesticks make almost or the same low. When the Tweezer Bottom candlestick pattern is formed the prior trend is a downtrend. A bearish tweezer candlestick is formed which looks like the continuation of the ongoing downtrend. The bottom-most candles with almost the same low indicate the strength of the support and also signal that the downtrend may get reversed to form an uptrend.
Due to this the bulls step into action and move the price upwards. An Inverted Hammer is formed at the end of the downtrend and gives a bullish reversal signal. In this candlestick, the real body is located at the end and there is a long upper shadow.
It is the inverse of the Hammer Candlestick pattern. This pattern is formed when the opening and closing prices are near to each other and the upper shadow should be more than twice the real body. The Three Outside Up is multiple candlestick pattern which is formed after a downtrend indicating bullish reversal. It consists of three candlesticks, the first being a short bearish candle, the second candlestick being a large bullish candle which should cover the first candlestick.
The relationship of the first and second candlestick chart should be of the Bullish Engulfing candlestick pattern. The pattern is called a neckline because the two closing prices are the same or almost the same across the two candles, forming a horizontal neckline.
Bearish Reversal candlestick patterns indicate that the ongoing uptrend is going to reverse to a downtrend. Thus, the traders should be cautious about their long positions when the bearish reversal candlestick patterns are formed. Hanging Man is a single candlestick pattern which is formed at the end of an uptrend and signals bearish reversal. The real body of this candle is small and is located at the top with a lower shadow which should be more than the twice of the real body.
This candlestick pattern has no or little upper shadow. The psychology behind this candle formation is that the prices opened and seller pushed down the prices. Suddenly the buyers came into the market and pushed the prices up but were unsuccessful in doing so as the prices closed below the opening price. This resulted in the formation of bearish pattern and signifies that seller are back in the market and uptrend may end.
Traders can enter a short position if next day a bearish candle is formed and can place a stop-loss at the high of Hanging Man. Dark Cloud Cover is multiple candlestick pattern which is formed after the uptrend indicating bearish reversal. It is formed by two candles, the first candle being a bullish candle which indicates the continuation of the uptrend. Traders can enter a short position if the next day a bearish candle is formed and can place a stop-loss at the high of the second candle.
Bearish Engulfing is a multiple candlestick pattern that is formed after an uptrend indicating a bearish reversal. The first candle being a bullish candle indicates the continuation of the uptrend. The second candlestick chart is a long bearish candle that completely engulfs the first candle and shows that the bears are back in the market.
Traders can enter a short position if next day a bearish candle is formed and can place a stop-loss at the high of the second candle. The Evening Star is multiple candlestick pattern which is formed after the uptrend indicating bearish reversal.
It is made of 3 candlesticks, first being a bullish candle, second a doji and third being a bearish candle. The first candle shows the continuation of the uptrend, the second candle being a doji indicates indecision in the market, and the third bearish candle shows that the bears are back in the market and reversal is going to take place. Traders can enter a long position if next day a bearish candle is formed and can place a stop-loss at the high of the second candle.
The Three Black Crows is multiple candlestick pattern which is formed after an uptrend indicating bearish reversal. These candlesticks are made of three long bearish bodies which do not have long shadows and open within the real body of the previous candle in the pattern. The Black Marubozu is a single candlestick pattern which is formed after an uptrend indicating bearish reversal.
This candlestick chart has a long bearish body with no upper or lower shadows which shows that the bears are exerting selling pressure and the markets may turn bearish. The Three Inside Down is multiple candlestick pattern which is formed after an uptrend indicating bearish reversal. It consists of three candlesticks, the first being a long bullish candle, the second candlestick being a small bearish which should be in the range the first candlestick.
The third candlestick chart should be a long bearish candlestick confirming the bearish reversal. The relationship of the first and second candlestick should be of the bearish Harami candlestick pattern.
The Bearish Harami is multiple candlestick pattern which is formed after the uptrend indicating bearish reversal. It consists of two candlesticks, the first candlestick being a tall bullish candle and second being a small bearish candle which should be in the range of the first candlestick chart.
The first bullish candle shows the continuation of the bullish trend and the second candle shows that the bears are back in the market.
Shooting Star is formed at the end of the uptrend and gives bearish reversal signal. In this candlestick chart the real body is located at the end and there is long upper shadow. It is the inverse of the Hanging Man Candlestick pattern. This pattern is formed when the opening and closing prices are near to each other and the upper shadow should be more than the twice of the real body. The Tweezer Top pattern is a bearish reversal candlestick pattern that is formed at the end of an uptrend.
It consists of two candlesticks, the first one being bullish and the second one being bearish candlestick. Both the tweezer candlestick make almost or the same high. When the Tweezer Top candlestick pattern is formed the prior trend is an uptrend.
A bullish candlestick is formed which looks like the continuation of the ongoing uptrend. Bulls seem to raise the price upward, but now they are not willing to buy at higher prices. The top-most candles with almost the same high indicate the strength of the resistance and also signal that the uptrend may get reversed to form a downtrend.
This bearish reversal is confirmed on the next day when the bearish candle is formed. The Three Outside Down is multiple candlestick pattern which is formed after an uptrend indicating bearish reversal. It consists of three candlesticks, the first being a short bullish candle, the second candlestick being a large bearish candle which should cover the first candlestick.
0コメント