Candles for Trading

Types of Candlesticks Pattern

 

Things to notice

1)History repeats over and over

2)Buy strength, sell weakness

3)Stay Flexible while noticing

4)Look prior for opposing trend

5)Length of the candle

 

Single Candlestick Pattern

Pattern-1

Marubuzo -(don't look before, just look at it) 

No upper and lower Shadow

Open Low , Close High   ||   Close low , Open High 

 

Indication

Bullish Green Candle-Strong buying interest

Bearish Red Candle- Strong selling interest

Prediction

Bullish Green Candle-Buy

Bearish Red Candle-sell

Stop Loss

If bullish- low of the candle

If bearish- High of the candle

Pattern 2

Spinning Top  & Doji

Candles with small body 

                

                           

 Indication - Uncertainty

Prediction - Market swing & new Big Move

Pattern 3

Paper Umbrellas

Bullish Hammer at the bottom/Bearish Hanging man at the top

           

Indication  -  opposing interest

Prediction

Bullish Hammer-Strong Buy

Bearish Hanging Man-sell

Stop Loss

If bullish- low of the shadow

If bearish- High of the candle

 Pattern 4

Shooting Star

Indication  -  opposing interest

Prediction

Appears at the top - Strong sell
Appears at the bottom - buy

Stop Loss

If appears at the top - High of the shadow
If appears at the bottom - low of the candle

Multiple Candle Pattern

Pattern 1

Bullish Engulfing at the bottom/Bearish Engulfing at the top

                        

Bullish Engulfing                                                                     Bearish Engulfing                      

            

Indication - opposing interest 

Prediction

 Bullish Engulfing at the bottom - Buy

 Bearish Engulfing at the top- Sell

Stop Loss

If appears at the top - High of the Highest candle

If appears at the bottom - low of the lowest candle

Pattern 2

Piercing pattern/Dark Cloud cover

                                                                                       

Dark cloud cover                                                                      Piercing pattern

                   

Indication - opposing interest (If doji is present at the end, indicates a strong trend)

 Prediction

Piercing (Partial Engulfing at the bottom) - Buy

Dark Cloud (Partial Engulfing at the top)- Sell

Stop Loss

If appears at the top - High of the highest candle

If appears at the bottom - low of the lowest candle

Pattern 3

Harami Pattern/Pregnant pattern

                                                

Bullish Harami                                                                     Bearish Harami

                                                         

                   

Indication - opposing interest (If doji is present at the end, indicates a strong trend)

 Prediction

 Bullish Harami at the bottom - Buy

 Bearish Harami at the top- Sell

Stop Loss

If appears at the top - High of the Highest candle

If appears at the bottom - low of the lowest candle

Pattern 4

Morning Star Pattern & Evening Star Pattern

                                                                                  

Morning Star                                                                           Evening Star                         

                                                           

            

Indication - opposing interest & 3-days Strong signals

 Prediction

 Bullish Morning Star at the bottom - Buy

 Bearish Evening Star at the top- Sell

Stop Loss

If appears at the top - High of the Highest candle

If appears at the bottom - low of the lowest candle

Source – Zerodha Varisity