Jump to content
AskTraders Trading Community
  • 0

Candlestick patterns in trading


Melinda

Question

2 answers to this question

Recommended Posts

  • 0

The above answer has explained the technical aspects of candlesticks very well

In simple terms, they were designed to read trading psychology of the price. It help us get an idea about who is winning among buyers and sellers. 

You can check out the guide about Candlesticks, most common Patterns, and trading them; https://www.asktraders.com/learn-to-trade/trading-guide/candlestick-trading/ 

Example; you can see the reversal doji near support, and the price recovering. 

w7vb7coB

 

Edited by Rishabh Tyagi
Link to comment
Share on other sites

  • 0


Hi Melinda,

Candlesticks show the four main prices levels (open, close, high, and low) for a given period, coloured according to the direction of price movement. The regularly occurring patterns from the candlesticks assist the traders in predicting the short-term price direction.
Due to their ease of interpretation and superior visual appeal, candlesticks are more popular than line and bar charts. 
Candlesticks have three basic features as follows:  
The real body
 It shows the difference between the open and the close price for a period. They are often one solid colour, or hollow, displaying colours only on their edges.
Wicks
These are thin lines above and below the body showing movement above and below the open and close prices, hence indicate the intra-day highs and lows.
Colours
They give the direction of the market movement. A black or red body indicate price decrease. A white or green body shows price increase.
The Patterns
The patterns are either bullish or bearish. Bearish patterns indicates price fall, and the bullish pattern shows prices might increase. Below are some of the candlestick patterns:
•    Bearish evening star- The last candle in the pattern opens below the small real body of the previous day showing stalling of the buyers, then controls by the sellers.
•    Bearing engulfing- This is reflected by a small green real body getting engulfed by a long red real body showing sellers are taking control. 
•    Bullish engulfing- This appears in a decline and has a short red candle next to a larger green one. Buyers are taking control, and the price could get higher. 
•    Bearish harami- A small red real body is entirely inside the prior day’s real body, representing indecision amongst the buyers.
•    Bullish harami-The previous day’s large red real body engulfs a small green real body, indicating the trend is pausing.


 

Link to comment
Share on other sites

Join the conversation

You can post now and register later. To reply to this question, sign in or create a new account.

Guest
Reply to this question

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...