Candle Stick Patterns in Stock Market

Candle Stick Patterns in Stock Market

Best candlestick patterns that actually work in share market here are some common candlestick patterns:

1. Bullish piercing

2. Bearish piercing

3. Bullish engulfing

4. Bearish engulfing

5. Bullish hammer candle

6. Bearish hammer candle

7. Doji candle

8. Morning star pattern

9. Shooting star pattern

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Bullish piercing-

· Bullish Piercing Pattern is a bullish reversal pattern that can be found at the end of a downtrend. This candlestick pattern is used as an indicator to enter a long position or exit the sell position.

· It is made up of two candles

· The first candle must be Red in colour and the second candle must open gap down or below the close of first candle.

· The second candle must be Green in colour and close above the median (50% of the body) of first candle.

· This pattern is more significant if made after a downtrend.

· It tells us that bulls have successfully overridden bears.

Bearish piercing

· Bearish Piercing Pattern is a bullish reversal pattern that can be found at the end of an uptrend. This candlestick pattern is used as an indicator to enter a short position or exit the long position.

· It is made up of two candles

· The first candle must be Green in colour and the second candle must open gap up or above the close of first candle.

· The second candle must be red in colour and close below the median (50% of the body) of first candle.

· This pattern is more significant if made after an Uptrend.

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Bullish engulfing

· Bullish engulfing candle is a reversal candle pattern consist of two candles, in which the second candle completely engulf (Eat) the first candle:-

· Here the first candle must be red in colour

· Then the second candle must open gap down or below the close of first candle.

· Here the second candle closes above the first candle completely.

· It can occur anywhere, but it is most significant at the bottom or support area.

· It shows that buyers are aggressive and managed to push the prices up

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Bearish engulfing

· Bearish engulfing candle is a reversal candle pattern consist of two candles, in which the second candle completely engulf (Eat) the first candle:-

· Here the first candle must be green in colour

· Then the second candle must open gap up or above the close of first candle.

· Here the second candle closes below the first candle completely.

· It can occur anywhere, but it is most significant at the top or resistance area.

· It shows that sellers are aggressive and managed to push the prices down.

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Bullish hammer candle

· Bullish hammer candle is a reversal candle made up of one candlestick.

· This candle looks like a hammer.

· Bullish hammer candle consists of small body and large lower wicks.

· They usually do not have upper wicks.

· Bullish hammer candle is more significant when it occur at the bottom of trend or at support zones.

· The color of candle makes no difference.

· The longer the wick of lower side the more bullish the pattern is

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Bearish hammer candle

· Bearish hammer candle is a reversal candle made up of one candlestick.

· This candle is also called as Inverted hammer

· Bearish hammer candle consists of small body and large upper wicks.

· They usually do not have lower wicks.

· Bearish hammer candle is more significant when it occurs at the top of trend or at resistance zones.

· The color of candle makes no difference.

· The longer the wick of upper side the more bearish the pattern is.

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Doji candle

· A Doji candle is a neutral candle pattern which does shows strong fight between bulls and bears:

· In Doji price open at a level makes highs and lows but closes near the opening price. So Doji candle have very little to no body.

· It's a sign of indecision.

· This candle provides significant information if found at the top or bottom.

· The color of Doji candle does not matter. It can be both red and green.

· If we see Doji candle in isolation, we see a cross like structure.

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Morning star pattern

· Morning Star is is reversal pattern made up downtrend: - of three candles which usually forms after following a

· Here the First candle is tall bearish candle which is then followed by an indecisive (Doji) candle showing that bears are tired and bulls starts to take control.

· And finally the third candle is tall bullish candle closing above the median of first candle confirming that now bulls have taken control over bears.

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Shooting star pattern

· Shooting Star is reversal pattern made up of three candles which usually forms after following an uptrend:

· Here the First candle is tall bullish candle which is then followed by an indecisive (Doji) candle showing that bulls are tired and bears starts to take control.

· Here the third candle is tall bearish candle closing below the median of first candle confirming that now bears have taken control over bulls.