Bullish Market
Bearish Market
Basics of Candlestick Analysis
Candlestick chart: a chart used to describe price movements/actions of
a security, derivative, or currency.
Colour Significance and
Formation of a Candle
Green Candle:
− is formed when closing price is higher than the opening price
− signifies buying pressure
− Usually: Open-Low-High-Close (OLHC)
Red Candle:
− is formed when closing price is lower than the opening price
− signifies selling pressure
− Red Candle: Open-High-Low-Close (OHLC)
Parts of a Candlestick
Body: (colour filled) area between opening price and closing price
Wick/Shadow: point of the highest lowest price. (a thin line)
Upper Shadow/Wick: thin line attached above the body
Lower Shadow: thin line attached below the body
4 kinds of price
Opening Price: the price at which a stock first trades upon the opening of
an exchange on a trading day.
Closing Price: the price at which a stock last trades before the closing of
an exchange of a trading day.
Highest Price:
Lowest Price:
Trend
1. Reversal Candlesticks Patterns
2. Continuation Candlesticks Patterns
3. Natural Candlesticks Patterns
Natural Candlesticks Patterns
Doji Candlestick
− Looks like plus (+) sign.
− Opening price = Closing price
− Means, price went high and low but finally closed with opening or
nearly to that.
− No body and no wick, natural
− It signifies the neutrality of the market.
− By itself it doesn’t signify any kind of trend. (But, combining with
next candle it can mean ….)
− It’s reality or effect depends upon next candle.
− Signifies the nearness of the change/reversal of a trend.
− Signifies the uncertainty of the market.
Doji Family:
1. Doji Star
2. Long Legged Doji
3. Gravestone Doji
4. Butterfly Doji
5. Four Price Doji
Doji Star
Condition: Doji Star + Green Candle
Action: Doji star ko high lai break garne green candle ma entry linuparxa.
Green candle ko low ma stop loss lagaunu parxa. jati tala aako thiyo tyeti
mathi janxa tyo trend
…
Doji Star + Red Candle
Action:
Silimar to Long Legged Doji
Doji
Long Legged Doji
Doji Star vs Long Legged Doji
Both doji signifies the uncertainty of market (trend).
Star doji signifies low price movement, whereas long-legged doji signifies
high price movement
Star doji means low uncertainty of market, whereas long-legged doji
means high uncertainty of the market.
Gravestone Doji: SELL
- Clearly indicates selling pressure.
- Start of bearish trend.
- Formation of Gravestone Doji at the reisistance level (Should Sell)
- Bullish trend followed by gravestone doji, signals the starting of bearish
trend.
gravestone doji resistence level ma xa bhane 100% sell garnu parxa.
Because, its clear indication of bearish trend.
Gravestone doji ko paxi red candle bannu parxa.
Set stop loss at the top/highest price of red candle
Take sell/entry position at the bottom/lowest price of that red candle.
Pressure:
Trend it indicates: starting of bearish trend
Action to take: Sell (if it forms at the resistance level)
Stop Loss
is to avoid big loss in the trade.
Butterfly/Dragonfly Doji: BUY
Trend is going high or about to fly.
T-shaped candle.
Here, opening price, highest price and closing prices are same.
Indicates high buying pressure.
Long lower wick of this candle indicates the pressure of buyer.
Long upper wick of this candle indicates the pressure of seller.
Dragonfly doji after a long bullish trend signifies the probability of
bearish trend.
Dragonfly doji after a long bearish trend signifies the probability of
bearish trend.
Butterfly doji at the support level indicates
Support level ma butterfly doji banema
butterfly ko paxi green candle banema.
tyo green candle ko lowest point ma stop-loss lagai, highest point
ma/bata buy/entry position linu parxa.
Support level + butterfly doji + green candle
Long red + butterfly doji (T) + green start
Long green + gravestone doji(L) + red candle ….. (bearish trend starts)
Four Price Doji
Four-price doji + green: BUY
Four-price doji + green candle >> green candle ko lowest point ma stop-
loss lagaunuparxa ra highest point bata buy position linu parxa.
Four-price doji + red: SELL
Four-price doji + red candle >> red candle ko highest point ma stop-loss
lagaunuparxa ra lowest point bata sell position linu parxa.
Bullish Reversal Candlestick Patterns
Hammar:
2x (long) lower wick/shadow
Means, strong rejection of selling/bearish
Indicates, future bullish trend
Pressure = length of wick
Long upper wick: selling pressure
Long lower wick: buying pressure
Short upper wick:
Hanging Man:
2x (long) lower wick/shadow
Means, strong rejection of buying/bearish
Indicates, future bearish trend
Wick and price-rejection
