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CREATED BY SHANKAR.A.G

TRADING IN GOLD
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COMMODITY MCX TIMING INDIAN MARKET: 9:00 AM to 11:30 PM

(Monday to Friday)
WEEKENDS MCX MARKET CLOSED
AND ON HOLIDAYS NOT ON WEEKENDS SOMETIMES MORNING
SESSION CLOSE BUT EVENING AFTER 5:00 pm to 11:30pm

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FOR GOLD TRADING BY SEEING XAUUSD(OANDA) FOR DRAWING SUPPORT

AND RESISTANCE AND TRENDLINES AND THEN PLACE BUY OR SELL ORDER IN
GOLDMINI FUTURES IN MCX :
FOR EVERY 1 TICK POINT(TICK) MOVE IN GOLDM 10 RUPEES DIFFERENCE
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CONTENTS
Bullish engulfing pattern -------pg 10
Bullish harami ---------------------pg 11
Morning star -----------------------pg11&12
Piercing line--------------------------pg 13
Hammer ------------------------------pg14
Inverted hammer--------------------pg15
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Bearish engulfing---------------------pg16
Bearish harami-------------------------pg17
Evening star-----------------------------pg18
Hanging man ---------------------------pg19
Dark cloud cover-----------------------pg20
Shooting star----------------------------pg21
Three black crows-----------------------pg 22
Inside bars--------------------------------pg23
Three white soldiers---------------------pg 24
Marbozu------------------------------------pg 25
Doji -----------------------------------------pg27
Gravestone doji------------------------- pg27

Dragonfly doji---------------------- pg28

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TO CAPTURE MAJOR SWINGS

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A)4HR TIME FRAME FOR DRAWING SUPPORT AND RESISTANCE AND TRENDLINES &

1HR TIME FRAME FOR SEEING ENTRY OR EXIT BASED ON REVERSAL OR BREAKOUT CANDLES.

TO CAPTURE MINOR SWINGS

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B)1 HR TIME FRAME FOR DRAWING SUPPORT AND RESISTANCE AND TRENDLINES &

15 MINS TIME FRAME FOR SEEING ENTRY OR EXIT BASED ON REVERSAL OR BREAKOUT CANDLES.

TO CAPTURE VERY MINOR SWINGS

C)15 MINS TIME FRAME FOR DRAWING SUPPORT AND RESISTANCE AND TRENDLINES & 5 MINS TIME
FRAME FOR SEEING ENTRY OR EXIT BASED ON REVERSAL OR BREAKOUT CANDLES

ALWAYS TRADE IN THE DIRECTION OF WHAT TREND STOCK IS IN CURRENTLY FOR THE TIME FRAME
i.e USED FOR DRAWING SUPPORT AND RESISTANCE I.E FOR CAPTURING MAJOR SWING WE USE 4
HOUR TIME FRAME SO IN 4 HOUR TIME FRAME CHART SEE WHAT TREND IS THERE BY CHECKING
HIGHER HIGH HIGHER LOW OR LOWER HIGH -LOWER LOW FORMATION WHETHER IT IS IN UPTREND
OR DOWNTREND . IF SUPPOSE STOCK IS IN UPTREND.CONSIDER TAKING LONG. BUT IF YOU WANT
TO TAKE SHORT IF IT IS MAKING HIGHER HIGH-HIGHER LOWS SEE IF ANY REVERSAL CHART PATTERN
LIKE DOUBLE TOP.DOUBLE BOTTOM, HEAD AND SHOULDER IS BROKEN AT THE POINT OF ENTRY AND
THEN ENTER(FOR GUIDE REFER YOUTUBE VIDEO -mastering reversals :trading by @ewn)

REVERSAL CHART PATTERN

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TRENDLINES

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TRENDLINES ARE DRAWN BY CONNECTING HIGHER HIGH AND HIGHER LOWS FOR UPTREND SO
ALWAYS CONNECT THE WICK FOR THE FIRST POINT FOR DRAWING TRENDLINES(confirm this point in
google) THEN FOR OTHER POINTS JOINING YOU MAY CONNECT USING WICK OR CANDLE CLOSE OR
PASSING THROUGH WICK SO THAT TRENDLINE ARE CONNECTING MAXIMUM POINTS.

TRENDLINES ARE CONNECTED SO THAT OUTER MOST SWING HIGHS ARE TOUCHED FOR UPTREND
LINE WITHIN THE CHART AND ANOTHER TRENDLINE IS ALSO CONNCECTED SO THAT SAME LINE
POINTS ARE CONNECTED(COHERENT PATTERN POINTS ARE CONNECTED FOR MAKING TRENDLINE)

FOR DRAWING RESISTANCE OR TRENDLINES OR SUPPORT ALWAYS SEE PREVIOUS TIME DATA OF
CHART UPTO CURRENT STRUCTURE (WHOLE STRUCTURE)

LINE RESISTANCE

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A BIG LINE SWING HIGH i.e INITIATING WHICH IS DISCONTINUED FROM REST OF THE CHART ACTS AS
A RESISTANCE

EXACTLY OPPOSITE FOR LINE SUPPORT

BIG RESISTANCE

A SINGLE MOST MAJOR SWING HIGH CAN ITSELF ACT AS A RESISTANCE

RESISTANCE

MINIMUM 2 COMMON MEDIUM TO LARGE SWING HIGH CAN ACT AS RESISTANCE

PSYCHOLOGICAL RESISTANCE ALSO ACTS for XAUUSD OANDA LIKE 3100 OR 3200 OR 3150 (IN
MULTIPLES OF 50 )

NOTE : JOIN RESISTANCE CONNECTING MAXIMUM POINTS AND IT SHOULD BE MEANINGFUL YOU
CAN CONNECT BOTH WICK AND BODY

A RESISTANCE IS OK AS A RESISTANCE ONLY IF ANY CANDLE DOESN’T CUT THE RESISTANCE FOR 2-3
TIMES FOR CURRENT TRADING TIME UNDER CONSIDERATION OTHERWISE THE RESISTANCE
BECOMES INVALID (IT IS OK ONLY IF IT CUTS 1 TIME)

RESISTANCE HIGH ACTS AS SWING HIGH SO SWING HIGH POINT I.E TIP OF THE CANDLE IS MORE
IMPORTANT THAN THE CANDLE CLOSING FOR RESISTANCE.

FOR BREAKOUT OF RESISTANCE SEE IF MEDIUM OR BIG GREEN CANDLE IS BREAKING AND BREAKING
CANDLE SHOULD BE BROKEN SUCH A WAY THAT AFTER RESISTANCE LINE THE CANDLE BODY
SHOULD BE MORE OUTSIDE THE TOP OF THE RESISTANCE LINE.(MORE BODY AND LESS WICK
SHOULD BE AFTER BREAKING OF RESISTANCE FOR THE BREAKOUT CANDLE) AND ALSO SEE IF THERE
IS SURGE IN VOLUME FOR BREAKOUT CANDLE

BREAKOUT i.e ENTRY or EXIT SHOULD BE ALWAYS SEEN IN MINOR TIME FRAME.
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Powerful Candlestick Patterns: A Complete Trading Guide for Beginner Traders

Candlesticks consist of the open, high, low and close prices for a specific period. The thick
rectangular ‘body‘ represents the range between open and close. The thin ‘wicks‘ or ‘shadows’
reresent highs and lows. The coloring of the body conveys whether close was higher than the open,
which is often indicated by green or white, and if close is lower than the open, it is represented by
red or black.

Candlestick patterns fall into different categories that signal potential market movements.
Bullish reversal patterns indicates shift from downward to upward momentum while bearish
reversals indicates shift from upward to downward momentum.
Continuation patterns suggest the prior trend is likely to continue, whether bullish or bearish.
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Indecision patterns means there is struggle between buyers and sellers and often comes before
trend reversals.

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Bullish Reversal Patterns: Bullish reversal patterns in candlestick charts indicate a potential change
from an downtrend to an uptrend, suggesting that buyers are to dominate the market. Let’s move

A bullish engulfing pattern when made at support. In bullish engulfing pattern

1st candle : short to medium red candle

2nd candle :long green candle and 2nd green candle body totally engulfs 1st candle body.(AND
WICKS compulsarily)

IT GIVES MORE WEIGHTAGE IF SHADOWS OF FIRST CANDLE TO BE IN THE LOW TO HIGH RANGE OF
SECOND CANDLE

The first candle shouldn’t be a doji

Confirmation for bullish engulfing pattern

1)Check if there is an increase in trading volume on the bullish candlei.e. 2nd candle

2)RSI IN OVERSOLD ZONE below 30

3)2nd candle should be quiet bigger than 1st candle

4)third candle i.e immediate candle after the pattern should close above the bullish candle of
bullish engulfing pattern

ENTER THE TRADE AT THE CLOSE OF BULLISH ENGULFING CANDLE

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2. Bullish Harami or bullish harami cross(in bullish harami cross the second candle is common doji
and first candle is same as bullish harami)

The bullish harami candlestick pattern is a two-candle pattern. Harami means pregnant in Japanese.
Formed in a downtrend or near a support

1st candle : long red candle

2nd candle : small green candle open above the close of first candle and second candle actually opens
in the body of the first candle result is second candle is a small candle.it’s a spinning top with small
wicks the size of wicks are not usually important but it is better to be small whatever the size of
shadow they must be inside the body of the first candle.

CONFIRMATION OF BULLISH HARAMI

1)MACD- SHOULD SHOW GREEN SIGNAL

and

2)RSI-check the RSI to see if it’s moving up (below 30), which suggests the market is recovering from
oversold conditions.

However, after spotting the bullish harami, you must verify the trend. Typically, the third or fourth
candlestick will confirm the trend reversal. This confirmation comes if the third or fourth candlestick
is bullish and closes above the prior bullish candlestick i.e 2nd candle of bullish harami pattern.

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3. Morning Star
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The morning star candlestick pattern is a bullish reversal pattern it is made up of three candles. The
first candle is a big red candle. The second candle is a small candle(color doesn’t matter), spinning
top which shows the indecision and also shows that the sellers are getting weak. The third candle is
a long green candle which changes the trend.

This candlestick pattern is a strong indication of the potential trend reversal. Traders use this pattern
to set up stop losses below the doji(/spinning top or the bullish candle.

1st candle : long red candle

2nd candle (colour doesn’t matter): 2nd candle opens below the closing of the 1st candle

3rd candle: long green candle which opens with a gap above 2nd candle but not necessary.

Confirmation of morning star

RSI - When RSI dips below 30, it suggests that the market is oversold, which aligns nicely with the
potential reversal signaled by the Morning Star pattern

MACD- MACD shows green signal

INCREASED VOLUME ON THIRD CANDLE OF MORNING STAR

Enter the Trade: Buy when the price breaks above the third candle’s high (THIRD CANDLE OF THE
PATTERN)
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4. Morning Star Doji

Same as morning star pattern except 2nd candle is a doji instead of a spinning top.

Morning star doji confirmation same as morning star confirmation

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5. Piercing Line

The piercing line candlestick pattern is a bullish reversal pattern

1st candle : red candle

2nd candle: green candle open below 1st candle close or ideally below 1st candle low and 2nd candle
closes above 50 percent of first candle

Both 1st and 2nd candle are fairly long candles with small or non existent wicks. The greater the green
candle closes above first candle that much is the power of this pattern.

Confirmation of piercing line pattern

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1. Volume: High trading volume on the second day can further strengthen the bullish
signal.
2. Confirmation: You can combine this pattern with other technical indicators like the Relative
Strength Index (RSI) or Moving Average Convergence Divergence (MACD) to confirm the
trend.
3. Traders typically look for confirmation of the reversal by waiting for the next candle
after the pattern to close higher than the second candle of the piercing pattern.
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6. Hammer

A hammer candlestick pattern is a single candlestick pattern that shows a potential reversal of the
bullish trend. WICKS are double the size of body.

Confirmation of hammer

1. The next candle should close above the high of the hammer.

2. imagine you're tracking a stock in a downtrend. You notice that the price is making lower
lows, but the RSI is making higher lows. When a hammer candlestick forms at this point, it
signals a potential bullish reversal.

3. Increased trading volume

4. Moving avg-hammer forms at moving avg i.e taking support and then price breaks above
moving average line

Hammer should have body and wick which is double the size of body.
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7. Inverted Hammer

The inverted hammer candlestick pattern is a single candle pattern that is formed after a
downtrend. The inverted hammer has same properties of the hammer candlestick pattern, but that
is ulta of hammer in look and appearance

CONFIRMATION OF INVERTED HAMMER

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 RSI (Relative Strength Index): Check the RSI to see if the market is oversold(BELOW 30),
which supports the idea of a bullish reversal.

 MACD (Moving Average Convergence Divergence): Look for bullish crossovers(GREEN

SIGNAL) in the MACD to add another layer of confirmation

 Check the Volume: A higher volume can add credibility to the pattern.

 Wait for Confirmation: next candle should be a bullish candlestick that closes higher
than the inverted hammer’s close.
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Bearish Reversal Patterns: Bearish reversal patterns in candlestick charts indicate a potential shift
from an uptrend to a downtrend, suggesting that sellers are starting to dominate the market.
Examples include the Shooting Star, Bearish Engulfing, and Evening Star patterns, each defined by
distinct formations that traders use to predict a possible market decline. Let’s learn 13 bearish
reversal patterns.

1. Bearish Engulfing

1st candle : short to medium green candle

2nd candle :long red candle body whose body totally engulfs body of first candle
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Ideal situation is body of second candle totally engulfs shadow of first candle also

First candle shouldn’t be a doji

CONFIRMATION OF BEARISH ENGULFING

1.next candle should be a bearish candle after the bearish engulfing pattern.

2. An increase in trading volume on the engulfing candle often reinforces the reversal signal.

3.RSI IN OVERBOUGHT REGION ABOVE 70 or MACD SHOWS RED SIGNAL

2. Bearish Harami

The bearish harami pattern is a strong bearish signal.

1st candle : long green candle

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2nd candle : small red candle open below the close of first candle and second candle actually opens in
the body of the first candle result is second candle is a small candle.it’s a spinning top with small
wicks the size wicks are not usually important but it is better to be small whatever the size of
shadows.whatever the size of shadows they must be inside the body of the first candle.

Confirmation of bearish harami

1) needs a bearish follow up candle

2)needs increased trading volume on 2nd candle of bearish harami i.e red candle of bearish
harami.

3) Some other indicators like BOLLINGER BAND(SHOULD APPEAR CLOSE TO UPPER BAND) or RSI
SHOWING DIVERGENCE can be used for further confirmation.

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3. Evening Star

An evening star candlestick pattern is a bearish reversal pattern.

1st candle : long green candle

2nd candle : small candle opens above closing of first candle

3rd candle : long red candle that crosses below than 50 % of first green candle
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Third candle opens with gap below 2nd candle close but this is not a necessity for pattern to work

CONFRIMATION OF EVENING STAR

1)If RSI shows divergence or overbought above 70 (e.g., higher highs in price but lower highs in RSI),
it signals that the uptrend is weakening, making the Evening Star pattern more reliable.

2)increased trading volume on the 3rd CANDLE of the evening star pattern

3) Bollinger Bands: If the evening star pattern forms near the upper Bollinger band,

4) Initiate a short position at the BELOW the third bearish candle low

4. Evening Star Doji

Evening star doji is same as evening star except 2nd candle is a doji

CONFIRMATION OF EVENING STAR DOJI SAME AS EVENING STAR PATTERN

Difference between Requires the third candle to be a strong bearish close below the first candle’s
midpoint for proper confirmation while for evening star it just needs to be third bearish candle to
close below midpoint of first candle

Rest all same

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4. Hanging Man

The hanging man candlestick pattern is a bearish trend reversal pattern.

Body is at the top and long wick is at the bottom. The body is small and wick is double the size of
body, while the upper side has minimum to no wick.

The hanging man pattern forms when the market is in an uptrend, The hanging man pattern is
considered a bearish reversal .

Hanging man candlestick confirmation

Prior trend should be uptrend
1. Hanging Man needs confirmation from a bearish candle to be next candle after pattern
2.RSI-should be Overbought rsi above 70.
3.Moving average For seeing entry point on 15 mins chart see 20 period ema
5 or 9 ema for scalpers using for seeing entry point on 5mins chart and 50 period ema for 1 hour
chart entry point

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23. Dark Cloud Cover

The dark cloud cover candlestick pattern is a bearish trend reversal pattern.
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Both candle have small shadows or no shadows with longer shadows the pattern can be effective but
with not very long shadows

1st candle: long green candle

2nd candle: long red candle opens above first candle close or ideally above first candle high and
closes below 50 % of first candle

Confirmation of Dark cloud cover candlestick pattern

1.rsi
2.macd
3.imcreased trading volume on 2nd candle of dark cloud cover
4.prior trend uptrend

5 formation of bearish candle following the 2nd day of the pattern

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24. Shooting Star

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The shooting star candlestick pattern is a single candlestick bearish reversal pattern. Shooting star is
formed with a single candle which has a long wick at the top and a small body at the bottom. The
shooting star pattern is confirmed after a strong bearish candle that follows the shooting star candle.

Confirmation of shooting star

1.Traders should wait for confirmation candle which means following candle should close below the
shooting star candle body
2.higher volume on shooting star day or confirmation candle day is important
3.rsi- should be above 70
4. Moving averages -see hanging man confirmation for what moving average to use for what time
frame

5. next candlestick to close lower after the pattern to confir the pattern
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Three Black Crows

The three black crows pattern is formed at the top of the price chart right after a bullish rally.

1st candle : long red candle

2nd candle: A long red candle the 2nd candle opens above first candle close and 2nd candle closes
below first candle close

3rd candle : 3rd candle(long red candle) opens above 2nd candle close and 3rd candle closes below 2nd
candle close

This pattern indicates a potential reversal of the uptrend.

Confirmation of 3 black crows candlestick pattern

1.if volume increases with each bearish candle
2.prior trend uptrend
3. If rsi in Overbought zone 70
4. MACD -red MACD signal

 5. Each candle of pattern should open within the body of the previous one.
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 All three must close progressively lower, indicating sustained selling pressure.

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Inside Bars

The Inside Bar pattern is a candlestick formation that occurs when a smaller candle is completely
contained within the high and low range of the previous candle. This pattern indicates a period of
consolidation or indecision in the market, Inside Bars are often seen as potential signals for a
breakout, in whichever direction breakout happens that side market will move.

Confirmation of inside bars candlestick pattern

1. High volume breakout
2. Look at moving averages to see if breakout is likely to continue in that direction
3. Check rsi or macd if they support breakout of inside candle direction
4. Breakout candle should be strong with little to no wick

5.Breakout Entry: A classic method for trading Inside Bars trading is If the price breaks out
above the high, enter a long position; if it breaks below the low, consider a short position.
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6.Reversal Signals: Pay attention to reversal signals or other candlestick patterns that may
indicate the end of the trend. For example, a bearish engulfing pattern after a bullish Inside
Bar breakout could indicate a potential reversal.

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Three White Soldiers

The three white soldiers candlestick pattern is formed when the market makes three long green
bullish candles.The three white soldiers pattern is formed at the support or trendline after a bearish
rally.

1st candle : green candle

2nd candle : 2nd candle open below first candle close and 2nd candle closes above the first candle close

3rd candle : 3rd candle open below 2nd candle close and 3rd candle closes above the second candle
close
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Confirmation of three white soldiers
1.prior trend downtrend
2.RSI - rsi shows oversold
3.Macd - shows green signal
4.increase in volume

 5. Each candle of pattern should open within the body of the previous one.

 All three candles must close progressively higher, indicating sustained buying pressure.

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32. Marubozu

There is both a bullish marubozu and bearish marubozu.

In bullish marubozu

, High = Close and Low = Open.

Conversely, a bearish marubozu pattern, where the candle opens at the high and closes at the low
without any wicks, suggests that the sellers have been in control, pushing the price lower. During
this session, High = Open and Low = Close.
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Indecision Patterns: Indecision patterns in candlestick charts indicate uncertainty in the market,
where neither buyers nor sellers have a clear advantage. Examples include the Doji, Spinning Top,
and Long-Legged Doji patterns, each characterized by small bodies and long wicks, reflecting a
balance between buying and selling pressure. Let’s learn about 8 indecision patterns.

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Doji
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The doji candlestick pattern is characterised by the price of a stock opening and closing at nearly the
same level.

The doji pattern is formed when the market is in a state of indecision, with neither bulls nor the
bears able to gain a clear upper hand. resulting in a candlestick with an extremely small or no body.
Doji also known as common doji itself indicates indecision but when paired with other candlesticks
to from morning star or evening star may give indication of change in trend.

Long legged doji has more activity than common doji so long legged doji shows less indecision than
common doji or in other words common doji shows more indecision which means common doji is
more significant than long legged doji

34. Gravestone Doji

Gravestone doji candlestick pattern indicates a potential bearish trend reversal. Gravestone doji is
generally formed at the resistance or trendline top.

The gravestone doji pattern is formed after an uptrend The opening and closing prices being nearly
identical, with a long upper wick and no lower wick, This pattern signals a potential shift in market
sentiment from bullish to bearish.

Confirmation of gravestone doji

1.increase in volume during pattern formation
2. RSI -should be in Overbought i.e
Above 70
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3 .moving average- see hanging man notes
4. A confirmation signal usually comes from the next candlestick. If it’s bearish.

5.prior trend uptrend

35. Dragonfly Doji

Dragonfly doji candlestick pattern indicates a potential bullish trend reversal. Traders interpret this
pattern as a signal to take a bullish trade in the stock.

The dragonfly doji pattern is formed after a strong bearish momentum .The opening and closing
prices being nearly identical, with a long lower wick and no upper wick in dragon fly doji. This pattern
signals a potential shift in market sentiment from bearish to bullish.

Confirmation of dragonfly doji

1. Confirmation might come in the form of a bullish candle following the Doji,
2.rising moving average or bullish crossover or signal in MACD
3.rsi below 30 means oversold
4.volume increase immediately or after the appearance of dragonfly doji

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Prior trend
1.bullish engulfing -downtrend
2.bullish harami-downtrend
3.morning star - downtrend
4.piercing line-downtrend
5.hammer-downtrend
6.inverted hammer -downtrend
7.bearish engulfing -uptrend
8.bearish harami -uptrend
9.evening star -uptrend
10.hanging man -uptrend
11.Dark cloud cover-uptrend
12.shooting star-uptrend
13. Three black crows-uptrend
14.inside bar-This pattern signifies a consolidation phase where the market takes a "pause," often
leading to a breakout once the price breaks above or below the Inside Bar.
15.three white soliders-downtrend
16.gravestone doji-uptrend
17.drgonfly doji -downtrend
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