Hi,
Candlestick Patterns are formed in the candlestick chart that helps us to determine the price direction and reversal of the ongoing trends.
These formations can be made by a single candlestick or multiple candlesticks.
In the video, let us discuss some famous single candlestick patterns:
The Marubozu:
In Bullish Marubozu, there is no wick which means that the opening price is the same as the low price and the closing price is the same as the high price of that day.. This indicates that bulls are back in the market and the trend is going to reverse to the uptrend.
Similarly, In Bearish Marubozu, the opening price is the same as the high price and the closing price is the same as the low price of that day. There is intense selling by the sellers indicating the bears are back in the market and the trend is going to reverse to downtrend.
The Doji:
The Doji has a very small or no real body and has wicks on the other side. This candlestick indicates indecisiveness in the momentum of the ongoing trend.
Doji indicates uncertainty in the market, if Doji is found in the uptrend, then it signifies that uncertainty in the ongoing uptrend.
When Dojii is found in the downtrend, then it signifies that uncertainty in the ongoing downtrend.
The Spinning Top:
The spinning top like Doji indicates indecisiveness in the market. A green spinning top indicates that the bulls tried to push the price upwards but failed in doing so.
A red spinning top indicated that the bears tried to push the prices downwards but failed in doing so.
Spinning Top in the downtrend indicates that the bears are consolidating, another round of selling may occur and it also indicates that upside reversal may also occur.
Spinning Top in the uptrend indicates that the bulls are consolidating, another round of buying may occur and it also indicates that downside reversal may also occur.
The Hammer:
The hammer is a bullish reversal candlestick pattern. It has a long lower wick, the length of which should be double the size of the real body.
The Hammer indicates that the sellers were making prices fall but the buyers took over the prices and pushed upwards towards the closing price.
The Hanging Man:
The hanging man is a bearish reversal candlestick pattern and formation of it is the same as the Hammer.
The Hanging man indicates sell off and the buyers are pushing the price upwards toward the opening price.
It signals that the bulls are losing control over the prices.
The Shooting Star:
The shooting star is another bearish reversal candlestick pattern. It has a long upper wick, the length of which should be double the size of the real body.
This candlestick pattern indicates that the prices tried to rise but the seller took the control and made the prices fall.
The above candlesticks are single candlestick patterns that help us in knowing if the trend is going to reverse or not.
But these candlesticks patterns should be used with other technical indicators to confirm the signals given by them.
One should also wait for the next day candlestick to confirm the signals given by these candlesticks pattern.
Thank you for watching the video!
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