Before we pursue, the
Candlestick Chart was used in the 18th century, founded by
Mr. Munehisa Homma. He is a Japanese so they called it Japanese Candlestick.Then it was introduced into the stock market and developed patterns based on supply and demand and emotion of traders to know where the price will go.
CANDLE -Is a chart style where he says what is OPEN and CLOSE price, HIGHEST and LOWEST price on a trading day (daily chart). There are many chart style like the candle, bar, line, mountain etc. But let's focus on candle because that's what most people use in trading today.
In candlestick trading,it is primarily for our entry(buy) and exit (sell), we look at the Sign Of Reversal (SOR) if the price goes up or down.
Sign Of Reversal are the "
WARNING /
CAUTION /
SIGNAL /
SIGN" which can change or reverse a trend (uptrend or downtrend). It's 'MAJOR' change will results in the battle of bulls (buyers) and bears (sellers) and that's where SOR patterns are formed.
This are various types of Candle Stick Patterns.
DOJI -It's a reversal candlestick signal that simply means opening and closing at the same price, it's a signal that the trend will change but it all depends on his position, if it's in the UPTREND it a sign that it will go down, on the DOWNTREND will go up.
Types of DOJI
DRAGONFLY DOJI -Is a helpful Candlestick pattern to help traders visually see where support and demand was located. After a downtrend, it a signal to traders that the downtrend could be over and that short positions could potentially be covered.
GRAVESTONE DOJI -Is a reversal pattern to help traders visually see where resistance and supply is likely located. After an uptrend, it can signal to traders that the uptrend could be over and that long positions could potentially be exited.
LONG-LEGGED DOJI -Indicates that prices traded well above and below the session's opening level, but closed virtually even with the open.
HAMMER -It is hammer-shaped candlestick bullish reversal pattern that if found in the downtrends, this indicates that after a downtrend, it signifies that an uptrend is on the way. If the price pattern of the stock is always bouncing 'immediately' after the SOR candle, the more accurate it is because stock traders are expecting that effect after the SOR candle.
HANGING MAN -It's opposite hammer that if located in the uptrend that's a sign that it will down.
INVERTED HAMMER and SHOOTING STAR -These two are reversal candlestick signals opposite the hammer and hanging man, their long shadow are on top and also have small body. That means buying bulls have a heavy buying price to push the price upward, notice that its long upper shadow. But the bears (sellers) have also been pushed. This is the reason why they are 'WEAKER' SOR because the bulls eventually lost. So better if there is a confirmation candle to see if they succeed in reversing. If see it the uptrend it signals it will go down (Shooting Star) and in the down trend (Inverted hammer).
https://i.postimg.cc/RCc9nhx8/inverted_hammer_shooting_star.jpgHARAMI -Is the japanese word for pregnant. This consist of mother and a baby, it indicates when the baby gets smaller, the signal grows, so if the doji is a baby the stronger the SOR.
https://i.postimg.cc/qgVzw5vT/index.png This are the types of harami
https://i.postimg.cc/FsC9hq4s/HARAMI.jpg.
ENGULFING -engulf means completely covered it's another SOR pattern that opposite to harami, if harami baby is on the right side this is on the left side. Bearish if its on the uptrend(the second candle should be red) and bullish if its on the downtrend (second candle should be green)
https://i.postimg.cc/tCpL8znR/images.png.
BULLISH ENGOLFING -This pattern means that bulls have taken control. In a downward trend, after several red candles, the bulls suddenly showed interest. This signals can be reversed.
If the candle is less than 25% compared to the 2nd candle and especially if the 2nd candle does not have a shadow, that's a very powerful SOR.
https://i.postimg.cc/htKs3RZz/buliish_engulfing.jpgBEARISH ENGULFING -Means that bears have taken control. In the upward trend, after several green candles, it has shown heavy selling, lock in profit or bad news, etc etc, as well as bulls.
https://i.postimg.cc/26DV78FK/bearish_engulfing_final.jpgPIERCING -This is one of the few important pattern in TA, In a 'downtrend', and gap down on open price. This means that the bulls were defeated. Which is a very strong sign that keeps the price down. 'THEN' all of a sudden suddenly the price reverse and here comes the bulls! HEAVY BUYING! pushing the price pushed and closed 'more than' 50% of the previous candle.
https://i.postimg.cc/6qnSCsYW/index.jpgDARK CLOUD COVER -The opposite of the above, In an 'uptrend', and the price is up. This means that the bulls, bulls win in pre-opening battle. Which is very strong sign that continues to increase, but suddenly, here come the bears! HEAVY SELLING! lowered the price and then closed 'more than' 50% of the previous candle.
https://i.postimg.cc/W3RwgdKZ/image.pngBULLISH KICKER -This is the most important that you shouldn't have miss because it is the most powerful SOR where you can gain your profit. Mostly it will be triggered if the stock has surprise news or update. It is the most bearish and bullish among all candle patterns if you see that the candle has no shadow both high and low. Green candle means the bulls have a complete control they never let the price go down by heavy buying that push the price up until closing.
https://i.postimg.cc/C5WybdbZ/image.pngBEARISH KICKER -The same also with Bullish Kicker with no shadow in the high and low but opposite, it is on Red candle this means that the bears has a complete control of the price and did not allow the price went up by heavy selling that makes the price went dip.
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