Anatomy of a candle stick, Study Guides, Projects, Research of Web Design and Development

Download Anatomy of a candle stick and more Study Guides, Projects, Research Web Design and Development in PDF only on Docsity! Anatomy of a candle Bearish Upper WeakHigh shadow low shadow Open Open Close Close Upper Weak Bullish Resistance Support Doji dragonygravestonelong-legged traditional Hammer Hanging Man A hammer candlestick in the context of a downtrend suggests the potential exhaustion of the downtrend and the onset of a bullish reversal. Is identical in shape to the hammer; the dierence is that while hammers occur in downtrends, the hanging man pattern occurs in uptrends. It is often the rst sign that the uptrend is exhausting, and bears are stepping in to create a reversal. The “dragony” and “gravestone” doji imply, respectively, that sellers and buyers controlled the market for most of the trading period, but then the opposite group managed to push price back to the open before the close. While “tradition” and “long-legged” dojis are reective of indecision and stalling, gravestone and dragony are generally clearer, stronger indica- tors that a force is stepping in to push the market in the direction of the wick and away from the body. Gravestone and Dragony dojis are similar to hammer and hanging man. Marubozo The text-book marubozu is a long candle, which implies that the day’s trading range has been large. And it should have no upper or lower wick (“marubozu” in Japanese means “shaved”). A green marubozu signals strong conviction among buyers, while a red marubozu indi- cates that sellers hare eager to ee. Bullish Engulng Bearish Engulng A bearish engulng pattern is most indicative of the onset of a bearish price move when it appears in the midst of an uptrend. If a bullish engulng pattern appears in a downtrend, it can suggest a shift price trend and the onset of buying demand becoming the prevailing force that will ultimately push price higher in the context of the timeframe being viewed. Piercing Line Dark Cloud Cover A bullish signal that occurs in the context of a downtrend when, after a long bearish candle, a bullish candle opens at a new low and then closes at a level at least halfway up the body of the previous bar; this signal is reliable as a two-bar indicator of a trend reversal in proportion to the height of the second bullish bar. As the strength of the reversal signal is related to the size of the second candle, this pattern is similar to the Tweezer pattern, which is discussed later in this guide. This two-candle bearish reversal pattern is the bearish converse of the piercing line, occurring at the top of a bullish trend. The rst bullish candle is followed by a bearish candle that opens at a new high and then closes at least halfway down the body of the bar preceding it. Three White Soldiers This is a 3-candle bullish pattern that implies a reversal at the bottom of a bearish trend. The three soldiers are bullish candlesticks that open within the body of the previous candlestick and close near the high of the day. This applies to all three candles; they should all be strong bullish candles, with small wicks and a close near the top. These high closes imply a strong reversal from bearish to bullish market sentiment. Three Black Crows This 3-candle pattern is the opposite of “Three White Soldiers;” it signals the reversal away from bullish control at the top of an uptrend. It consists of three successive bearish bars that open within the preceding bar’s body and close below its close. Kicker A kicker signal, also known as a professional gap, occurs when the following conditions are met: 1. Price is moving in a trend. 2. Suddenly, a gap appears in the chart. A gap is dened as when the open price of one candle is not equal to the close price of the candle that precedes it; there is a gap in the price movement. The gap is in the opposite direction of the trend. If price fell from 10 to 3 and then opened the next day at 5, it would signal a bullish kicker, a bullish sign for traders. Bullish kicker For instance, imagine that price closed at 10 after rallying over a number of days from 2. The next day, price opens at 8. In this instance, we have a gap down, or a bearish kicker. Bearish kicker