So in this blog, I’m going to cover the basics of candlestick chart patterns. Candlesticks are basically a way to interpret charts. There have also other charts like bar charts, line chart etc. But most of the traders prepare candlestick chart for there technical analysis. It is more popular because it reveals a bit of important information on price movement. Structure of candlestick shown in below image:
In bullish candle open and price close to a higher level at a particular time. The green filled body represents the open and closes off part of the bullish candle. During the formation of this candle, price move slightly lower below opening as well as higher of closing which called as the wick of the candle and it represents High and Low of that particular time. Basically bullish candle form when buying volume is more than the selling volume.
Opposite in Bearish candle where price open and close lower than the opening levels. Bearish candle form when selling volume is more than the buying volume.
There have lots of different type of candlestick pattern trader using to take the decision to buy/sell. Below is the list of commonly used candlestick patterns:
- Bullish/Bearish Engulfing
- Hammer and Hanging Man
- Shooting Star
There have also other candlestick patterns which is combination of more than 2-3 candles like Dark Cloud Cover, Three black crows and many other.
Checkout below image for reference of all candlestick patterns: