what is candlestick chat pattern in binary option trading , Forex trading and stock trading.
Candlestick chart patterns are most important part in trading. every traders should have basic knowledge of candlesticks. what is the next movement of market can be predicted by the help of candlesticks.
What is a candle ?
A candle is made from opening price and closing price. When the closing price is higher than the opening price it forms a Green or bullish candle and when the opening price is higher than closing price then it forms a Red or bearish candle. A candle can show four things, i.e. Opening quote, Closing quote, Higher shadow, Lower shadow.
How candlestick pattern works ?
There are many candlestick patterns available in the market. some of those we will discuss here. Candlestick is very important topic for the market analyzing. We can predict the market movements by its motion or formation .
Types of candlestick pattern..
A. DOJI Candlestick pattern :
When a doji pattern occurs it shows the equilibrium point between supply and demand. After a long bullish or bearish trend Doji pattern appears. it shows the market strength is going to be low after an uptrend and downtrend. Traders wait for the confirmation and acts accordingly. Doji formation are of many types Long legged Doji, Gravestone Doji, Dragonfly Doji etc Traders need to understand the working formation of these patterns.
B. The Hammer candlestick pattern :
It is named Hammer just because it looks like a Hammer with holding hands. This pattern formed in both trends either uptrend or downtrend. The stock must have an uptrend before occurring this candle. the identification of this candle is that its shadow must be at least twice of the body size. There are no shadow on head or a very small shadow. The color of the body doesn't matter either it can be green or red. A Red body if more effective than a green body.
C. Bullish engulfing candle :
A Bullish candlestick patterns mainly occurs after a significant Downtrend. The body of the engulfing candle should be longer than the previous candle. It shows the change of trend from this pattern. For a bullish trend engulfing candle should be Greeen.
D. Bearish engulfing Candle :
A Bearish candlestick patterns mainly occurs after a significant Uptrend. The body of the engulfing candle should be longer than the previous candle. It shows the change of trend from this pattern. For a bearish trend engulfing candle should be Red.
E. On the dark cloud candle :
In this type of candle the next candle opening at least haft of the previous candle. The larger the or closer the penetration of the previous candle the more powerful the candle. The trend must be an uptrend before this occurs.