LEARN TECHNICAL ANALYSIS
What is Candle Stick?
Candle stick is a Japanese Charting Technique. Candlestick charts use the same price data as bar charts (open, high, low, close). However, candlestick charts are drawn in a much more visually identifiable way typically resembling a candle with wicks on both ends. The high and low are described as shadows and plotted as a single line.
# Abandoned Baby
A rare reversal pattern characterized by a gap followed by a Doji, which is then followed by another gap in the opposite direction. The shadows on the Doji must completely gap below or above the shadows of the first and third day.
# Dark Cloud Cover
A bearish reversal pattern that continues the uptrend with a long white body. The next day opens at a new high then closes below the midpoint of the body of the first day.
Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary, and the resulting candlestick looks like, either, a cross, inverted cross, or plus sign. Doji convey a sense of indecision or tug-of-war between buyers and sellers. Prices move above and below the opening level during the session, but close at or near the opening level
# Downside Tasuki Gap
A continuation pattern with a long, black body followed by another black body that has gapped below the first one. The third day is white and opens within the body of the second day, then closes in the gap between the first two days, but does not close the gap
# Dragonfly Doji
A Doji where the open and close price are at the high of the day. Like other Doji days, this one normally appears at market turning points.
# Engulfing Pattern
A reversal pattern that can be bearish or bullish, depending upon whether it appears at the end of an uptrend (bearish engulfing pattern) or a downtrend (bullish engulfing pattern). The first day is characterized by a small body, followed by a day whose body completely engulfs the previous day's body.
# Evening Doji Star
A three day bearish reversal pattern similar to the Evening Star. The uptrend continues with a large white body. The next day opens higher, trades in a small range, then loses at its open (Doji). The next day closes below the midpoint of the body of the first day.
# Evening Star
A bearish reversal pattern that continues an uptrend with a long white body day followed by a gapped up small body day, then a down close with the close below the midpoint of the first day.
# Falling Three Methods
A bearish continuation pattern. A long black body is followed by three small body days, each fully contained within the range of the high and low of the first day. The fifth day closes at a new low.
# Gravestone Doji
A doji line that develops when the Doji is at, or very near, the low of the day.
Hammer candlesticks form when a security moves significantly lower after the open, but rallies to close well above the intraday low. The resulting candlestick looks like a square lollipop with a long stick. If this candlestick forms during an advance, then it is called a Hanging Man.
# Hanging Man
Hanging Man candlesticks form when a security moves significantly lower after the open, but rallies to close well above the intraday low. The resulting candlestick looks like a square lollipop with a long stick. If this candlestick forms during a decline, then it is called a Hammer.
A two day pattern that has a small body day completely contained within the range of the previous body, and is the opposite color.
# Harami Cross
A two day pattern similar to the Harami. The difference is that the last day is a Doji.
# Inverted Hammer
A one day bullish reversal pattern. In a downtrend, the open is lower, then it trades higher, but closes near its open, therefore looking like an inverted lollipop.
# Long Day
A long day represents a large price move from open to close, where the length of the candle body is long.
# Long-Legged Doji
This candlestick has long upper and lower shadows with the Doji in the middle of the day's trading range, clearly reflecting the indecision of traders
# Long Shadows
Candlesticks with a long upper shadow and short lower shadow indicate that buyers dominated during the session and bid prices higher. Conversely, candlesticks with long lower shadows and short upper shadows indicate that sellers dominated during the session and drove prices lower
# Morning Doji Star
A three day bullish reversal pattern that is very similar to the Morning Star. The first day is in a downtrend with a long black body. The next day opens lower with a Doji that has a small trading range. The last day closes above the midpoint of the first day.
# Morning Star
three day bullish reversal pattern consisting of three candlesticks - a long-bodied black candle extending the current downtrend, a short middle candle that gapped down on the open, and a long-bodied white candle that gapped up on the open and closed above the midpoint of the body of the first day
A bullish continuation pattern in which a long white body is followed by three small body days, each fully contained within the range of the high and low of the first day. The fifth day closes at a new high.
# Shooting Star
A single day pattern that can appear in an uptrend. It opens higher, trades much higher, then closes near its open. It looks just like the Inverted Hammer except that it is bearish
Prices do not only rise or fall but most of the time they actually move in narrow ranges. So, in accordance with the Dow Theory we can therefore divide trends into three types:
Downtrend means that every next bottom is under the previous bottom and every next high is under the previous high, so in this case, the trend line is created by using the highest points.
Any trend (bullish or bearish) must be confirmed by trade volume. Put it simply: when prices move in accordance with the prevailing trend, the trade volume increases; when prices move against the prevailing trend (rebound), then trade volume decreases. Once the situation changes and trade volume during rebounds becomes greater than that during the trend price movement, it is a serious signal that the trend may not be so strong (but it is not the signal to open the opposite position, as there is no confirmation of the trend reversal).
Please note the odd sequence in counting, as you will see, it is necessary for the inductive analysis. By starting with a top we are assured of beginning our count on a new wave. (The reverse would apply for a bearish wave.)
Please note the odd sequence in counting, as you will see, it is necessary for the inductive analysis. By starting with a top we are assured of beginning our count on a new wave.
(The reverse would apply for a bearish wave.)
Support and Resistance levels are patterns of classical technical analysis. All trend (channel) lines, reversal and continuation chart patterns are only combinations of support and resistance levels.
Support level is a starting point of an uptrend, and is actually a tangent to the minimum prices. It is commonly thought that when the price falls down to the support level, Bulls (buyers) start to resist against further price decrease thus giving it support. This explains why is many cases the price will bounce back and start rising after having reached a support level.
After several attempts the price may break the support level. Once the support level is broken, it becomes the resistance level:
Twenty simple Rules of
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