InvestorQ : how many candle stick patterns are there in technical analysis
Mahendarreddy K made post

how many candle stick patterns are there in technical analysis

Answer
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Shreya Karn answered.
1 year ago


Candlestick is a very popular chart pattern used in the stock market. It is a graphical representation of the price movement captured for a specified time-frame. Candlestick is formed by the opening, high, low, and closing prices of a financial instrument. As it represents price movements in a single price bar, it adds depth to the technical chart.

The rectangular box is called as body and color of this rectangle body determines whether the opening price or the closing price was higher. If the closing price of the day was less than the opening price, the body is filled with black or red. A filled body indicates bearish. If the closing price of the day was greater than the opening price then the body is white or hollow. This hollow body signifies a bullish trend. The body has two lines on the up and down of the vertical body, which is called as shadows. Shadows represent the entire range of price action for the day, from low to high. The upper shadow shows the stock’s highest price for the day, and the lower shadow shows the lowest price for the day.

Although Candlestick is Japan’s ancient technical trading technique, it is the most popular among traders. Nowadays, traders have identified different types of patterns of candlestick formation to predict stock prices. There are around 40 types of candlestick patterns and these patterns are further has formation on which traders rely. Some of the candlestick patterns are as follows :

1. Doji is a pattern formed when opening and closing price is almost same and so the body is just a horizontal line.

2.Hammer is a small body with little high or no upper shadow and a long lower tail. It is a bullish signal

3. Inverted Hammer is a reverse signal of Hammer. A black or a white small body with no lower shadow and long upper tail.

4. An Evening star is a bearish candlestick pattern consisting of a large white candlestick, a small-bodied candle, and third black that candle closes within the large white body.

5. Morning Star is a bullish candlestick pattern consisting of a large black candlestick, a small-bodied candle, and and third white candle that closes within the large black body.

6. Three Black Crows is formation seen in the chart when black bars is seen continuously for three days at or after a high of uptrend. This signals traders that the bullish trend might start.

7. Bearish Herami is a formation of candlestick when a small black body that comes next to a very large white body thus a bearish indicator in up-trend.

8. Bullish Herami is a formation of candlestick when a small white body that comes next to a very large black body thus a bullish indicator in downtrend.

9. Engulfing Bullish is a formation of candlestick when long white body comes next to a small black body that indicates a major reversal signal of a bear market

10. Engulfing Bearish is a formation of candlestick when black or filled white body comes next to a small white body that indicates a major reversal signal of a bull market.


These are the basic formation, there are many other patterns formation which traders uses like Rising Window, head and shoulder, cup and handle, etc.