Candlesticks

Candlesticks
Origin- Japan
Displays Open, High, Low, Close
prices.
2 dimensional bodies depicts Open to
close range.
Shadows represents high and low.
No calculations required.
Represents one period of data.

Candlesticks
Formation
Hig
h

Upper
shadow

High
Open

Clos
e
Real body

Open

Clos
e

Low

Low
Lower
shadow

Candle Patterns
Candle
patterns
One
candle
pattern
Hammer
Hanging Man
Inverted
Hammer
Shooting Star

Two
candles
pattern

Three
candles
pattern

Bullish Engulfing Evening Star

Bearish Engulfing Morning Star
Doji
Piercing
Dark Cloud Cover
Bearish Harami
Bullish Harami

One Candle PatternsHammer and Hanging Man

Long lower shadows and small real
bodies.

Hamm
er

Hanging
Man

Hammer and Hanging

Man
Criteria:
The lower shadow should be at least two
times the length of the body.
No or very small upper shadow.
The real body is at the end of trading range.
Colour not much significant.
Hammer- at the end of Downtrend.
Hanging man- at the end of Uptrend.
Next day confirmation required.

Inverted Hammer &

Shooting Star
Long upper shadows and small real
bodies.

Inverted
Hammer

Shooting
Star

Inverted Hammer &

Shooting Star
Criteria:
Upper Shadow at least twice of body.
No or very small lower shadow.
The real body is at the end of trading range.
Colour not much significant.
Inverted Hammer- at the end of downtrend.
Shooting star- at the end of uptrend
Next day confirmation required.

Two candles PatternBullish Engulfing and Bearish

Engulfing
Two opposite coloured bodies.
One coloured candlestick
overshadowed by large opposite
coloured candlestick.

Bullish
Engulfing

Bearish
Engulfing

Bullish Engulfing and Bearish

Engulfing
Criteria:
The candlestick body of previous day
overshadowed by next days candlestick.
The colour of first candle is similar to previous
one and body of second candle is opposite in
colour to first candle.
Large volume on the engulfing day.
Next day confirmation of reversal required.
Bullish engulfing- end of downtrend
Bearish engulfing- end of uptrend

Piercing and Dark Cloud

Cover
Two opposite coloured candlesticks
Next candlestick closes at least 50%
of previous candlesticks real body.

Piercing
Pattern

Dark Cloud Cover

Pattern

Piercing and Dark Cloud

Cover
Criteria:
Piercing: Opens lower than previous close;
closes at least 50% of previous real body.
Dark Cloud Cover: Opens higher than
previous close; closes at least 50% of
previous real body.
Piercing : At the end of downtrend.
Dark Cloud Cover: At the end of Uptrend.
Large volume during these 2 trading days is
a significant confirmation.

Bearish Harami and Bullish

Harami
Large candlestick followed by a small
candle that is within the previous
sessions large real body.

Bearish
Harami

Bullish
Harami

Bearish Harami and Bullish

Harami
Criteria:
Bearish Harami- Second day opens lower
than close of previous day and closes higher
than open of prior session
Bullish Harami- Second day opens higher
than close of previous day and closes lower
than open of prior session
Next day reversal confirmation is required.
Bearish Harami- at the end of Downtrend.
Bullish Harami- at the end of Uptrend.

Three Candle PatternEvening Star and Morning Star

Evening star: Formed by tall Green
body candle followed by a small real
body that gaps above the first real
body to form a star and a third red
candle that closes well into first
sessions green real body.

Evening Star and Morning

Star
Morning Star: Formed by tall Red
body candle followed by a small real
body that gaps above the first real
body to form a star and a third
Green candle that closes well into
first sessions Red real body.

Evening Star and Morning

Star
Criteria:
Evening Star- at end of Uptrend
Morning Star- at end of Downtrend
A gap between first and second
session adds to probability of
reversal.
Gap before and after the star day is
more desirable.

Doji
Same opening and closing price.
Likelihood of a reversal increases if
subsequent candlesticks confirm the
dojis reversal potential.
Period of indecision.

Dragon
fly Doji

Doji
Cross

Tombsto
ne Doji

Comparative
Candlestick Analysis
Trend
Colour
Pattern

Significance

Next day
Confirmation

Hammer

Downtrend

Hanging Man

Uptrend

Inverted
Hammer

Downtrend

Shooting
Star

Uptrend

Bullish
Engulfing

Downtrend

Bearish
Engulfing

Uptrend

Piercing

Downtrend

Dark Cloud
Cover

Uptrend

Bullish
Harami

Downtrend

Bearish

Uptrend