A candlestick chart is a visualization tool widely used by traders for technical analysis. Each trading period (whether that’s five minutes or a day) is represented by a candlestick (or candle) that shows the relative positions of four price points for that period: the high price, the low price, the opening price, and the closing price. To show this, each candlestick comprises a ‘real body’ and a ‘shadow’ (or ‘wick’): Changes in the length of the real body and the upper and lower shadows reveal the price action and give an insight into the emotion in the market. Bullish, or ‘up’, candlesticks are usually green or white. Bearish, or ‘down’, candles are usually red or black.
An engulfing bullish pattern is created when a bearish small black or red body candle happens on a chart and then the following candle has a large bullish white or green candlestick body that has both a higher high and a lower low.
The bullish kicker is a two-candle pattern that starts with a large bearish candlestick lower (black or red) then a second large bullish candle that gaps higher in price. The bullish candle should have a flat bottom or tiny wick with almost no movement back into the price gap. The bullish kicker candlestick pattern doesn’t have to form after a … Read more
A spinning top is a single candlestick pattern that has a body in the middle of two longer wicks. A spinning top chart pattern is a signal that neither buyers or sellers have control of price action in the time frame of the candle. The spinning top candle shows that price ended up closer to … Read more
The doji candlestick is a chart pattern in technical analysis that is usually formed from a small trading range in a time period where both the open and closing price are nearly equal. A doji candlestick usually signals indecision for a direction in a market. A doji is not very significant inside a range bound market … Read more
The hammer is the name used for a single candlestick chart pattern that is a bullish reversal signal. Its name comes from the fact that it visually looks like a hammer.
Overview of the Inverted Hammer Pattern The inverted hammer pattern is a type of candlestick located at the end of a downtrend and is used by technical analysts as a bullish reversal signal from the lows. The inverted hammer candle visually looks like a hammer turned upside down with its handle pointing up. It is … Read more