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RELIABLE CANDLESTICK PATTERNPattern Name: Bullish Engulfing Pattern Type: Bullish Reversal No. of Candles: 02 How to Identify it? 1)There must be a preceding Downtrend. 2)A short Red candle followed by a long green candle. 3)The Green candle should open lower & closes higher than the Red candle. 4) The Green candle should completely engulf the Red candle. The psychology behind it : 1)The Bears lose momentum & the Bulls take charge and manage to close above the red candle. 2)It implies the bulls have fully overridden the bears. How to trade it? 1)Look for the Bullish Engulfing at the bottom of the Downtrend. 2)Upon confirmation, open a Long position in the 3rd Candle. 3)Place a Stoploss below the low of the Green candle.
NSE:HDFCBANKEducation
by farhanf7867
Triple Top Pattern (trend reversal) at ABFRLBe Cautious Triple Top Pattern (trend reversal) at #ABFRL weekly chart. What Is a Triple Top? The triple top is a type of chart pattern used in technical analysis to predict the reversal in the movement of an asset's price. Consisting of three peaks, a triple top signals that the asset may no longer be rallying, and that lower prices may be on the way. Triple tops may occur on all time frames, but in order for the pattern to be considered a triple top, it must occur after an uptrend. However, the opposite of a triple is a triple bottom, which indicates the asset's price is no longer falling and could head higher. ONLY FOR #educational NOT SEBI REGISTERED. #LEARNEARN (DONT TRUST ANYONE) #nifty50 #sharemarket #BREAKOUTSTOCKS #Multibagger #sharemarket #sharemarketindia #sensex #technicalanalysis #kukiinvest #Chartanalysis #headandshoulders #breakdown #tripletop
BSE:ABFRLEducation
by Usemerr
Head and Shoulders Pattern at AstralBe Cautious Head and Shoulders pattern (trend reversal) at #Astral weekly chart. The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end. Stock seems to be changing trend(Head and Shoulders pattern) . One should try to keep the profits with them. Now if you think you are buying it on discount, then you are wrong - you are buying on the other side of trend. ONLY FOR #educational NOT SEBI REGISTERED. #LEARNEARN (DONT TRUST ANYONE) #nifty50 #sharemarket #BREAKOUTSTOCKS #Multibagger #sharemarket #sharemarketindia #sensex #technicalanalysis #kukiinvest #Chartanalysis #headandshoulders #breakdown
NSE:ASTRALEducation
by Usemerr
Head and Shoulders Pattern at SUNTECKBe Cautious Head and Shoulders pattern (trend reversal) at #SUNTECK weekly chart. The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end. Stock seems to be changing trend(Head and Shoulders pattern) . One should try to keep the profits with them. Now if you think you are buying it on discount, then you are wrong - you are buying on the other side of trend. ONLY FOR #educational NOT SEBI REGISTERED. #LEARNEARN (DONT TRUST ANYONE) #nifty50 #sharemarket #BREAKOUTSTOCKS #Multibagger #sharemarket #sharemarketindia #sensex #technicalanalysis #kukiinvest #Chartanalysis #headandshoulders #breakdown
NSE:SUNTECKEducation
by Usemerr
MOST RELIABLE CANDLESTICK PATTERN Pattern name: Bullish Engulfing Pattern Type : Bullish Reversal No. of Candles : 02 How to Identify it ? 1)There must be a preceding Downtrend. 2)A short Red candle followed by a long Green candle. 3)The Green candle should opens lower & closes higher than the Red candle. 4)The Red candle should be completely engulfed by the Green candle. Psychology behind it : 1)The Bears lose momentum & the Bulls take charge and managed to close above the red candle. 2)It implies the bulls have fully override the bears. How to trade it ? 1)Look for the Bullish Engulfing at the bottom of the Downtrend. 2)Upon confirmation, open a Long position in the 3rd Candle. 3)Place a Stoploss below the low of the Green candle. Happy Trading :) -Divyaa Pugal
Editors' picks
HEducation
by Divyaapugal
35
3 periods Relative Strength When near, intermediate & far period relative strengths get into sync just like moving averages, it shows maximum trend strength. lets say ... near rs crosses 0... 1pt interm also crosses 0... 2pts far also crosses 0... 3pts i use 10 21 55 time periodes which are selected as they will be in sync with my Rsi indicator settings of 10 21 rsi crossover. Disclaimer: it's just educational purpose about Relative strength and link between different time periods.
NSE:TATAMOTORSEducation
by VarunNeel90
Triple Top Pattern at #mastekBe Cautious #tripletop #Pattern (trend reversal) at #mastek weekly chart. What Is a Triple Top? The triple top is a type of chart pattern used in technical analysis to predict the reversal in the movement of an asset's price. Consisting of three peaks, a triple top signals that the asset may no longer be rallying, and that lower prices may be on the way. Triple tops may occur on all time frames, but in order for the pattern to be considered a triple top, it must occur after an uptrend. However, the opposite of a triple is a triple bottom, which indicates the asset's price is no longer falling and could head higher. ONLY FOR #educational NOT SEBI REGISTERED. #LEARNEARN (DONT TRUST ANYONE) #nifty50 #sharemarket #BREAKOUTSTOCKS #Multibagger #sharemarket #sharemarketindia #sensex #technicalanalysis #kukiinvest #Chartanalysis #headandshoulders #breakdown #tripletop
NSE:MASTEKEducation
by Usemerr
1
Doubletop Pattern at KPITTECHBe Cautious #doubletop #Pattern (trend reversal ) at #KPITTECH weekly chart. A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset's price falls below a support level equal to the low between the two prior highs. ONLY FOR #educational NOT SEBI REGISTERED. #LEARNEARN (DONT TRUST ANYONE) #nifty50 #sharemarket #BREAKOUTSTOCKS #Multibagger #sharemarket #sharemarketindia #sensex #technicalanalysis #kukiinvest #Chartanalysis #headandshoulders #doubletop #doublebottom
NSE:KPITTECHEducation
by Usemerr
A beginner's guide to trading - Chapter 2In Chapter – 1, we have seen about candlesticks. Today we are going to see about supply & demand concept with candlesticks. Lets first see about the normal concept people follow for supply/demand zone. I have used numbers 1,2,3 and 4 to mark supply and demand zones in this post. In the above chart 1 acts as demand zone as price had good upside move from it. When price reach 2, as per normal demand zone concept, people think there will be pending orders to buy from big institutions at that level and we can buy. At 2 buyers were trying to take charge and we had a big bull candle. That was not institutional buyers, but from retails traders. It was proved as price did not move much from that. At 3 price was broken downside by a big bear candle. And at that level demand zone became supply zone. At 4 price had a nice fall. This is an example about how a demand zone becomes supply zone. Trend strength determines whether a particular level will act as supply or demand zone. Now we will see another example to understand trend strength. In the above chart, price had good move from 2 and becomes demand zone. When price reach 3, there was small upside move, but price fall from 4. Look at the arrow marks. When bearish strength increases, the demand zone becomes supply zone. Simply buying whenever you see a demand zone wont work. It wont give you consistent money. But understanding the trend strength and trading according to it will help you to make consistent money. In the chart above, at 3 price showed bearish strength & there was not even a small fight from bulls, instead bears won without much competition and price fall down. In the chart above, before price break down @ 3, note how bull strength was reducing which I have marked. Always trade with the knowledge of trend strength. Always trade with stop loss. Always trade with the knowledge of trend direction.
Editors' picks
NSE:AXISBANKEducation
by vanathi
34
Head and shoulders pattern @SPXBe Cautious #headandshoulders #pattern (trend reversal) at #SPX weekly chart. The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end. Stock seems to be changing trend(Head and Shoulders pattern) . One should try to keep the profits with them. Now if you think you are buying it on discount, then you are wrong - you are buying on the other side of trend. ONLY FOR #educational NOT SEBI REGISTERED. #LEARNEARN (DONT TRUST ANYONE) #nifty50 #sharemarket #BREAKOUTSTOCKS #Multibagger #sharemarket #sharemarketindia #sensex #technicalanalysis #kukiinvest #Chartanalysis #headandshoulders #breakdown
TVC:SPXEducation
by Usemerr
Breakout In USDINR Breakout In USDINR - Rising dollar value against Indian rupee is leading to further decline in Nifty 50 Index. If you think deeply about this, you can see it’s an Indication of FII squaring off or liquidating their holdings from Indian markets. When FII want to invest in Indian markets; they’ve to convert USD to INR, which would cause the Dollar value to decline against Indian rupee. Vice versa, when they want to liquidate(SELL) their investments; they’ve to convert INR back to USD, which would cause the Dollar value to shoot up. In the present situation, we are witnessing a similar scenario. It’s very wise to conclude that FII are driving the Price Action in Nifty 50 or at least majority of the sharp market moves we have seen so far(8000 - 18500), happened because of that. So in coming days, to get a better insight of Market sentiment in #Nifty50, Traders/Invester should keep an eye on the Price Behaviour of USDINR. Doing so will give an informed perspective to trade the markets.
Education
by Usemerr
Type: 3 Fear - Fear of Leaving on the table (After taking trade)Believe me there is no such table here .... Jokes apart have you ever thought why we are not what we might be , what is that problem which is creating a difference between our potential and our reality. I think that is our belief system every emotion whether it be of fear, greed, jealousy or any other emotion. Let me explore more on the relation of belief with emotions. Let us consider you live in village where you have Maruti Alto 800 and nobody in the entire village have a car or had a car before, you are the first one ok. You feel good about your car or bad , obviously you will proudly ride your car and may feel elated when people ask help or praise your car. Second scenario: Let us consider you now living in a city where you have Maruti Alto 800 and everybody in your colony , people you work with have Maruti Alto 800 will you feel the same way you felt before in the village about your car. Or what if people around you have more valuable assets than your assets , will you feel the same way. So why our feelings changes , because in depth in our belief we strongly think that having luxurious items which other’s can’t afford is good ,is more appreciable , is respectful , admirable , more acceptable by society. We all are crowd seekers you admit it or not we always feel good when we get accepted by crowd. Let me take another example, suppose you in childhood had a very bad experience with dogs they bitten you they ran after you and all terrible experience you had in the past, will you play with dogs if any playable dog approaches you in a garden probably not, you will see everybody enjoying with dogs but you are fearful of it. Can you control your emotion of fear, probably not so is there any way out there? You just now believe that all dogs are dangerous. What happens when we had several experience with trades where we saw big profit but at the end booked loss. What will happen to your mindset when you seeing that your target is getting missed by just 1 pip or 5 paisa whatever the minimum spread, and at the end you got out on SL.? What if you see series of such trade in a month? Now you doubt on your system, your strategy. Am I right at this point? Let me know in comment. You may think that leaving that open profit for that potential target might be not a good decision. You always think that there is something missing, you have to do something to minimize this losses. Is there any way to not book in a winning open position? Is there anything we can do with those trades where open position profitable at some point of time. I tried back testing of around 15 years on more than 200 scrips spent a lot of money on buying past data.(the data earlier have to be bought ,nowadays it is free of cost) . After that rigorous search for that Holy Grail solution of this terrible problem. Plane and simple thing there is NO SOLUTION at all, trade may go into your favour for some time and suddenly it can go straight to take your SL. Prices are random your part is to execute trades on time according to your plan. That’s it ……. As we can overcome our fear of dogs by starting to spend time with small dogs (puppy) same way we can minimise our risk per trade to a level where we have no fear of losing that on a single trade. Every improvement in your belief system will take time, effort and ACCEPTANCE.
NSE:NIFTYEducation
by TRADEWITHFUN247
Dynamic Support and ResistanceIntra-day trading need more of dedicated full time effort and major portion of that is finding support and resistance. The problem trader face is these support/resistance keep updating as new sharks (trader) jump-in. To address this we need Dynamic Support and Resistance (DSR) finding tool which can ease new trader to find place in market. Traders need to concentrate on price movement in combination with volume if they treat them separately it is bound to fail in market. Manually it will come with multiyear experience in trading.
NSE:JSWSTEELEducation
by kamath1977
E-Commerce Aggregators IndexThere was humongous craze of some of the IPOs which came last year like Paytm, Zomato,Policybazar etc. But the primary concern was always high valuations of these loss making startups. In the meantime from November 2021 these companies have eroded great wealth of their investors. I made an index to track performance of so called web or app based aggregators. Say we are in year 2035 and some of these companies are producing huge profits and have become giant entities. This index will track the stock performances of these companies. I have kept the base price of Index at ₹1500 and base date as 6 May 2022. As it is clear from the chart they have underformed nifty by almost 40%. But that is in past and let us see how they perform in future. Company name its weightage in index and buying price is shown below. E.g. Nykaa have been allocated ₹300 out of ₹1500 and matrimony.com have been allocated ₹30 in the index. Nykaa 20% @₹1539 Naukri 20% @₹3898.05 Zomato 15% @₹60.50 Paytm 15% @₹568 Policybzr 10% @₹617 Indiamart 7% @₹4418.7 Easy trip 7% @₹385 Justdial 4% @₹751.45 Matrimony 2% @₹737
NSE:NYKAAEducation
by SSR1999
Learning is extremely crucial investinglearning is the process of learning merely by observing our surroundings life is too small to make every mistake and then learn from it. A smart person always learns from others mistakes. Importance of Vicarious learning in investing Profit booking: Behavioural scientists have often proposed that we feel the pain much more than pleasure. If we have had a bad experience of stocks in the past, then, we are pretty sensitive towards the pain. And, in that process, we may not prefer to sell bad performing stocks because we don’t want to incur any more losses. And, we may keep thinking about booking heavy profits from stocks while still holding on to bad stocks, but, is it going to work this way? So, vicarious learners learn that to incur good profits, it is important to critically evaluate bad performing stocks, and get rid of them at the earliest. Quality Check: When it comes to mutual fund investment, the idea of staying invested for long works out for better. But, for an individual investor the same does not work in case the stock pricing go wrong due to some damaging cause such as fraudulent activities of the management. So, here waiting to see things turnaround wont make much sense. Thus, vicarious learning in stock investment teaches you to believe in value investing by deeply analysing the companies on varied fronts rather than simply investing for the heck of it. Winning stocks: Many self-investors believe in keenly observing the winning stocks as they are still not able to decide whether they would want to invest in those stocks. Vicarious learning goes a long way in teaching investors to formulate a couple of strategies before blindly investing in winning stocks. Correcting errors: Vicarious learning teaches us to correct our errors by observing other expert investors. Instead of limiting the potential to invest, it is rather imperative to learn from mistakes and keep investing. Fears take over investors only when they refuse to learn from the mistakes they have made in the past. So, vicarious learning plays a major role in correcting errors and overcoming the fear of investment. Value investing: Vicarious learning teaches us a lot about not just investment but about approaching the life in a much better way. The legendary investors like Warren Buffet and Charlie Munger are the perfect examples of vicarious learners. They devised their own theories and strategies for investment with the valuable learnings they derived by being keen observers. And, now the entire world of investors has turned out to be vicarious learners trying to learn the investing psychology of Warren Buffet and Charlie Munger.
NSE:NIFTYEducation
by ProfitPicks
2
How to see idea statistics on TradingView?Hey everyone! 👋 Have you ever wondered how to check your post statistics such as views, comments, and likes, without going through each and every post? Today we wanted to drop this short visual guide to help you out in achieving this. 1. When you open TradingView, you will see a toolbar on the right side of the screen. 2. Click on the bulb-like icon (5th position from the bottom). 3. As soon as you click on the bulb icon, it will list all your ideas, along with all the statistics. 4. You can notice the likes, comments, and views listed on the side of your posts. You can use the “star” icon to set the post in the “favorite category”. 5. There is also an option to filter the posts based on favorite ideas or private ideas. Thanks for reading! Hope this was helpful! See you all next week. 🙂 – Team TradingView Feel free to check us out on Twitter and Instagram for more awesome content! 💘
Editors' picks
AEducation
by TradingView
1
Five Important Lessons to Learn From the MarketHere are a few important lessons that can help traders and investors to survive in the markets and become profitable over a period of time. Risk Management ---------------------- Whether you are an options trader or cash market investor, risk management is the most important concept to deal with. You should always prescribe our risk before entering the trade. Adjust position size so that the risk does not exceeds the prescribed limit. After entering the trade, you can either go for reward which could be double, triple or more than your risk OR you can trail your stop loss to go for larger gains, in case momentum is strong. Nothing Works All the Time --------------------------------- A trader can utilize a custom system/strategy, can take discretionary decisions or use an algorithm to take decisions. But remember that nothing is going to work all the time. You are bound to miss moves, exit early or get shaken out before the move actually starts. You need to think about longer term perspective. The opportunities that you missed were just a few of next 100 trades that you are going to take. But if you are missing 6 out of 10 opportunities, you need to adjust your strategy. All Strategies are not for Everyone ------------------------------------------- You might have seen or heard about traders who made huge money using their own strategy. But trust me, even if you get that strategy for free there are higher chances that you are going to lose. It is not just the strategy but years of hard work by the author that made it perfect for him. He would know all the nuances and the environments where it worked well. Also, the nature of a strategy should be directly proportional to your personality. An aggressive strategy for one trader can be too slow for the others. Start Small -------------- If you are not so familiar with the stock market then you need to start with small capital. This will automatically reduce your risk and position size. Your profit will also be small but learn to make your calculations in percentage terms. First prove yourself that you are a profitable trader for at least three months, then increase your capital gradually. Deal with Failures ---------------------- As I said nothing works all the time. There will be losing days and losing streaks. It is very difficult to deal with losses when you are new to trading. But to begin with, minimal losses are easier to deal with. Imagine you started trading with 1lac and lost 10K on the very first day. I am sure that soon you will lose it all and then become an investor. Following risk management and developing strategy that suits you are not overnight processes. You have to develop discipline to follow them. Try to stay in the market for longer time and it will teach you how to deal with failures. Before you leave don't forget to like and comment for more such writeups in the coming days. Regards
Editors' picks
NSE:NIFTYEducation
by Bravetotrade
14
How do Breakout traders get trapped?In the example above, note the following: - Warning candles: Doji + Hammers + bearish candles indicating exhaustion and a lack of follow-up. - A relatively higher volume on hammer & doji, which is never a good sign for a breakout because it indicates significant selling pressure. - A bullish breakout must always be accompanied by a good follow-up, else it won't sustain. Bullish BO needs good bullish candles, NOT dojis. Notice how a small wick (on the daily chart) looks like a clear liquidity hunt on lower time frames. Underlying concepts: 1. The market was moving sideways and generating liquidity on both sides. 2. In general, when the market is ranging, different participants place orders with a different bias. Hence, there is liquidity on both sides. 3. For a bullish market, the price must form a series of higher highs and higher lows. Similarly, for a bearish market, the price must form a series of lower highs and lower lows. 4. Whenever the price reaches a resistance level, there are 2 types of traders that take positions: - Those who short the level in anticipation of it acting as a resistance. - Those who long early in anticipation of resistance being taken out. 5. The stop losses of these traders act as liquidity. A short position has a “buy order” as SL, whereas a long position has a “sell order” as SL. 6. In general, almost everyone is aware of how the retail participants place their stop losses. They are either: - Above/below an important swing level such as a support, resistance, day high, day low, etc. - Above/below a demand, supply candle. - Above/below the candlestick pattern such as a shooting star, hammer, and doji. - Above/below the charting pattern. 7. The market moves from one zone of liquidity to another. 8. As a retailer, you may not realize the importance of a small wick. The small wicks are more than enough to liquidate plenty of positions. Psychology and Behind the scenes stuff: 1. When the price reached the resistance level, 2 types of traders started opening positions. - Aggressive shorters who shorted in anticipation that the level will hold. - Aggressive longers (those who don't wait for confirmation) who were waiting for the candle to close above the resistance. 2. Both of these traders opened their positions and placed their stop losses in the system. 3. The banks/institutions have fairly complex algorithms that can easily identify these positions. 4. The stops of these aggressive participants are taken out fairly easily and the market moves from one zone of liquidity to another. Thanks for reading! Hope this was helpful. If you need a PDF of this post with all the charts and write-up, check out the signature section (under the post). Disclaimer : This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk. Happy learning. Cheers! Rajat Kumar Singh (@johntradingwick) Community Manager (India), TradingView
Editors' picks
NSE:POLYCABEducation
by johntradingwick
56
What is Bearish divergence?Hey everyone! 👋 Last week, we explained some of the basics to know when it comes to understanding bullish divergences in the markets. If you haven’t read that post, be sure to check it out here: In this post, we are going to examine just the opposite: bearish divergences! Please remember this is an educational post to help everyone better understand investing and trading principles. In no way are we trying to promote a particular style of trading. Table of contents: 1. What is bearish divergence? 2. Types of bearish divergence 3. Some examples When the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, it is called divergence. Divergence warns about potential underlying weakness in the current trend. What is Bearish divergence? A bearish divergence occurs when the price rises to a new high while the oscillator fails to reach a new high (exception being hidden bearish divergence). It indicates that the buying pressure is decreasing and the bears may soon take over the market. Generally, a bearish divergence occurs at the end of an uptrend. It has two sub-types: - Classic bearish divergence - Hidden bearish divergence What is classic bearish divergence? The classic bearish divergence occurs at the end of a bullish trend and indicates that a trend reversal may occur soon. In this, the price and the oscillator always either form a higher high or an equal high. It can be subdivided into 3 types, based on the strength. 1. Strong Bearish Divergence In strong bearish divergence, the price forms higher highs but the oscillator forms lower highs. This means that the buyers are not buying at the same momentum i.e. the buying pressure is decreasing. Price : Higher highs Oscillator : Lower highs Exhibit: Strong bearish divergence Exhibit: Strong bearish divergence followed by a reversal 2. Medium Bearish Divergence The price makes double top (almost the same level as the previous high) and the oscillator makes lower highs. This indicates that at the same price levels, the momentum is decreasing. Price : Equal highs Oscillator : Lower highs Exhibit: Medium bearish divergence Exhibit: Medium bearish divergence followed by a reversal 3. Weak Bearish Divergence In weak bearish divergence, the price makes higher highs but the oscillator has almost the same highs. This means that even though the price is increasing, the momentum is intact. Price : Higher highs Oscillator : Equal highs Exhibit: Weak bearish divergence Exhibit: Weak bearish divergence followed by a reversal What is hidden bearish divergence The hidden divergence occurs during the correction phase of a trend and is a possible sign of a trend continuation. In this, the price forms lower highs, but the oscillator forms higher highs. This indicates that even at an increased momentum, there is enough selling going on to push the price down. This type of divergence occurs with less frequency as compared to the other types. Price : Lower highs Oscillator : Higher highs Exhibit: Hidden bearish divergence Exhibit: Hidden bearish divergence followed by a reversal Thanks for reading! As we mentioned before, this isn't trading advice, but rather information about a tool that many traders use. Hope this was helpful! See you all next week. 🙂 – Team TradingView Feel free to check us out on Twitter and Instagram for more awesome content! 💘
Editors' picks
AEducation
by TradingView
7
'Verse' of 'Reverse' Candlestick Pattern-> Definition of Reversal patterns :- Reversal patterns mean the formation of candlesticks which indicate the end of the existing trend (uptrend or downtrend). When such formation appears in a downtrend, it indicates a bullish reversal or end of selling spree and onset of buying spell. Conversely, when a trend reversal pattern forms in an uptrend, it warns traders of a possible end to bullish run and onset of a slump. Candlestick patterns are visual patterns, helping traders to visualize when market sentiment is shifting, which is why many traders prefer candlestick charts over other trading tools. However, any trend reversal indication must conform with other popular technical trading tools. -> Engulfing Patterns :- An engulfing pattern is a two-candle formation that signals trend reversal, and hence, there are bullish engulfing and bearish engulfing. The bearish engulfing happens in the uptrend. The first candle is a white/green candle that forms in the uptrend. The second candle opens higher than the previous session and then closes below the previous. It indicates that the bullish force made a final thrust before bearish forces took over. The opposite of bearish engulfing is bullish engulfing, and it appears at the bottom of a downtrend. ->Doji :- Doji is a unique formation – a candle with no real-body but with shadows. Doji can take many forms like Doji Star, Dragonfly Doji, Gravestone Doji, Long-legged Doji, and more. It is often associated with market indecision before a trend reversal. Apart from Doji star, Dragonfly Doji and Gravestone Doji also indicate a trend reversal; but to base your trading decisions on them, those must concur with other popular trading tools like moving average, RSI, or moving oscillator. Doji formations often have no real-body, means that the opening and closing price is almost the same, or the market has reached an equilibrium where neither the buying not the selling strengths are strong enough to give it a direction. -> Abandoned Baby :- Apparently, an abandoned baby is a more decisive trend reversal pattern than Doji. It is a rare formation, but when it appears, it is a strong enough indication for traders to alter their position accordingly. Since it is a trend reversal pattern, an abandoned baby can appear in both uptrend or downtrend. An abandoned baby is a Doji star that appears between two candles – the first one appearing in the direction of the trend and the second confirmation candle appearing in the reversed trend, either bullish or bearish. The shadow of the first candle mustn’t overlap the second candle. The star appears above or below the trend, looking abandoned, hence the moniker. -> Hammer Pattern :- Hammer is a single candle pattern that appears in a downtrend implying a trend reversal to bullish. It usually has a small real-body and a long downward shadow. It indicates that the market fished for the bottom but eventually buying forces were strong to push the market up – the result is a bullish or green candle comprising a short real-body. The candle appearing next to the hammer must confirm the trend reversal to form a trading strategy. It must close above the last candle formed before the hammer. The opposite formation of a hammer, an inverted hammer which appears in an uptrend, is also a trend reversal pattern. In this case, the color of the hammer doesn’t matter, but the upper shadow is twice the size of its real body. An inverted hammer requires stronger confirmation candles to ascertain trend reversal. Another similar formation that appears in the candlestick chart is called a hanging man. It is a hammer that appears in uptrend. When the hanging man appears after a rally, it indicates a trend reversal. It needs further confirmation from the following candles appearing in the trendline. If those appearing in a downtrend, the hanging man confirms a downward trend reversal. -> Piercing Line :- A piercing line is a two-candle formation – a bearish long-bodied candle and another bullish candle which opens at a gap and closes at the midway of the bearish candle. Both candles have robust long bodies. It shows that the market started in bearish impulse, but eventually, buyers gained momentum to pull the market up and reserve their position. -> Harami Pattern :- Harami patterns are common and can be both bullish harami and bearish harami. In Japanese, the word translates to pregnant. It is a two-candle formation where the second candle is a small-bodied candle that opens and closes within the body of the first candle, representing a pregnant form. In the case of Harami Cross, the second candle is a Doji star. A Harami is a reversal pattern, but it isn’t as strong as the hammer and needs confirmation from other technical trading tools like RSI, MACD, and the like. My OBSERVATION :- These reversal patterns works very well when used with RSI, In case of indices, when RSI is above 65 or below 35 any such pattern visible indicates reversal and In case of stocks, when RSI is above 70 or below 40 any such pattern visible indicates reversal.
Editors' picks
NSE:NIFTYEducation
by Chaser30
64