SINGLE CANDLE:
* Reading the single candle marks the beginning of Japanese candlestick analysis.
* A single candle can represent any trading period.
BASIC CANDLESTICK INFORMATION:
There are three basic candle types,
1.A Green, or empty, candle indicates that the closing price is higher than the opening price for the trading session.
3.A doji occurs when the opening and the closing price are equal, or very close to each other.
DEFENITION:
* This candle’s close is greater than the open during a greater than average daily range.
* The close must be equal
to the high, and the open must be equal to the low.
* It has no
upper or lower shadows.
INTERPRETATION:
*Marubozu has several meanings in Japanese,
one of which is “bald” or “shaven.”.
*In describing a candle it
means there is no upper or lower shadow.
* A Long Marubozu
White Candle is considered extremely bullish because it has
no shadows.
* It is the most bullish of all long white candles as
it opens at the low and closes at the high.
*The bulls are in total
control of the market on this day.
LONG RED MARUBOZU CANDLE:-
*This candle’s close is less than the open during a
greater than average daily range.
* The close must be equal to the
low, and the open must be equal to the high.
* It has no upper or
lower shadows.
INTERPRETATION:
* Marubozu has several meanings in Japanese,
one of which is “bald” or “shaven.”
*When applied to describe
a candle, it means there is no upper or lower shadow.
*A Long
Marubozu red Candle is considered extremely bearish because it has no shadows.
*It is the most bearish of all long red candles as it opens at the high and closes at the low.
*The bears
are in total control of the market on this day.
INVERTED UMBRELLA CANDLEs:-
DEFINITION:
*This candle’s close is greater than the open during an average or large range day.
*The upper shadow must
be at least twice the length of the real body.
*It has a small
real body and a long upper shadow.
*This formation is called
a shooting star if it is found at the top of the market or an
Inverted Hammer if it is found at the bottom.
*It can be recognised by its tight opening and closing real body.
INTERPRETATION:-
*The Inverted Umbrella Candle has strong
reversal implications.
* In interpreting an Inverted Umbrella
Candle, the colour of the real body is not important.
*Rather
it is its location that is of the essence
*This inverted Umbrella Candle becomes a shooting star and has bearish implications if found after a market advance.
*It becomes an Inverted
Hammer and has bullish implications if found after a market
decline.
SPINNING TOP:-
*This candle’s close is greater than the open with a
less than average daily range
. * The total length of the real body
must be smaller than the sum of its upper and lower shadow.
INTREPRETATION:-
* A Spinning Top (white or black does not
matter as colour is unimportant in this type of candle) is a sign
of market indecision and is considered neutral in a sideways
trend.
*In a trending market, it can be part of a continuation
pattern.
*Found after a strong rally, it could signal a possible
reversal to the downside, but found after a decline, it could
signal a reversal to the upside.
*In analysing a Spinning Top its
colour is unimportant but its location is.
DOJI:-
* The doji is one of the more important single candles.
*It is created
when its opening price and its closing price are the same.
*A doji
does not have a real body.
*The upper and lower shadows can be
long or short.
*More weight is given in analysing a doji with longer
shadows.
*Doji with longer shadows reflect a volatile day while
doji with shorter shadows reflect a dull and quiet day.
THREE IMPORTANT DOJI'S:-
1.LONG LEGGED DOJI.
2.DRAGONFLY DOJI.
3.GRAVESTOE DOJI.
LONG LEGGED DOJI:-
DEFINITION:-
* The Long‐Legged or High‐Wave Doji is formed
when the open and close are at the same price during a larger
than average daily range.
*The open and the close must be at the
midpoint of its range. It has a long upper and lower shadow.
*It
is the long upper and lower shadow that gives it the alternative
name of a High‐Wave Doji.
*When it emerges after an uptrend
or downtrend, the Japanese say that the market has lost its
sense of direction.
*This lack of orientation puts the prior trend
into doubt.
DRAGONFLY DOJI:-
* The Dragonfly Doji is formed when the open, close,
and high are at the same price during an average or larger daily
range. It has a long lower shadow.
GRAVESTOE DOJI:-
DEFINITION:-
*The Gravestone Doji is formed when the open,
close, and low are at the same price. It has a long upper shadow.
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