Candlestick chart patterns ppt
Many candlestick clusters will resolve as continuation signals after initially signaling indecision. But there are a few patterns that suggest coninuation right from the outset.
Introduction to Candlesticks [ChartSchool]
In his book, Candlestick Charting Explained , Greg Morris notes that, in order for a pattern to qualify as a reversal pattern, there should be a prior trend to reverse. Bullish reversals require a preceding downtrend and bearish reversals require a prior uptrend. The direction of the trend can be determined using trend lines , moving averages , peak/trough analysis or other aspects of technical analysis. A downtrend might exist as long as the security was trading below its down trend line, below its previous reaction high or below a specific moving average. The length and duration will depend on individual preferences. However, because candlesticks are short-term in nature, it is usually best to consider the last 6-9 weeks of price action.
Inserting Candlestick Charts in PowerPoint Presentations
The shadow is the portion of the trading range outside of the body. We often refer to a candlestick as having a tall shadow or a long tail.
Long white candlesticks show strong buying pressure. The longer the white candlestick is, the further the close is above the open. This indicates that prices advanced significantly from open to close and buyers were aggressive. While long white candlesticks are generally bullish, much depends on their position within the broader technical picture. After extended declines, long white candlesticks can mark a potential turning point or support level. If buying gets too aggressive after a long advance, it can lead to excessive bullishness.
The Japanese have been using candlestick charts since the 67th century to analyze rice prices. Candlestick patterns were introduced into modern technical analysis by Steve Nison in his book Japanese Candlestick Charting Techniques.
A candlestick that gaps away from the previous candlestick is said to be in star position. The first candlestick usually has a large real body, but not always, and the second candlestick in star position has a small real body. Depending on the previous candlestick, the star position candlestick gaps up or down and appears isolated from previous price action. The two candlesticks can be any combination of white and black. Doji , hammers , shooting stars and spinning tops have small real bodies, and can form in the star position. There are also several 7- and 8-candlestick patterns that utilize the star position.
maintains a list of all stocks that currently have common candlestick patterns on their charts in the Predefined Scan Results area. To see these results, click here and then scroll down until you see the “Candlestick Patterns” section. The results are updated throughout each trading day.
Engulfing patterns are the simplest reversal signals, where the body of the second candlestick 'engulfs' the first. They often follow or complete doji , hammer or gravestone patterns and signal reversal in the short-term trend.
There are two pairs of single candlestick reversal patterns made up of a small real body, one long shadow, and one short or non-existent shadow. Generally, the long shadow should be at least twice the length of the real body, which can be either black or white. The location of the long shadow and preceding price action determine the classification.
The hammer is not as strong as the dragonfly candlestick, but also signals reversal after a down-trend: control has shifted from sellers to buyers. The shadow of the candlestick should be at least twice the height of the body.
We’re going to explain candlesticks in a way that you will remember. If you’re a more advanced trader, this candlestick PDF guide is for you as well. We’re going to share with you a powerful candlestick pattern strategy.
The Evening Star pattern is opposite to Morning Star and is a reversal signal at the end of an up-trend. The pattern is more bearish if the second candlestick is filled rather than hollow.
To insert Candlestick Charts in PowerPoint presentations you can get them from Excel and then copy and paste into your slides. Here we will show you how to generate a simple historical price datasheet in Excel and create a candlestick chart for your PowerPoint presentations.
The dragonfly occurs when the open and close are near the top of the candlestick and signals reversal after a down-trend: control has shifted from sellers to buyers.
Dragonfly doji form when the open, high and close are equal and the low creates a long lower shadow. The resulting candlestick looks like a “T” due to the lack of an upper shadow. Dragonfly doji indicate that sellers dominated trading and drove prices lower during the session. By the end of the session, buyers resurfaced and pushed prices back to the opening level and the session high.
More controversial is the Hanging Man formation. A Hammer candlestick is a bullish signal in a down-trend but is called a Hanging Man when it occurs in an up-trend and is traditionally considered a bearish (reversal) signal. Thomas Bulkowski (Encyclopedia of Chart Patterns) tested the pattern extensively and concludes on his website that the Hanging Man pattern resolves in bullish continuation (of the prevailing trend) 59% of the time. It is therefore advisable to treat the Hanging Man as a consolidation pattern, signaling indecision, and only take moves from subsequent breakouts, below the recent low or high.
The upper and lower shadows on candlesticks can provide valuable information about the trading session. Upper shadows represent the session high and lower shadows the session low. Candlesticks with short shadows indicate that most of the trading action was confined near the open and close. Candlesticks with long shadows show that prices extended well past the open and close.
Generally speaking, the longer the body is, the more intense the buying or selling pressure. Conversely, short candlesticks indicate little price movement and represent consolidation.
An open and close in the middle of the candlestick signal indecision. Long-legged dojis, when they occur after small candlesticks, indicate a surge in volatility and warn of a potential trend change. 9 Price dojis, where the high and low are equal, are normally only seen on thinly traded stocks.