Candlestick Stock Analysis – Patterns | Stock Market For Beginners

Candlestick Stock Analysis – Patterns

In our earlier article we talked about introduction to candlestick stock analysis. Now, we will go a bit deeper and understand the basic candlestick patterns which can be seen in these types of charts used in stock analysis for beginners. Below are the simple types of candlesticks which are being used in this kind of analysis:

White candlestick – White candlesticks or hollow candlesticks signal uptrend movement. These occur in different lengths; the longer the body, the more significant the price increase.
Black candlestick – Black candlesticks or filled candlesticks signal downtrend movement. These occur in different lengths; the longer the body, the more significant the price decrease.
Long lower shadow – Long lower shadow gives a bullish signal. The lower wick must be at least the body’s size; the longer the lower wick, the more reliable the signal.
Long upper shadow – Long upper shadow gives a bearish signal. The upper wick must be at least the body’s size; the longer the upper wick, the more reliable the signal.
Hammer – A hammer shows a bullish pattern during a downtrend. The hammer has long lower wick and small or no body. Shaven head hammer shows a bullish pattern during a downtrend & a bearish pattern during an uptrend since it has no upper wick. The Hanging man hammer candlestick shows bearish pattern during an uptrend. It has long lower wick, small or no body; wick has the multiple length of the body.
Inverted hammer – Inverted hammer signals bottom reversal; however confirmation must be obtained from next trade. It may be either a white or black body. Shaven bottom inverted hammer signals bottom reversal, however confirmation must be obtained from next trade. It has no lower wick. Shooting star inverted hammer shows a bearish pattern during an uptrend. It has small body, long upper wick, small or no lower wick.
Spinning top white – Spinning top white gives a neutral pattern. It gives a normal view until seen with respect to the other candlestick patterns
Spinning top black – Similar to spinning top white pattern and gives neutral pattern but in black candlestick. Again becomes meaningful when sees in combination with other candlestick patterns
Doji – Doji is a neutral pattern with no body and only shadows, meaningful in combination with other candlestick patterns
Long legged doji – This is a type of DOJI but have long shadows. It signals a top reversal
Dragonfly doji – As in a normal Doji, there is no body and a Dragonfly Doji signals trend reversal since it has no upper wick and long lower wick.
Gravestone doji – Opposite to Dragonfly doji and signals trend reversal. It has no lower wick and long upper wick
Marubozu white – Marubozu denotes dominant bullish trades and continued bullish trend. It has no upper or no lower wick.
Marubozu black – Marubozu black denotes dominant bearish trades and continued bearish trend. It has no upper or no lower wick.