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Understanding Candlesticks



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One of the biggest assumption in technical analysis is that "history tends to repeat itself".

So, if a certain sequence of things happends in regard to price and volume in the past, it is likely that the same thing will repeat again.

Using the patterns, we can try to predict an entry price, a possible exit price and a stop loss.

Candlesticks are technical analysis tools that help us to identify trading patterns.

So, a technical analyst will have to use candlesticks to identify patterns and use them to predict certain outcomes.

There are two types of candlesticks patters

  1. Single Candlestick Patterns
  2. Multiple Candlestick Patterns

Single Candlestick Patterns

In this type of patterns, a single candlestick can be used to identify a pattern:

1.Marubozu a. Bullish Marubozu b. Bearish Marubozu

2.Doji

3.Spinning Tops

4.Paper umbrella a. Hammer b. Hanging man

5.Shooting star

Multiple Candlestick Patterns

In this type of patterns, multiple candlesticks can be used to identify a pattern:

1.Engulfing pattern a. Bullish Engulfing b. Bearish Engulfing

2.Harami a. Bullish Harami b. Bearish Harami

3.Piercing Pattern

4.Dark cloud cover

5.Morning Star

6.Evening Star

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