Candlestick is a very powerful charting pattern widely use by technical traders to predict stock prices. Candlestick chart consists of white and red candlesticks.
The white candlestick on the left means the stock price is up for the day, and the red candlestick on the right represents a down day for the stock. We can easily visualize the open, close, high and low price for any stock using candlestick on a chart.
Let’s look at sample candlestick chart for DRH.
The chart above shows that DRH stock was trading in the range of $8 to $9.8 in the period of 09/2009 to 03/2010. On 3/3/2010, a Bullish Engulfing Pattern was formed and the stock gone up from $8.5 to $9.5 in 2 weeks with a 11.7% gain. You don’t need to know what bullish engulfing pattern is for now, just note that it is one of the most bullish patterns in candlestick which signals a strong buy, I will discuss this pattern in more detail in the next topic.
The following are some popular candlestick patterns.
Bullish Candlestick Patterns (Buy Signals)
Bullish Engulfing
Hammer
Piercing
Above the Stomach
Bullish Tri Star
Bullish Meeting Line
Bullish Belt Hold
Rising Three Method
Three Line Strike
Morning Star
Bullish Kicker
Inverted Hammer
Bullish Side By Side
Bullish Harami
Last Engulfing Top
Three White Soldier
Unique Three River Bottom
Three Outside Up
Bearish Candlestick Patterns (Sell Signals)
Bearish Engulfing Pattern
Hanging Pattern
Dark Cloud Pattern
Bearish Kicker Pattern
Bearish Harami Pattern
Evening Star Pattern
Shooting Star Pattern
