What is a candlestick pattern?

In financial technical analysis, a candlestick pattern is a movement in prices shown graphically on a candlestick chart that some believe can predict a particular market movement. The recognition of the pattern is subjective and programs that are used for charting have to rely on predefined rules to match the pattern.

What makes candlesticks so attractive as a charting tool?

But what happens between the open and the close, and the battle between buyers and sellers, is what makes candlesticks so attractive as a charting tool. Candlestick patterns are technical trading tools that have been used for centuries to predict price direction.

What is a Morning Star candlestick pattern?

There is usually a significant gap down between the first candlestick’s closing price, and the green candlestick’s opening. It indicates a strong buying pressure, as the price is pushed up to or above the mid-price of the previous day. The morning star candlestick pattern is considered a sign of hope in a bleak market downtrend.

How a bearish Candlestick is formed?

A bearish candle means that while the bulls tried to take the stock up, eventually the bears won the battle. This is why the close price is less than the opening price. Now that you understand how a bullish and bearish candlestick is formed, let us understand the eight basic candlestick patterns. Candlestick Patterns can be divided into –