15 CANDLESTICK Patterns for Profitable Trading !!!
Welcome friends to this Wednesday special video. Today it's going to be a very special video. Because today I am going to talk about 15 special candlestick patterns that we all must know about. Basic candlesticks pattern, important candlesticks pattern and very relevant candlesticks pattern. So, this is going to be very interesting. Possible that it might be long but watch till the end.
You will get a lot of learning. How you can use it practically. How to identify stocks? How to participate in them? We will discuss all these things today. Friends, my name is Vivek Bajaj. And I've been in the market for a long time and I understand what goes on in the market. Before starting the video let me tell you one thing that the whole discussion that I will be doing, It's a complete discussion in English, it's detailed literature. We have already recorded it. So elearnmarkets.com/blog
If you go there then over there you will understand all 35 candlestick charts. From these 35 I have selected 15 for you. And approximately more than 600,000 people have benefited from this blog. So you even take advantage of it. Go inside it. We have explained everything about the candlestick patterns very well. It's in English. Text based. So if you see it, you will understand a lot. From these 35 I will talk about 15 that you should practice in the market for sure. Especially if you want to do reversal trade in the market. Now, what is this reversal? When we talk about candlestick patterns, Then I would like to divide this conversation into two parts. One is the candlestick that tells us about the continuation of the trend.
If the market is uptrending then if that candle is in making then the market will remain uptrending only. And one is reversal if the market is uptrending and If some formation happens after going up. From which it seems to be that the uptrend will get over, then it's known as the reversal pattern.
Friends if you are understanding what I am saying. I have actually discussed about candlesticks. That's why I am not teaching basics of candlesticks. If you watch Learn2Trade session#18 whose link I will give on top. In that I had explained about candlesticks like a small kid that what is candlesticks and why should we see it? And what is it's relevance. So I will not discuss about the basics. If you do not know that basic then either read the blog
Or watch my video on basics about candlesticks. So, let's continue. Either there will be continuation of pattern or reversal. One more thing that we have to focus is when we talk about candlesticks then there is one candle in which there is a body and in which there is an upper and lower part. One candle says alot on its own. And similarly if we add one more candle there then both together says something. If we ass one more candle then all three together says something.
So the point if we have to predict any action of any type of market then we can see candlestick pattern and multi candle pattern too. So the 15that I am going to discuss today in which some are single and some are multiple. As I will discuss the concept you will get understanding. Secondly, now I want to tell you the process that whenever you study about the market from candlesticks point of view then remember the three steps. And set it in your mind. IPC. Not the IPC which stands for Indian Penal Code. I meaning Identification.
First step is Identification wether it be a single or dual candle, identify it and finding out what pattern it is. The name is not so important but if there are names then the mind respones fast. Like my name is Vivek. So, you will respond more to that. My face is unique so you might not respond. Similarly in candlesticks, the names are important in pattern. So it's good if you know that name. So first identification and secondly placement. This is very important that if any particular pattern came in any time Where did it come? When did it come? To know it is impossible. Because in the falling market,
When the candle pattern is made. And if in rising market a candle pattern is made then both have alot of difference. So to know the placement is important. Third which I always believe in and is very important in the share market and it is confirmation. What does confirmation mean? That yes this pattern is made and probably the market is respecting this pattern. But wether it will confirm that the judgement I am making for the market. The judgement is confirming the market action after the Candlestick.
So, IPC. IDENTIFICATION. PLACEMENT. & CONFIRMATION. This has to be remembered. So always remember in mind IPC. When you are working on candlesticks point of view then set this IPC. Now after that, I have made some pointers, notes that's why I am going towards the paper. So whatever I record for you, after doing some homework and thought process I don't do scripting but atleast I make my pointers such that I can have a clear cut discussion with you. Always remember one thing that there is nothing perfect. Neither we get perfect wife or neither they get perfect husband. Neither any boy is perfect and neither any girl. So, situations are even never perfect. So the Candlestick Pattern will never be perfect.
There will a difference of 19-20. That's why what happens is many softwares give you the pattern after coding. Identify this pattern and give me a software. Possibly that the pattern which is theoretically refined when we code it in the software then might be it's not coded properly. Because there is always an approximation. So don't go towards perfection. Look at the approximation. And that too when you analyse the chart after the candlestick then your mind somewhere accepts that market condition. So to comprehend you don't need perfection. You need approximation. Not necessarily you need perfection in life. Let's move ahead. Now we will look at each patterns and understand what it is and for that I will use StockEdge.
And this what I will be discussing about in StockEdge is a free feature in StockEdge. So the one who wants us free feature from us, Then we have made this pattern recognition free for you. So do see it and we will understand the concept one by one. So firstly, when I go into scans in StcokEdge and if I see in scan then candlestick scans. Like you get to understand by the name, Meaning of candlestick scans. I am trying to identify those stocks in which a particular Candlestick Pattern meets.
But now I will not show you the scan from that point of view. Now I want to show you how you understand the candles and understand the concept. And today I will discuss reversal. Why? Because when the trend is upwards so its easier to identify the trend that are made through trendlines But when that trend will conclude and when the market has gone into a reversal either a bull run reversal or bear run reversal. To find it out is very important. So, in today's video we will focus on reversal and candlesticks is such a powerful utility,
that you can get an edge in reversal, if you use it for that purpose only. So first let's talk about BULLISH REVERSAL PATTERNS So the first concept is HAMMER. On the upper its metal and below its body and it might be that there's a cap on top. So here you will see symbolically even. Let me zoom in a bit. You see, hammer mean the upper body. The distance between the open and close is relatively less but the line below is high. Now the hammer can be green as well as red.
Like in the falling market if the green hammer comes then it's very good. But if there is a red hammer in the falling market then even it's fine. Because the gap between open and close is not very important. Open above close? Or close above open? It is important that the WICK below is big or not. Let me show you one interesting thing, when you go to any candlestick scans and press 'i' Where you will see the video that we have recorded. So if you want you can see the video and learn the concept at a micro level. We have made 3-4 videos on each pattern. Have done very interesting work, friends. So take benefit of it. And if you are in the app then right swipe where you will get access to these videos. It's free. No money for this.
Did you understand about Hammer friends? First we will talk about BULLISH REVERSAL. And I have starred in the important ones which I see. And I will tell the relevance of the same. But now understand that whatever I have starred are important relevant candlestick patterns. Second is BULLISH ENGULFING. What does it mean? This is a dual candle pattern. The first candle is red. Remember this. This means that this was the bear run market, a red candle was made. But the mixed candle that was made was green.
And the whole red candle body and that of the green candle body has captured the former one. You can see it symbolically over here. So this means that probably this is the last leg of market fall. As the next candle would be green. In this it's green. Some softwares have white and dark means black which stands for market falls i.e. Red. So it depends upon your software. So Bullish Engulfing means a reversal can come. Now the question is that The Reversal can come so according to you what can be the level in which I can buy? Important question. We will discuss it. But trying to answer this small question. When any candle is formed then we cannot initiate trade on same candle.
Because till the time it's not formed till then how will we know it that this candle has been initiated? We always wait for the next candle and if the high-low has breaken of the previous candle. Like in this case there is reversal, So if the high breaks then I will take. Because next candle has broken the previous candle high. And if it has breaken the low then it means that this pattern has been nullified so I will take stoploss. So, next candle should be used for trade execution. There are some more points which I want to discuss with you, a bit conceptual. Whenever you trade in the market then two things must be focused upon. First, VOLUME.
If in any candle a follow on candle is coming, if there is volume support on the same. This means many people belief on what you believe. So, you will have confidence to trade. Second is time interval. If you are watching the 5 minute candle then it's chances of accuracy is less. If you are seeing the weekly candle then chances of it to be accurate is more. So the bigger the time frame for our identification process The higher the chances for you to see the effectiveness of the candle. Many people say that I see 5 mins chart and candlesticks don't work. It is not so, candlesticks signifies the market situation. But after that, has the market given respect to it? To find this is very important. It is also known as Confirmation. And, whether there is enough players in the market who, beleive what you believe.
So, volume and timeframe both are equally important in that process. So what was the process! Let's repeat. IDENTIFICATION - PLACEMENT - CONFIRMATION so in the falling market if there is dark at the below level and then again it's green meaning there is placement in the falling market so it's nice. Let's go inside and see whether there is any stock in it or not. Such an interesting stock. PNB Housing Finance. Let's go inside and see it. So, in StockEdge if I see the data for 1 year then see it's the falling trend. If in the falling trend this stock is making this pattern then chances are there that the next candle runs above the high of this then this stock would reverse. It means that this negative falls will get reversed. I have kept some examples for you from Nifty-BankNifty that I will show you towards the end of the video.
But this StockEdge has made so easy that which stock is showing which pattern is easily identified. And as I said this is completely tech working so, it's not so it would be 100% accurate. But still if we do 95% work accuracy then somewhere or other we won in this process. Let's go to the other pattern. We have talked about Hammer, Bullish Engulfing. Like hammer there is Inverted Hammer too. It means that the upper weak and below is the body. Because body is a small one. So either it will be like this or this. Doesn't matter. So hammer doesn't mean that bull run. Hammer means that there is fight going on because open and close both are together. And there is somewhere or other who has done activity. Either gone below from up or up from below. Activity has taken place.
So hammer is reversal. When the market falls then wether is be hammer or reversal hammer, in both situations there can be a reversal in market. Like if you see the inverted Hammer here. So in the form of example if we see then oil India. Tata Elxsi. See. What is its prerequisite? There should be a down trend. Now it's not necessary that the downtrend would be for 1 or 2 years. If in a small swing downtrend even there a reversal will come then probably that stock could move up towards reversal.
Again, telling you a caveat, a warning that these are tentative signs. Till the next candle is not confirmed I don't have to do this. Let's take the example of Tata Elxsi. I use a bit of TradingView too in this so that you get a better understanding. So, let's see Tata Elxsi because you will find the chart clearer in TradingView. So, Tata Elxsi has gone up and given Reversal. Going down, there's a small trend. Over here an inverted Hammer is made. So, it's high is 8635. Meaning if Tata Elxsi goes above 8635 then this will confirm the reversal. So, let me draw a line here and put an alert here.
If it goes above this then you say to me. So, I use TradingView for looking at the detailed chart and StockEdge for Quantitative Algorithms. Because there are patterns in TradingView too like if I search for Indicator and over there in Technical if I search for Hammer. And select in Inverted Hammer then see TradingView isn't able to capture it. This is the beta version. TradingView hasn't mastered this. We have more or less done it. Because we have put Candlestick for a lot of time in StockEdge. See this is a very interesting name for Inverted Hammer. So, Hammer, Inverted Hammer, Engulfing Pattern is done.
And after that fourth one is Piercing Line. What happens to Bullish Engulfing? There is a small candle and then a candle covering it completely. But what does the piercing line say? It might be possible that the complete is not covered but if 50% is even being covered then it's very good. So, it's the same concept for the Piercing Line. The downtrend that was made, so there should be a red candle, and the next green candle is covering the 50% of the previous candle. So it's called a piercing line. Which stocks come under the same? No major stocks. If I remove major stocks, and do all NSE stocks And see which ones come! A stock came - Cupid Ltd., Osia Hyper Retail, all these are small cap stocks. If we see in them then more or less the 50% of the body is covered by the candle. It is called a piercing line.
Are you understanding friends? Going slowly. You don't get confused in this nomenclature because it's very simple and If you go to StockEdge and spend some time then we have made it so simple, on each concept we have made a learning video. And if we press 'i' then you will get a video of 3 minutes on the piercing line. So we have explained the concept very well.
Now if you give some time. 2-3 hours then you will understand this completely. So, Hammer, Inverted Hammer, Engulfing Pattern, Piercing Line, After that there's a pattern whose name is Harami. This name is a bit weird. But, if I discuss this pattern a bit, we will talk about the bearish side. Because its impact is very relevant there. I find its impact diluted in bullish but over here we have not given Harami Pattern in Bullish. But works well in Bearish. There is the Bullish Harami Cross which is a bit different about which we will not talk.
Because I want to talk about 15 key Patterns only today. So, amongst them is the Bullish Harami Pattern. After that let's go to Morning Star. What does it do? First candle is red, always remember that whenever we talk about reversal the first candle should follow the previous trend; If there is downtrend then first would be red, after the first red candle there is a small candle behind which more or less does not come in the body. It makes a body below and after that a green candle comes which again makes a body. So bigger-smaller-bigger together combined makes a morning star. If we see inside that then this is the stock, Cerebra Integrated Technology. Inside it there is Morning Star
If we see the same in TradingView then see this, so lovely. But in this there is a downtrend. Over here it has made a morning star. Big candle - red and then a small body and then a big candle - green. Now, if it goes above the high of the candle then a movement can come in this. Remember one thing - moving averages, trendlines, all play a very big role. So suppose in this stock 50day MA at a price of 77.15
So if it breaks this price and trades above the moving average then definitely a big movement can be seen in it. So this stock can be kept on radar. The Beauty of StockEdge is that you can identify stocks from each pattern which you want to keep on your radar. Now, these were the bullish ones. Hammer, Inverted Hammer, Engulfing Pattern, Piercing Line, Bullish Harami and Morning Star. I will explain Bullish Harami on the Bearish side. Now let me talk about the bearish side. Again reversal. Because focus on reversal should be there. Now under reversal we talk about HANGING MAN.
What does it mean? The reverse of the Hammer is Hanging Man. When we go inside it then what can we identify? When there is a Bullish market and if a hammer is made then it's called the hanging man. As simple as that. The names are different but more or less they do the same work. So, the ones that I have told you,
Their names on the bearish side have different names but the work is the same. So one is Hanging Man. SHOOTING STAR. In the Bullish market if a hammer is made,opposite of Inverted Hammer is Shooting Star. After that, ENGULFING PATTERN. Bullish Engulfing Pattern, smaller and then on top a body. The reverse of that, if you see on the Bearish side then it's known as Bearish Engulfing. See this. Smaller one but it should be green because it's the Bullish reversal. Smaller green candle and bigger red candle. So this is Bearish Engulfing. Let's see if there is any stock. See this. Let's do NSE major stocks and see because that will give us the major big stocks. Delta Corp. - Bearish Engulfing.
Mishra Dhatoo Nigam - Bearish Engulfing. This means there can be a reversal and move downwards from bullish. It can go. When will it be confirmed? When it will go below that candle's low. After that DARK CLOUD COVER. It is Piercing Line. Remember that? If minimum 50% is being covered then its fine. Not complete. 50%. In the bear side, the opposite for piercing line is dark cloud cover. We have pictorially presented it so nicely.
If you focus on this for 21 days, you will get a habit and you will enjoy a lot. After that Bearish Harami. I had to talk about Harami! Bearish Harami is opposite of the engulfing pattern - smaller and bigger i.e. Harami is bigger and smaller. First bigger and then smaller one should be within the part of the body. So, what will happen in Bullish Harami? Again this is a reversal pattern, so the big red candle and green over here, In case of bearish reversal means reversal in bullish. Big green candle and then smaller red, this is known as Harami. There was no secret but I have said it.
The reversal of Engulfing format means reverse of bigger-smaller is Harami. Bullish Harami is one and other is Bearish Harami. Bearish Harami works well because after making the small candle when the small one comes to capture it. After that let's go to EVENING STAR. Similar to morning star. What was morning star about? One candle that should be red in the falling market. And then a smaller one at below then again a big candle which is a green candle. Evening Star is just the opposite to that. In the bullish market, green candle then again a small red candle. A small candle whose colour doesn't matter.
Less candles for me is red one which in total identifies evening star. We see it's impact less on bearish reversal so we have not given here, But you can use it for some other software. So these were the 12 candlestick patterns. Now there are 3 more patterns which we should focus upon. They are called Doji which means there is no idea what is going to happen. Because what is doji? Have you seen a cross? Line and a cross means open and close is almost same. Made a high and low signifying no certainity. If we study this even and if we go to neutral scans over here you will find Doji & Near Doji. So these are the stocks that belong to Doji.
Now, Ddoji doesn;t give any kind of information but yes it sets an alert that some fight is going here. So, if the next candle breaks the high or low of Doji. Then definitely we have to look at that candle for our trading purpose. So, in total we studies about 15 candlestick patterns, and the more you study the more better you will become. On every candlestick pattern, we have made an english video which you can see if you want to. If you understand English. And practise it, the more you practise the more perfect you will become. Now lets go to NIFTY - BANKNIFTY chart. And let me show you some magic.
In NIFTY, I have highlighted. This is the 1day chart of NIFTY - downtrend, over here if you see Going up on trendline a bearish engulfing is been created. Bearish Engulfing meaning? Green candle in the bullish market and then a red candle after being engulfed.
And when the next candle go below its low it was a short opportunity. After that Doji Cross means a cross. Doji Cross means some thing is happening and as soon as next candle breaks the high of Doji Cross then the market went one side. Generally the support and resistance line, or on moving average support; if a pattern like this is made then it's impact will be huge.
See on top - dark cloud cover meaning the green candle in the bullish market and after that the red candle which was made is more or less covering the 50% of the body of the green candle which is why it's said dark cloud cover. See. It works so well. If I do the same in BANK NIFTY Then see on TOP, because we are talking about reversal, and our role is to catch the reversal such that big money is earned in small stop loss. So, over here a shooting star was made. Over here a Hammer. A dark cloud cover was made here which was with NIFTY too and piercing line here. So this way if we keep our observation skills nicely, stay focused and identify these on bank nifty - nifty at least.
They have made algorithms in Trading View but till now not so well so I won't recommend it to you. Using StockEdge if you could be able to use the stock specific candles and identify stocks then it will benefit you a lot. One more thing that you can do is that you can make combo scans and here price action of the stocks plus combining candlesticks you can make combinations such that you get that stock specific or StockEdge gives you in which there can be any activity in that stock. Before going, I will tell you one more thing, that this was a free learning content for you from my side.
And hoping that you liked it and you will share with your friends and family members and motivate me more. Beyond that if you feel that I can help you more, we have made a lovely course on candlesticks. If you search candlesticks. The name of the course is Candlesticks Made Easy. This is an English course in which 11,300 people have enrolled and it has a good review. In this we have made videos on candlesticks such that you can learn it. And if you want to learn candlesticks from us in Hindi, at a very reasonable cost.
if you go to 999courses > view all > changing the language to Hindi > where you can see the course कैंडलस्टिक्स अब हुआ आसान which has been taken by more than 7000 people and in this even approximately 15-20 videos. If you will see then your concept will be cleared. If you use VIV50 on these two courses then you will get 50% off. Now the point is that should you take this course? Well, what I have taught, the learning is sufficient but when you take the course then the efforts that we are making. You are appreciating those efforts. So, if you take the course we will get the contribution. Secondly when you take course then you will have many questions, an obligation to answer those questions comes on us and on our team. So, definitely you join with us. Take this course and this video is good. If you want share this video with your friends and family
the power of candlesticks, the 15 patterns that I told, the concept that I explained, you will share this power will people. Then you will get good karma and we all would be able to participate in the market with a sensible way and become a better market participant. Hoping that you liked the video. It was lengthy but I enjoyed a lot in recording this video for you. And if you even enjoyed it then you will have to do one thing only - share this video. And if you haven't subscribed to my channel yet. Then just subscribe such that you can consume this type of knowledgeable content that I'm making. Thank you. Bye bye. Please Take care.
2022-04-21 13:36
