Candle Stick Pattern that we should knowđđ
A candlestick pattern is a method of reading price action in financial markets using the graphical representation of price movements over a specific time period. Each candlestick consists of a "body," representing the range between the opening and closing prices, and "wicks" or "shadows," which show the highest and lowest prices during that period.
There are many candlestick patterns, each indicating different potential outcomes for the price. For example:
- Bullish Engulfing : A small red (bearish) candle followed by a larger green (bullish) candle, suggesting a potential upward reversal.
- Bearish Engulfing : The opposite of a Bullish Engulfing pattern, indicating a potential downward reversal.
- Doji : A candle where the open and close prices are very close, signaling indecision in the market, which could precede a reversal.
- Hammer and Hanging Man : Both have small bodies with long lower wicks. A Hammer appears after a downtrend and suggests a potential reversal upwards, while a Hanging Man appears after an uptrend and could indicate a reversal downward.
These patterns are used by traders to predict future market movements and to make informed trading decisions.
