1. What are red and green candlestick patterns?
Red and green candlestick patterns are used in technical analysis to represent price movements in financial markets, particularly in stocks, forex, and cryptocurrencies.
Green Candlestick (Bullish Candle): Indicates that the closing price was higher than the opening price, meaning the asset’s price increased during the period.
Red Candlestick (Bearish Candle): Indicates that the closing price was lower than the opening price, meaning the asset’s price decreased during the period.
2. What is OHLC?
OHLC Means Open, High, Low and Closing price for each period. Four major data points can be seen in the OHLC chart.
3. Why are there different shapes of candles?
There are different shapes of candles as each candle shows four price points ( open, high, low, close).
4. What is an engulfing candlestick, and what is the difference between Bullish Engulfing & Bearish Engulfing candlesticks?
An engulfing candlestick is a two-candle pattern in technical analysis that signals a potential trend reversal. The second candlestick completely engulfs the body of the first candlestick, indicating a strong shift in momentum.
Difference Between Bullish and Bearish Engulfing Candlestick Pattern.
Bullish Engulfing (Reversal to Uptrend)
*Appears after a downtrend
*The first candle is small and red (bearish)
*The second candle is large and green (bullish) and fully engulfs the first candle
*Indicates increasing buying pressure and a potential trend reversal to an uptrend
Bearish Engulfing (Reversal to Downtrend)
*Appears after an uptrend
*The first candle is small and green (bullish)
*The second candle is large and red (bearish) and fully engulfs the first candle
*Signals strong selling pressure and a potential trend reversal to a downtrend
5. Why do we say power in engulfing candles?
Due to the huge body that shows power, there is A very small or no wick observed in the candle.
6. What if there is no wick in an engulfing candle?
If there is no wick in an engulfing candle, it indicates the candle is even more powerful with no rejection faced.
7. What is the most important thing in the OHLC of the candles?
Closing is the most important thing in OHLC
8. In which time frame should we watch Bullish & Bearish Engulfing Candles?
We can watch Bullish and Bearish Candles in ANY time frame.
9. What is profit booking?
When someone exits from trade in profit, that is called profit booking.
10. What are unrealized profits?
Unrealized profits are the profits that we have made in a running trade.
11. What are realized profits?
Realized profits are the profits you have made once you exit from a trade.
12. What causes HPR & LPR?
When the Bullish or Bearish power decreased, that caused rejection in the price, and hence, there was a wick formed in a candle denoting LPR and HPR.
13. What do the tail, wick, and shadow represent?
Tail, Wick, and Shadow are all the same term used for the thin line in the candlestick, which represents LPR or HPR.
14. Which one is more important between the red hammer and the green hammer?
In a Hammer candlestick pattern, colour does not matter as both candles provide the same information, which is HPR & LPR.
15. What is important in a hammer candlestick pattern?
In a hammer candlestick pattern, only the wick and how long the wick is matters.
16. What does Doji represent?
Doji represents confusion or indecisiveness in the market.
17. What is indecisiveness?
When there is confusion about where the market is going to move ahead, it is indecisiveness that is created by a Doji.
18. What to do when there is an indecisive candle formed?
We should wait and watch the market until there is a confirmation of a clear signal.
19. Is piercing a strong or weak pattern?
Piercing is a weak pattern.
20. Is engulfing strong or weak?
Engulfing is a very strong pattern.
21. What to do when there is a piercing pattern.
We should wait for the next candle to be formed for confirmation.
22. Which one is stronger: a Shooting Star or a Hanging Man?
The shooting star pattern is much stronger than the Hanging Man.
23. When is the Morning Star pattern important?
Morning Star is only important when it is formed in a Downtrend.
24. When is the Evening Star pattern important?
The evening star is only important when it is formed in an Uptrend trend.
25. What is a failed Morning Star pattern?
When the third candle of the Morning Star fails to pierce 50% of the size of the The first candle is a failed Morning Star.
26. What is a failed Evening Star pattern?
When the third candle of the Evening Star fails to pierce 50% of the size of the first candle, it is a failed Evening Star.
27. Should we sell on a Failed Morning Star?
No, we should not sell during a Failed Morning Star. We should wait for a stronger confirmation.
28. Should we buy on a Failed Evening Star?
No, we should not buy during a Failed Evening Star. We should wait for a stronger confirmation.
29. What is a piercing candle?
When a candle is formed in reverse and closes above/below the 50% body of the previous candle, it can be called a piercing candle.
30. Do we have to take any action after a piercing candle?
We do not have to take any action after the formation of a piercing candle. We will Wait for the next candle formation for confirmation of the direction the price is going to move in.
31. What does a pierced candle indicate?
A piercing candle simply indicates the exhaustion of the previous candle’s power, Nothing else.
The above information is only for education purposes; we don’t give any trading tips. We hope this information is useful for you. For more blogs, follow us on growthofindia.com