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Candlestick Pattern Part - 1

 1) Hammer Pattern:

A hammer is a single candlestick pattern that forms at the end of a downtrend and signals a bullish reversal.
The actual body of this candle is smaller and is positioned on the top with a lower shadow that should be more than twice that of the actual body. There is no upper shadow in this candlestick chart pattern.
The psychology behind the formation of this candle is that the prices opened up, and the sellers pushed the prices down.
Suddenly buyers came into the market and pushed the prices up and closed the trading session higher than the opening price.
This resulted in the formation of a bullish pattern, indicating that buyers have returned to the market and the downtrend may be over.
If a bullish candle is formed the next day, traders can enter a long position and place a stop-loss at the low of the hammer.

2) Piercing Pattern 

A piercing pattern is a multiple candlestick chart pattern that forms after a downtrend that signals a bullish reversal.
Two candles make it up, the first candle is a bearish candle which indicates the continuation of the downtrend.
The second candle is a bullish candle that opens the gap but closes more than 50% of the actual body of the previous candle, indicating that the bulls are back in the market and a bullish reversal is about to take place.
If a bullish candle is formed the next day, traders can enter a long position and place a stop-loss at the bottom of the second candle.

3) Bullish Engulfing

 Bullish engulfing is a multiple candlestick chart pattern that forms after a downtrend that signals a bullish reversal.
It is formed by two candlesticks, the second candlestick surrounds the first candlestick. The first candle is a bearish candle which indicates the continuation of the downtrend.
The second candle is a long bullish candle that completely engulfs the first candle and indicates that the bulls are back in the market
If a bullish candle is formed the next day, traders can enter a long position and place a stop-loss at the bottom of the second candle.



4) The Morning Star 

Morning Star is a multiple candlestick chart pattern formed after a downtrend indicating a bullish reversal.
It is made up of 3 candles, the first is a bearish candle, the second is the Doji and the third is a bullish candle.
The first candle indicates the continuation of the downtrend. Doji of the second candle indicates indecision in the market. The third bullish candle indicates that the bulls have returned and a reversal will take place.
The second candle should be completely outside the actual body of the first and third candles.
If a bullish candle is formed the next day, traders can enter a long position and place a stop-loss at the bottom of the second candle.

5) Three White Soldiers

The Three White Soldiers is a multiple candlestick patterns formed after a downtrend that signals a bullish reversal.
These candlestick charts are made up of three long bullish bodies that do not have long shadows and are open within the original body of the previous candle in the pattern.

Another Pattern of the candlesticks covers into next parts.



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