Bearish Candlestick Patterns –Technical analysis
We already discussed the topic about Bullish Candlestick Patterns in our other blog, today in this Blog Candlestick patterns-Beginner Guide-Part 2 we are discussing about Bearish and Neutral Candlestick Patterns. This is the case when bulls run replaced by bears. In this pattern the seller has taken over buyers. This is the downtrend patterns, Here the prices of the stock are decreasing.
In this Pattern some people will exit the trade with loss or some may be waiting to take the entry near support level. Before investing you have to know about various Bearish Candlestick Patterns. The Trader should know where to enter or where to exit from the trade.
Candlestick patterns-Beginner Guide-Part 2
Bearish Candlestick Patterns includes various types they are
1.Bearish Engulfing
2.Bearish Piercing
3.Inverted Hammer (Shooting Star)
4.Bearish Harami (Inside Candle)
5.Bearish Marubozu
6.Evening Star
Neutral Patterns
1.Doji
2.Spinning Top
A)1. Bearish Engulfing
This is one of the most powerful candles when it is appeared in the Resistance Line it will give good results to the traders. If the Bearish candle should engulf or cover the Bullish Candle body fully is known as Bearish Engulfing.
This candlestick patterns shows the end of the bulls run and bears run started. Here the traders take the entry in downfall. Speed of the bears is very fast when we compared it into Bulls run why means in fear some of traders exit from the trade because the market will fall more.
2.Bearish Piercing
This is the trend reversal pattern. It indicates end of Bull runs and bear runs started. In this pattern on first day long bullish candle, followed by long bearish candle on second day. On second day candle opens higher than the previous day’s high, close within first day’s candle range, but below the mid-range of the candle. Whenever you see this candle, you can go for short.
3.Inverted Hammer (Shooting Star)
This is also the strongest candle whenever this candle shown in the Resistance line that stock will fall more. Here in this candle color does not matter either it will be Red or Green. This candle indicates that the price opened and traded higher in line but unable to sustain in the uptrend and sellers push that stock down the downtrend continue for some time.
4.Bearish Harami (Inside Candle)
Market is going in uptrend making higher highs formed a long bullish candle on first day on the second day price opens gap down it shows the selling pressure in market. The bears try to push down the prices and they try to close below the opening price ,But the closing should be above the opening price.
5.Bearish Marubozu
This is the bearish candlestick pattern. It has same long body and no Shadows the only difference is the color of the candles it can be Red or Green. A candle with an open equal to its high and a close equal to its low is known as a bearish Marubozu.
It functions as a trend reversal pattern if it does so during an uptrend indicating that the market sentiment has shifted and the stock is now bearish. A trader should look for opportunities to sell after the occurrence of a bearish Marubozu.
6.Evening Star
In this candle the first candle should be long green candle is showing up trend on the next day price opens gap up but trade within a narrow range, it makes a small body candle on the 3rd day the it is a large red candle which opens with the gap down below the second candle this shows the down Trend.
B)1.Doji
Doji indicates bearishness there are three types Dragonfly Doji, Long Legged Doji and Gravestone Doji. This indicates the trend reversal.
- Dragonfly Doji -A strong bullish candle indicates the end of bears run it looks like English Letter ‘’T’’.
- Long Legged Doji-It has a long upper and lower shadows; such candles indicate the indecision in the market. Only after clear trend is established then you can go for long or short.
- Gravestone Doji- This indicates failure in rally on the resistance level if you get this then after the conformation then you can go for short.
2. Spinning Top
Spinning Top indicates the indecision in the market regarding the future direction. You can see that doji candles have a shorter wick and no, or almost no body. On the other hand, spinning tops have longer wicks that extend to both sides, while the body is also longer, although the distance between the open and close should be small.
- An umbrella is made up of 2 candlestick patterns, the hanging man and the hammer. The hanging man indicates a bearish reversal pattern, whereas the hammer indicates the bullishness in the pattern.
- Long red and green here the green candle indicates the uptrend and red candle indicates the downtrend.
Note: All these candles are seen and can be studied in Trading view website, which is provides real time candle formation for a stock.
Conclusion
To conclude this candlestick patterns gives you the signal of movement in the market .Once you are get knowledge about the candles then only you can go for long or short position, otherwise big no for taking trade. Candlestick patterns are basically useful for the technical analysis of any stock.
Just like cars need to shift gears to gain momentum, on charts gears are shifted as we keep on getting fresh signals and new levels are reached.
Candlestick patterns-Beginner Guide-Part 2 in this article we tried to cover bearish and neutral patterns which we use in day to day life. Details are minimal but effective. Kindly let us know if need more information. We are happy to help you.
FAQ
1)why do candlestick patterns fail?
Candlestick patterns can vary from trader to trader, on basis of mindset also people will rush into take more trades. On news or results or in election time also the trade will go not in our direction. In market there is no 100% guaranteed we only do trade on basis of our assumptions and our studies.
2)Does colour matter in candlestick pattern?
The colour of the candles talks about the positivity or negative nature in market, whether buyers are there in the market or sellers are there in the market.
3)What do candlestick patterns predict?
Each candlestick represents one day’s worth of price data about a stock through four ways of information- the opening price, closing price, high price, and low price. The colour of the central rectangle (called the real body) tells investors whether the opening price or the closing price was higher.