Here in this blog, we are going to explain you, how to use candlesticks to confirm trading decision but first what is technical trading. You’re started trading you’ll know the feeling of sitting staring at the market wondering which way it’s going to move.
And our share prices tick up and down picking the right move, at the right time, can be the difference between making or losing thousands of rand.
If you’re looking to avoid the fear and indecision the comes with buy sell signal software with technical chart analysis could be your answer.
This quick tutorial will reveal 6 patterns that could easily save you 20000.
How does it work
The technical analysis applies the historical price action to help you make a buy and sell signal decision.
The most technical analysis is done using charts, which make trend is done using charts which trends and patterns easier to see. Consequently, technical analysis is sometimes called Chartists.
It’s a very different approach from the fundamental analysis: Chartist assumes that market and price are related to the psychology of the market participants more than the factors such as health and management of the relevant economic, sector or firm.
When does it work
Fundamentalist often scorns technical analysis on the ground that past price movement cannot predict what a share will do in the future.
No chart will ever tell you that Trevor Manuel is about to resign.
Black swan events (as they’re sometimes called) cannot be predicted with technical analysis. won’t even help you predict how all executives are running a company.
But wait is exceptionally good news with short-term timing (which is especially useful for gear traders)
So why is it useful for gear traders
The truth is between results presentation and trade updates or long period of time with is supposedly no relevant price news
Of course, shares will check up and down depend on where the currency moves and the cost related to the input factor but these number simply give an investor a rough idea of where the stock should be trading.
In the end, the shares price is driven by investor sentiment and when it comes to telling how investors are feeling hour to hour, day to day and week to week (the typical time horizon of a gear trade), technical analysis is very good.
Momentum indicator and oscillator, while valuable in fluctuating market, often become useless in strong bull trends like we have now. They continually throughout bought signals even though you would have closed your trade successfully long before pull-back came.
So today I’m going to skip the basic: moving averages, RSI, stochastic mac these and instead get straight to the fun stuff.
I’m going to show you six short-term candlestick patterns that you can use immediately as in extra confirmation that you’ve made the right trading decision.
How does a candlestick graph actually work
Here’s an example of a candlestick graph it’s going to give you all the same information as an open high low close graph but sometimes it’s easier to read at the glance at the top you’ve got the high price of the day over there at the top of the real body you’ve got the opening price. The case of a red candlestick it would be the closing price in the case of green candlestick the centre section also called the real body is red if the clothes are lower than green if the open is below the closer here in the case of the red graph we’ve got the closing price and at the tip of the bottom wake you’ve got the lowest price or the low shadow the low of the day okay now we’re ready to move on to some patterns.
Hammer
This is bullish signal is it occurs after a significant downtrend a hammer is identified by a small real body ie the small range between the open and closing price need a long lower shadow the low is significantly lower than the open high and close the body can be red or green that doesn’t matter and the the signal that you should buy.
The hanging man
It looks the same as a hammer but happens after a long uptrend and has the opposite meaning. They are identified by small real bodies (i.e. a small range between the open and closing price)and a long lower shadow. Their bodies can be red or green. The hanging man signal SELL.
The Gravestone Doji
This line signifies a turning point either bullish or bearish depending on the trend. It occurs when the open, close, and low are the same higher than the open, low, and closing price.
If the Gravestone Doji comes after a series of lower lows and lower highs (a downtrend) it’s time to BUY
The Doji Star
The Gravestone Doji might also come out as Doji Star. Doji’s represent indecision in the market and the star will be your signal that a reversal on the way.
If this comes after a rising bull trend then it’s time to SELL.
Dark Cloud Cover
The first line is a long green line and the second is a long red line. The second candle opens higher than the first. It’s more significant if the second body is below the center of the previous one (as in the picture).
If you see Dark Cloud Cover it’s time to SELL.
Harami
The harami means “pregnant” in English and indicates a decrease in momentum. It happens when the day body can fit entirely into the body of the day before.
If this happens after a bull trend if signals that it’s time to SELL.