Single Candlestick Patterns

Single Candlestick Patterns

1: Marubozu

What is the Marubozu Candlestick Pattern? 

A long candle with faint upper and lower shadows is the Marubozu pattern. The long, green true body of a bullish marubozu candlestick indicates that the bulls were in control throughout the day. No wicks were formed by higher or lower prices, and the stock closed higher than it started. The body of the bearish Marubozu candlestick is long and crimson. All day long, the bears held sway and drove the price lower. There were no wick-forming highs or lows, and it closed lower than it opened.

Two type of Marubozu candle

• Bullish Marubozu 
• Bearish Marubozu

How does a Marubozu candle work?

A strong message is conveyed by Marubozu candle patterns: the market is trending in a single direction. Despite having tiny wicks, this also holds true for Marubozu Open and Close candles, since the opposing side of the market was overtaken by purchasing or selling pressure.

Generally speaking, bearish Marubozu candles indicate that sellers are in complete control because they dominated the session in the desired direction, while bullish Marubozu candles indicate the opposite.

 2: Hammer Candlestick

     Two type of Hammer candlestick

• Bullish Hammer
• Bearish Hammer

In the stock market, the Red Hammer Candlestick pattern—also referred to as the bullish reversal candlestick pattern—is frequently seen at the bottom of downward trends. The red hammer candlestick pattern helps investors identify support and demand. The traders may be warned by the hammers that a downtrend might be about to reverse and that short positions might be covered once it has. Red hammer candlestick patterns, their identification, and trading tactics will all be covered in this article.

Hammer Candlestick

3: Spinning top

Two type of Spinning top

• Bulish spinning top
• Bearish spinning top

A short body in the centre and two long wicks on either side of it make up a spinning top candle. These two wicks should ideally have comparable lengths and a negligible opening-to-closing price change.

How does a spinning top candle work ?

A trading strategy using a Spinning Top candle is dependent on the risk tolerance of the trader, just like any other candlestick pattern. Furthermore, whether they offer short-term or long-term work is also significant.

For instance, the picture below demonstrates how the appearance of the Spinning Top candle caused the downtrend to reverse. It did not, however, occur immediately. Many traders would have seen the first candle following the Spinning Top as a signal for the continuation of the trend because it was extremely bearish.

Although there was a lot of volatility along the way, the price eventually moved upward, giving risk-tolerant bears an opportunity to profit from the short-term downward swing. Because of this, a spinning top is regarded as a recommendation rather than a powerful entry indication.

Risk-averse traders typically wait for three higher highs and lower lows for an uptrend and three lower highs and lower lows for a downtrend before opening a position. Since the second candle following the Spinning Top had a lower low than the first, signalling market volatility and indecision, you can see that there was also no strong confirmation of an uptrend.

In these situations, traders can choose a trading opportunity by incorporating information from other technical analysis tools.

The picture below, for instance, shows how to utilise trendlines in conjunction with a spinning top candle to identify a price breakout. Furthermore, this candle signalled a trend reversal because it was preceded by a strong advance.

Technical indicators can also be useful for elucidating market signals if you are familiar with them. To avoid larger than anticipated losses, it is crucial to always use risk management tools, as no technical tool can provide 100% accurate trade signals.

Planning a trading strategy is another area where using a demo account is beneficial. Make one for free, then practise opening trades and identifying candlestick patterns in a risk-free trading environment. To learn more about patterns,

4: Doji

A single candle used to create a short-term pattern is called a Doji candlestick. In Japanese, Doji means "the same thing." It's the ideal term for a candle with a very small body, meaning that the open and close prices are at or almost at the same level.

This is because bulls and bears have equal power and none is in charge. A Doji candle, which is dominated by wicks, frequently signifies market hesitation.

Both continuation and reversal patterns can be used to this kind of candlestick. The form of a candle and where it falls within the trend determine the signal that the Doji gives. 

Type of Doji candlestick

• Doji Star (Classic) 
• Long-legged Doji 
• Dragonfly Doji 
• Four-price Doji 
• Gravestone Doji

                                                 Doji star 

                            

With two wicks of comparable length and a relatively short body in the centre, a doji star candle resembles a cross. Either the end of a downturn or the final moments of an uptrend might produce this kind of candlestick. This could indicate a possible impending reversal and a weakening of the trend.

Long legged Doji

Similar to a doji star, a long-legged foji, also known as a "rickshaw man," has longer wicks on both sides. This kind of candle also indicates indecision because the market is significantly more volatile and there is no clear indicator of the next trend.

Both strong uptrends and downtrends can produce a long-legged doji candlestick formation, which indicates that the current trend may be nearing its end and that a reversal may be imminent.

Dragonfly Doji

The reverse of a gravestone doji is a dragonfly doji candlestick pattern.

With a body towards the top with a very lengthy lower wick and a much shorter upper wick, it is a bullish indicator. As a result, the open, high, and closing prices of a dragonfly doji candle are all quite near to one another.

Both uptrends and downtrends can produce this kind of candle, but it is seen to be stronger when it appears at the bottom of the downtrend and frequently signals an impending price reversal.

A dragonfly doji, which is present in the upswing, would suggest that it will continue. 

Four-price Doji

The four-price doji is an extremely uncommon pattern that resembles a horizontal line with the opening, closing, high, and low prices all at or close to the same level. This doji pattern indicates that the market is quite indecisive and has very little volatility. The four-price doji, like the neutral doji, can suggest that the trend is waning.

Gravestone Doji

The body of a gravestone doji candle is near the bottom, and the upper and lower wicks are significantly longer and shorter, respectively.

This bearish reversal pattern frequently occurs at the conclusion of an upward run. The gravestone doji indicates that although the bulls were able to push the market higher, they were unable to force a close close to the peak price of the candle. Because of this, the bears were able to pull the price back down, bringing the open, close, and low prices to about the same level. This could be a sign that the price direction is about to reverse.

The gravestone doji, on the other hand, would suggest that the downturn will continue if it is discovered.

How to trade the Doji candlestick

Since the doji candle by itself is typically insufficiently powerful to offer a conclusive trading signal, it is frequently combined with other technical analysis methods to bolster the conclusions.

Among the most often utilised instruments with a doji candle are the amount of support and resistance. For instance, the gravestone doji in the picture below closed close to the uptrend's resistance level. Bears forced the price to remain inside the trend channel, indicating that the higher price was rejected. The trend shifted because bears continued to push the price lower because they had a little more power over the market.

Finding two successive doji candles is another method of trading with doji candles; this typically indicates even more market indecision. A trend reversal frequently occurs when two candles appear in a trend channel one after the other.

Using a doji candle in conjunction with the RSI oscillator is another well-liked trading strategy. Doji candles, which indicate indecision, emerged in the uptrend, as seen in the graphic below. However, the RSI indicates that the instrument is overbought. The tendency reversed as a result of these two events. 

These are but a handful of possible doji candle positions. Remember that the emergence of these candlestick patterns is only a signal and does not ensure trend continuance or reversal. To avoid unanticipated losses in the event that the market moves against your prediction, it is imperative that you use risk management methods.