What are some of the patterns you can observe from candlesticks?

Hey Anon! I see Candlestick Analysis as a subset of Technical Analysis is extremely broad! People have conceptualized many different forms of candlestick patterns.

Some interesting bigger names include:

bearish dark cloud cover, evening star and three black crows. In addition, single bar patterns including the doji and hammer have been incorporated into dozens of long- and short-side trading strategies.

However not all patterns work well- the huge popularity of some of these has led some hedgefunds to execute trades quickly against such signals through deconstructed algorithms. However, that doesnt mean all candlestick opportunities are lost. I would suggest traders to understand where the stock is positioned based of technical indicators as a background when analysing candlestick patterns.

As Enk Loui said- candlestick patterns seem more of a gauge for investors to take positions. There is often a clear underlying news that causes the movement especially when it is a huge swing.

Heres an example of one typical pattern that you can observe/utilise when you are buying stocks!

Before that, perhaps you could refer to: https://seedly.sg/questions/how-to-get-started-... to get a rough understanding of how to "read" candles.

1) Bullish/Bearish Engulfing Candle (BEC)

A BEC pattern forms under these criteria:

a) Market must be in a clearly defined downtrend

b) First candle is bearish

c) Second candle is bullish

d) The bullish candle engulfs the body of the previous day's bearish candle

Lets use the example of Netflix Inc. (NFLX) to illustrate a BEC pattern.

Hence, when one identifies this pattern, it may be a good time to purchase the stock. In the above example, the share price of NFLX rallied from $253.67 on 26th December 2018 to $337.59 on 11th Jan 2019.

Of course, the entire market was rebounding on the prospects of a trade war truce between China and USA but candlestick patterns like the BEC give the investor a better gauge of when and whether they should enter the market.

Hope that helps!