What are the factors to be considered in a Candlestick chart(difference-candlestick-chart-pattern)?
To estimate the most excellent entry and exit place in the stock market, equity experts examine the market movement with the candlestick charts.
These stock charts allow them to choose on the best entry and exit price for a specific stock based on a few factors.
Technical analysts are those who examine and study the candlestick charts. According to them, the patterns of a candlestick are shaped based on human emotions.
Profitable buy and sell decisions are formulated by the trading techniques involved in the form of stock tips by the experts.
It is essential to keep in mind regarding a specific chart at a particular point in time that is indicated in its price.
The whole thing in the chart is slow and can be utilized only as a secondary tool. Below example for crude oil daily chart
The following factors are to be considered while studying the candlestick charts difference-candlestick-chart-pattern.
Where are the buyers and sellers?
The location of buyers and sellers are able to be tracked with the help of candlestick charts with those in power.
The market will be trending up if the buyers are in power and vice versa, if the sellers are in power, the trend will be in downtrend.
The market trend is identified with the help of candlesticks charts and opportunities to trade with the trend can be sorted out.
How are chart patterns formed?
Whenever there is a possible trend reversal, the candles make patterns. Some of the commonly used chart patterns include: Head and shoulders pattern, double top and double bottom pattern.
An Uptrend or a down trend market, the head and shoulder pattern will be formed.
This can be used to make trades in the opposite direction to the current trend.
In a bull market, the double top formation happens which is also a reversal signal.
In a down trending market, the double bottom pattern is formed and this can also be a trend reversal signal.
How are Candles shaped?
A bull phase and or a bear phase can be identified with the help of candles by analysts to choose upon the trend.
Likely trend reversals can also be indicated by candles.
Some of the commonly used patterns are Doji, shooting star and hammers.