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Candlestick Chart Tutorial

This tutorial introduces candlestick charts, which visually represent price movements of assets over time, highlighting key components such as open, close, high, and low prices. It outlines common candlestick patterns like Doji, Hammer, and Engulfing Patterns, explaining their significance in indicating market trends and reversals. Additionally, it offers guidance on how to effectively use these patterns in trading, emphasizing the importance of volume, support/resistance levels, and combining with other indicators.

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joycemoore1470
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39 views2 pages

Candlestick Chart Tutorial

This tutorial introduces candlestick charts, which visually represent price movements of assets over time, highlighting key components such as open, close, high, and low prices. It outlines common candlestick patterns like Doji, Hammer, and Engulfing Patterns, explaining their significance in indicating market trends and reversals. Additionally, it offers guidance on how to effectively use these patterns in trading, emphasizing the importance of volume, support/resistance levels, and combining with other indicators.

Uploaded by

joycemoore1470
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Here's a beginner-friendly **Candle Pattern Tutorial** to help you understand

**candlestick charts** used in trading (stocks, crypto, forex, etc.).

---

## 📘 What Is a Candlestick Chart?

A **candlestick chart** is a visual way to represent price movements of an asset


during a specific time period (e.g., 1 minute, 1 day, 1 week).

### Each candlestick shows:

* **Open**: Price when the period started


* **Close**: Price when the period ended
* **High**: Highest price during the period
* **Low**: Lowest price during the period

### Candle Parts:

* **Body**: Area between open and close


* **Wick (shadow)**: Lines above and below the body (high and low)
* **Color**:

* **Green (or white)**: Close > Open (bullish)


* **Red (or black)**: Close < Open (bearish)

---

## Common Candlestick Patterns

### 🔹 1. Doji

* Open ≈ Close → Very small body


* Signals **indecision** in the market.
* Types: Neutral, Long-legged, Dragonfly, Gravestone

### 🔹 2. Hammer 🔨

* Small body at the top, long lower wick


* Appears after a downtrend
* Bullish **reversal** signal

### 🔹 3. Inverted Hammer

* Small body at bottom, long upper wick


* After a downtrend
* Potential bullish reversal

### 🔹 4. Shooting Star 🌠

* Small body at bottom, long upper wick


* Appears after uptrend
* Bearish **reversal**

### 🔹 5. Engulfing Patterns

#### Bullish Engulfing

* Small red candle followed by large green candle that completely "engulfs" it
* Appears at the bottom of a downtrend
* Strong bullish reversal

#### Bearish Engulfing

* Small green candle followed by large red candle that "engulfs" it


* Appears at the top of an uptrend
* Strong bearish reversal

### 🔹 6. Morning Star 🌅

* Three candles:

1. Long red
2. Small candle (doji or small body)
3. Long green candle
* Appears at bottom of a downtrend
* Bullish reversal

### 🔹 7. Evening Star 🌇

* Opposite of Morning Star


* Appears at top of uptrend
* Bearish reversal

---

## 📈 How to Use Candle Patterns

1. **Confirm with Volume**: Strong patterns often come with high volume.
2. **Use Support/Resistance**: Patterns near key levels are more reliable.
3. **Combine with Indicators**: RSI, Moving Averages, MACD, etc.
4. **Look for Context**: Don’t rely on a single candle—consider trend, chart setup,
and fundamentals.

---

## Practice Resources

* **Free charting platforms**:

* [TradingView](https://tradingview.com)
* [Investing.com](https://investing.com)
* **Simulated trading apps**:

* Thinkorswim (TD Ameritrade)


* TradingView Paper Trading

Would you like diagrams for these patterns or a downloadable cheat sheet?

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