Only when a trader knows how to “read candlesticks“, he will be able to understand what the patterns tell him about the underlying market dynamics, the behavior of traders, and whether buyers or sellers are in control.
Bullish candlestick patterns may form after a market downtrend, and signal a reversal of price movement. They are an indicator for traders to consider opening a long position to profit from any upward trajectory.
A candlestick is a way of displaying information about an asset’s price movement. Candlestick charts are one of the most popular components of technical analysis, enabling traders to interpret price information quickly and from just a few price bars.
Stock chart pattern are lines and shapes drawn onto price charts in order to help predict forthcoming price actions, such as breakouts and reversals. They are a fundamental technical analysis technique that helps traders use past price actions as a guide for potential future market movements.
Stock charts, like all other charts, have two axis—the vertical axis and the horizontal axis. The horizontal axis represents the historical time periods for which a technical chart has been constructed. The vertical axis displays the stock price or the trading volume corresponding to each period.
Technical analysis proponents take the position that factors such as sales growth, profitability, debt and cash on the balance sheet, and the industry in which a company operates are already priced into the company’s shares.