Technical analysis we read candles, this technique was invented by Munehisa Homma, a Japanese rice trader in the 18th century. Introduced to the world by Steve Nisson in his book Japanese Candlestick Charting Techniques, which was first published in 1991. Munehisa Homma is God of Trading and they knew Technical Analysis is for Wealth Generation.
We all know that there is always something going on in the market. Sometimes the market goes up and sometimes it goes down. Which captures that moment in the form of candles.
Green-white candles open at lows and close at highs, indicating that the market is moving up, and red-black candles open at highs and close at lows, indicating that the market is moving down.
Technical analysis is universal, so we can analyze any market in the world, Moreover we can analyze each time frame. A candle represents a time frame.
Technical Analysis
Candlestick Pattern
Some candlestick patterns that are mostly used, when u see these pattern on the chart that means market will be reversed.
Bullish Candlestick Pattern, Technical Analysis is for Wealth Generation
1. Hammer Technical Analysis is for Wealth Generation
This candlestick formation involves a small body so that the open, high, low and close are approximately the same. Below the body is a long lower wick that should be more than twice the length of the candle body. When Hammer and Inverted Hammer patterns are formed, it means that the downtrend is about to end and the uptrend is about to start from here.
As the name suggests, hammer-shaped candlesticks have a long wick and a short top. The inverted hammer is like an inverted version of the hammer. It is a candle whose upper wick is longer and lower wick is shorter.
Hammer (Bullish)
2. Morning Star Analysis is for Wealth Generation
The Morning Star is a pattern of 3 candles of which the first candle is bearish which is large or medium indicating the presence of sellers in the market.
The second candle is a small size bullish candle which sees the presence of sellers and the presence of buyers.
The third candle is a large bullish candle that eliminates the presence of sellers and indicates the presence of buyers thereby reversing the trend.
Morning Star (Bullish)
3. Three White Soldiers Technical Analysis
Three white soldiers that form 3 consecutive bullish formations indicate that the market has reached a bullish trend and the market will rise.
4. Engulfing Technical Analysis is for Wealth Generation
Engulfing is the end of a downtrend, in which a large bullish candle completely engulfs its previous bearish candle. Consequently when the stock market climbs above key levels it is an important price action signal. These key levels include support levels, demand areas, trend lines, etc.
5. Bullish Harami Technical Analysis
The Bullish Harami forms a bullish reversal pattern, which is the exact opposite of engulfing. Bullish Harami consists of a smaller bullish candle in front of a larger bearish candle which is placed right in the middle of the bearish candle.
Market appears bullish, you can confirm the reversal using various tools such as market structure and price momentum. Most traders wait for the formation of a higher high before entering the trade.
6. Doji (Bulish/Bearish) Technical Analysis
The doji candle is formed when the opening and closing of a candle are almost equal.Doji candles appear as small to medium-sized candlesticks with small candle bodies. The body of the smaller candle reflects the inability of buyers to push prices higher and the inability of sellers to push prices lower.
Therefore if we know about just 2 doji candles then that will be enough. The Dragonfly Doji is considered as a bullish reversal pattern, while the Gravestone Doji is interpreted as a bearish reversal pattern.
Bearish Candlestick Pattern Technical Analysis is for Wealth Generation
1. Hanging Man
The Hanging Man is formed in an uptrend where trend reversal occurs, in which the shadow is long and the body is short, no matter what color it is formed in.
Only difference is that the Hammer is formed at the end of a down trend and the Hanging Man is formed at the end of an up trend.
2. Bearish Engulfing
Bearish engulfing is comprising two consecutive candles, in which the first candle opens with a gap and the one that closes upward is the bullish candle. Consequently The second candle also opens the gap up and closes downward, completely engulfing the first candle.
3. Advanced Block
An advance block consists of three consecutive candles that close above the high of each previous candle and open at the low of each previous candle. Consequently every candle appear that have progressively shorter from his last candle. Shadow gradually become taller especially the shadow of the last candle.
4. Bearish Harami
The Bearish Harami consists of two consecutive candles. The first candle is bullish and the second candle is bearish, which is formed between the first candles. if this pattern is formed in an uptrend, the trend reverses from there.
5. Evening Star
An Evening Star consists of three consecutive candles. In this, the first candle is bullish, the second candle opens the gap up from above and forms a small body and the third candle is bearish.
6. Belt Hold
Belt Hold is a Single candlestick pattern this is a bearish candle, opens near the low and closes near the high with no upper shadow. if candle larger then gives us the better the conformation and With attention to take a trade.
If you understand the above mentioned information better, the conclusion is that technical analysis is for wealth generation.
