S3 E3 : CANDLESTICK PATTERNS 101 ( BULLISH BEARISH )
“How Candles Tell Stories of Buyers and Sellers”
🕯️ What is a Candlestick?
A candlestick is a small box that shows how a stock moved during a certain time — like 1 day or 5 minutes.
It tells you:
-
Where the price started
-
Where it went highest
-
Where it went lowest
-
Where it ended
All this inside one tiny candle on the chart.
🟩🟥 Two Main Types:
🟩 Green Candle = Price went up
- Buyers were stronger
- Stock closed higher than it opened
🟥 Red Candle = Price went down
- Sellers were stronger
- Stock closed lower than it opened
🎭 Each Candle Tells a Story
Let’s look at some basic ones:
1. ✅ Bullish Engulfing
- A small red candle → followed by a big green candle
- It “eats” the red one completely
- Meaning: Buyers took control strongly
= Possible uptrend coming
2. 🚫 Bearish Engulfing
- A small green candle → followed by a big red candle
- Sellers overpowered buyers
= Warning of downtrend
3. ✋ Doji
- Looks like a cross (+)
- Open and close are almost same
- Buyers and sellers fought evenly
= Confusion. Wait and watch.
4. 🔼 Hammer
- Small body, long bottom wick
- Price went down but came back up
= Buyers fought back hard
= Possible bounce upward
5. 🔽 Shooting Star
- Small body, long top wick
- Price went up but dropped
= Sellers pushed price down
= Possible fall coming
🏢 Real Example: Zomato
Let’s say Zomato was ₹140 in the morning.
-
It dipped to ₹135
-
Then bounced and closed at ₹145
This will form a hammer candle
A trader might think:
"Buyers are back. I’ll watch if more green candles come tomorrow.”
⚠️ Don’t Trust One Candle Alone
One candle is just one sentence.
You need to read the full story — what came before and after.
That’s why traders wait for:
-
Confirmation
-
Volume
-
Support/resistance
🧠 Recap:
✅ Candlesticks show stock’s price action in a simple shape
✅ Green = Price went up; Red = Price went down
✅ Patterns like Hammer, Doji, Engulfing give clues
✅ But don’t act on one candle — wait for full story
✅ It's like reading emotions of the market