Six bearish candlestick patterns every traders must to know

 What is Candlesticks patterns -

Candlesticks patterns are used to predict the future direction of price movement. The most 16 common candlesticks patterns and use of them to identify the opportunities while trading.

 

What is the candlestick

 

A candlestick is a way to display the information about an asset’s price movement. It is one of the most popular components of technical analysis and to catch the price action on the movement.

 

The candlesticks have three basic features :

•   The body, which represents the open-to-close range
•   The wick. Or shadow, that indicates the intraday high and low
•  The colour, which reveals the direction of stock movement basically green body indicates a price increase and red body shows a price decrease.

 Before you start trading, its important to familiarize yourself with the basics of candlestick and the only way to understand is “PRACTISE READING CANDLESTICK PATTERNS”.

The best way to learn to read candlestick patterns is to practice entering and exiting trades from the signals they give. You can develop your skills in Demat – trading account, you may open by clicking below:

https://zerodha.com/?c=AY8398&s=CONSOLE

Six bearish candlestick patterns

Bearish candlestick patterns usually form after an uptrend and signal a point of resistance. Heavy pessimism about the market price often causes traders to close their long positions and open a short position to take advantage of the falling price.

 

Hanging man

The hanging man is the bearish equivalent of hammer : it has the same shape but forms at the end of an uptrend.

It indicates that there was a significant sell-off during the day, but that buyers were able to push the price up again. The large sell – off is often seen as an indication that the bulls are losing control of the market.

It formed like – 

Shooting star

The shooting star is the same shape as the inverted hammer, but is formed in an uptrend: it has a small lower body, and a long upper wick.

Usually, the market will gap slightly higher on opening and rally to an intra-day high before closing at a price just above the open – like a star falling to the ground. 

It formed like –  

Bearish engulfing

A bearish engulfing pattern occurs at the end of an uptrend. The first candle has a small green body that is engulfed by a subsequent long red candle.

It signifies slowdown of price movement and sign of an impending market downturn.

It formed like – 

Evening Star

The evening star is a three- candlestick pattern that is the equivalent of the bullish morning star. It is formed of a short candle sandwiched between a long green candle and a large red candlestick.

It indicates the reversal of an uptrend and is particularly strong when the third candlestick erases the gain of the first candle.

It formed like –

 

 Three black crows

The three black crows candlestick pattern comprises of three consecutive long red candles with short or non existent wicks. Each session opens at a similar price to the previous day but selling pressures push the price lower and lower with each close.

Traders interpret this pattern as the start of  a bearish downtrend as the sellers have overtaken the buyers during three successive trading days.

It formed like –

 

Dark cloud cover

The dark cloud cover candlestick pattern indicates a bearish reversal – a black cloud over the previous days optimism. It comprises two candlesticks; a red candlestick which opens above the previous green body and closes below its midpoint.

It signals that the bears have taken over the session pushing the price sharply lower. If the wicks of the candles are short it suggests that the downtrend was extremely critical.

It formed like –