Bullish Harami:

Bullish Harami: candle pattern is a reversal pattern appearing at the bottom of a downtrend. It consists of a bearish candle with a large body, followed by a bullish candle with a small body enclosed within the body of the prior candle. As a sign of changing momentum, the small bullish candle ‘gaps’ up to open near the mid-range of the previous candle.

The opposite of the Bullish Harami is the Bearish Harami and is found at the top of an uptrend.

The Bullish Harami Cross

Traders will often look for the second candle in the pattern to be a Doji. The reason for this is that the Doji shows indecision in the market. The colour of the Doji candle (black, green, red) is not of too much importance because the Doji itself, appearing near the bottom of a downtrend, provides the bullish signal. The Bullish Harami Cross also provides an attractive risk to reward potential as the bullish move (once confirmed) is only just starting.

Simple Moving Average

 Simple Moving Average: Simple Moving Average or SMA is a moving average which is calculated by adding the closing price of security prices for the last n-periods and dividing it by the total number of time periods. For example, suppose we want to calculate the 9 periods SMA of a security price. First, we will add the last 9 Days Closing Price of the security and then it will be divided by the 9 periods. 

Calculation for 9 periods SMA: 

(P9+P8+P7+P6…. +P1)/9 

Where, P=Price  P9= Closing Price 9 days ago SMA is a Technical indicator which is represented by a line and it is directly plotted on the security price. As per the choice of the trader, the periods can be changed in the SMA indicator. For shorter-term SMA, we can use 5,8,13 etc. For Medium term 20, 34, 50 and for longer term 100,200 can be used. If a medium term moving average is having a positive slope, the trend is considered to be positive in medium term and vice versa. Price breaching a particular moving average from down to up is considered a bullish sign. Similarly, price breaching a particular moving average from upside and closing below is considered bearish. If we find a shorter term moving average crossing a medium term moving average from below, often this is called bullish crossover. On the other hand if a shorter term moving average crosses a medium term moving average from upside to below that is called a bearish crossover and often considered a signal of bearishness.

Doji:

Doji: The Doji is a single candlestick pattern. The Doji assumes significance, when it appears after a trending move, be it up or down. The Doji symbolizes indecision and after a Doji the incumbent trend can reverse, go sideways or continue uptrend. However, appearance of a Doji is a signal of caution that the probability is high that the erstwhile trend may be coming to an end. Doji is a candle which has open and close almost at similar level. There can be upper shadows and lower shadows of various proportions.

Dark Cloud Cover

  Dark Cloud Cover: The Dark cloud cover is a two candlestick bearish reversal pattern and much similar to the bearish engulfing pattern. In this pattern, the second candle, unlike the bearish engulfing pattern falls short of engulfing the first candle, instead it crosses 50% the body of the first candle. The confirmation comes when a candle breaches the bottom of the pattern. On confirmation a short trade can be taken with stop loss above the high of the candle.

Piercing Pattern

2. Piercing Pattern:

Piercing pattern is a multiple candlestick chart pattern formed after a downtrend indicating a bullish reversal.

Two candles form it, the first candle being a bearish candle which indicates the continuation of the downtrend.

The second candle is a bullish candle which opens the gap down but closes more than 50% of the real body of the previous candle, which shows that the bulls are back in the market and a bullish reversal is going to take place.

Traders can enter a long position if the next day a bullish candle is formed and can place a stop-loss at the low of the second candle.

Below is an example of a Piercing Candlestick Pattern:

Bullish Engulfing Pattern:

3. Bullish Engulfing:

Bullish Engulfing is a multiple candlestick chart pattern that is formed after a downtrend indicating a bullish reversal.

It is formed by two candles, the second candlestick engulfing the first candlestick. The first candle is a bearish candle that indicates the continuation of the downtrend.

The second candlestick is a long bullish candle that completely engulfs the first candle and shows that the bulls are back in the market.

Traders can enter a long position if next day a bullish candle is formed and can place a stop-loss at the low of the second candle.

Below is an example of Bullish Engulfing Candlestick Pattern:

Hanging Man

 Hanging Man: Hanging Man is a single candlestick bearish reversal pattern. This appears after a sustained up-move. The candle looks like a hammer; only difference is that it appears at the end of an up-trend. The candle should have a small body at the top (red/green) and a lower shadow at least twice the length of the body. There should be very small or no upper shadow. A red colored body of hanging man pattern is more bearish than a hanging man pattern with green body. The confirmation of the pattern happens when price moves below the low of the candle. On confirmation a trader may take short trade with stop-loss above the high of the candle. The hanging man pattern is bearish counterpart of Bullish inverted hammer. However this appears much less frequently than shooting star which is another bearish reversal pattern.

Inverted-Hammer

 Inverted-Hammer: An inverted hammer is a single candlestick bullish reversal pattern. The pattern appears after a sustained down-trend. At the beginning of the day there should be a gap-down opening. However, bulls should push the price higher during the course of the day. Eventually the bears should push the price lower during the course of the day and close near the open price. The resulting candle should have a small body, red or green, the upper wick should be at least twice the body of the candle and the lower shadow should be quite small or negligible in size. If the body is green it is relatively bullish than if it is red. This looks like an inverted hammer as the name suggests. The philosophy is that bears were not able to push the price below the opening price during the course of the day. This pattern, however, is considered to be little less bullish than the hammer itself, because in hammer bulls are able to force a higher close by the end of the day. The confirmation of the pattern comes once the price moves above the high of the candle. On confirmation a buy trade can be initiated with a stop loss below the low of the candle. Inverted hammer occurs little less frequently in market as compared to hammer pattern.

Shooting Star

Shooting Star: A shooting star is just like a mirror image of a hammer candle. First there should be a sustained up trend and then there has to be a gap up opening. The bulls should push price higher in the initial part of the day. Then, later in the day bears should take in the control of the stock and push prices down. Eventually the closing price should be very close to the opening price, resulting in a candle with a small green or red body, a big upper shadow and a small or negligible lower shadow. The upper shadow of the candle should be at least twice the length of the body. Now a confirmation of the shooting star pattern comes if price moves below the low of the candle within next 2-3 candles. On confirmation, a short trade should be taken with stop loss above the high of the high of the candle. A shooting star pattern with a red body is considered slightly more bearish than one with a green body. It is often observed that shooting star candlestick pattern acts as bearish reversal pattern and triggers a down move after an uptrend.

Wedge

  Wedge: The Wedge chart pattern can be either a continuation or reversal pattern. It is similar to a Symmetrical Triangle except that the Wedge Pattern slants in an upward or downward direction, while the symmetrical triangle generally shows a sideways movement. The other difference is that Wedges tend to form over longer periods, usually between three and six months. The fact that Wedges are classified as both continuation and reversal patterns, can make reading signals confusing. However, at the most basic level, a falling wedge in an uptrend is bullish and a rising wedge in a downtrend is considered bearish.

Flag and Pennant:

 Flag and Pennant: These two short-term chart patterns are continuation patterns that are formed when there is a sharp price movement followed by a generally sideways price movement. The patterns are generally thought to last from one to three weeks (Can last from 1 to 12 week but ideally they should last between 1 and 4 weeks). They can appear both in up-trend and down-trend.

Triangles:

Triangles: Triangles are one of the most well-known chart patterns used in technical analysis. The three most common types of triangles, which vary in construction and implications, are Symmetrical Triangle, Ascending Triangle and Descending Triangle. These chart patterns are considered to last anywhere from a couple of weeks (ideally more than 12 weeks) to several months. These are areas of consolidations after a trending move and are generally continuation patterns, i.e. the erstwhile trends resumes after the breakout. However, in certain cases they act as reversal patterns. They can appear both in up-trend and down-trend.

Triple Tops and Bottoms:

Triple Tops and Bottoms: These are another set of reversal chart patterns in chart analysis. These are not as prevalent in charts as Head and Shoulders and Double Tops and Bottoms, but they act in a similar fashion. These two chart patterns are formed when the price movement tests a level of support or resistance three times and is unable to break through. They signal a reversal of the prior trend. A trade entry is initiated at the break of a neckline with a small stop-loss and the target is measured as the distance between peaks/troughs and the neckline.

Double Tops and Bottoms:

Double Tops and Bottoms: These chart patterns are well-known patterns that signal a trend reversal – these are considered to be one of the most reliable patterns and are commonly used. These patterns are formed after a sustained trend and signal to chartists that the trend is about to reverse. These patterns are created when price movement tests support or resistance levels twice and is unable to break through. These patterns are often used to signal intermediate and long-term trend reversals.

Head and Shoulder & Inverse Head & Shoulder:

 4.1: Head and Shoulder & Inverse Head & Shoulder:

 Head and Shoulder pattern is a bearish reversal pattern. This pattern appears after an uptrend. This pattern is formed with three consecutive tops with middle one being higher than the other two. The middle top is called the head and the two side peaks are called the shoulders. On joining the intermediate troughs, we get the neck-line. On ultimate break below the neckline, usually a short trade is taken with a stop-loss above the top of the nearest shoulder. The target is usually considered as the distance between the neckline and head, projected from the point of break. If the volume in the down leg of the right shoulder is on the higher side and break happens with high volume, the conviction is on the higher side for the reversal.

An Inverse Head and Shoulder is just mirror image of the Head and Shoulder pattern. This should appear after a sustained down trend, the rule of stop loss and target are similar. This often acts as a very effective bullish reversal pattern.

Volume

Volume: In this section we introduce the second aspect of charting. This is called volume. Traded volume is the number of quantity of stocks which change hand. The volume is shown as a sub graph in the price-time chart, below the price window. Higher the volume in any particular move, the greater is the conviction in that move to continue greater distance in that direction. However, if volume is on the lower side during a move, the stock is generally bound to lose momentum. Generally, during range bound phases, the volume is low. 

Trend	Volume	Interpretation
Up	High	Up trend may go greater distance
Up	Low	Lack of conviction/ participation in uptrend. Likely to retrace.
Down	High	Down move may cover greater distance
Down	Low	Less conviction in the down move, may reverse

 2.1: Market Trend and Range-Bound Consolidation: Often market movements happen in the form of trends. A price trend is a continuous or a directional price movement in upward or downward direction. We call them up -trend and down -trend respectively. Now if we look at price action in market through charts, we will find that no price movement happens in a straight line. Suppose we are looking at a broader uptrend represented as primary move, we may find intermediate corrections represented as secondary trend and minor counter moves among the secondary moves represented as minor trend. This is how the market behaves generally in both the up and the down trends. Market Trends Often an up- trend is represented in the form of a sequence of higher highs and higher lows. Similarly a downtrend is represented as a sequence of lower lows and lower highs. A trend is said to reverse when the sequence is broken. 

Candlestick Chart

1.3: Candlestick Chart: The concept of candlestick charts came from Japan. That is why they are often referred to as Japanese candlestick charts. These charts are the most versatile and popular form of chart representation. Price behavior during each time unit is represented in the form of a candle. If the closing price of a stock is higher than open price during a particular time period, then the candle is green, if the close price is below the open price then the candle is red. Each candle has a body and two wicks. The distance between open to close is represented by the body of a candle and the upper and lower wicks represent the highs and lows of a candle.

Bar charts

 1.2: Bar Charts: A bar chart is comprised of a series of bars. Every bar has four important price points - open close high and low. The bars are represented in green or blue color when close is higher than open and red color when close is lower than open. The bar charts are more detailed than the line chart and are good for demonstrating or spotting the classical price patterns. We will discuss about the classical chart patterns in appropriate time.

Line Charts

 1.1: Line Charts: In line chart each and every price point is represented as a dot. The X axis represents the time scale and the Y axis represents the price. Each dot or point represents the closing price at the end of a unit of time. These points are then joined to form a line. This is the simplest form of chart. But this is quite good if we want to plot 3-4 similarly priced stocks in a single chart and compare. Moreover, the line chart gives the clearest idea about price direction of a stock.