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We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- Multiple candlestick patterns evolve over two or more trading days.
- The bullish engulfing pattern evolves over two trading days. It appears at the bottom end of a downtrend. Day one is called P1, and day two is called P2.
- P1 is a red candle in a bullish engulfing pattern, and P2 is a blue candle. P2’s blue candle completely engulfs P1’s red candle.
- A risk-taker initiates a long trade at the close of P2 after ensuring P1 and P2 together form a bullish engulfing pattern. A risk-averse trader will start the business the day after P2, near the close of the day.
- The stop loss for the bullish engulfing pattern is the lowest low between P1 and P2.
- The bearish engulfing pattern appears at the top end of an uptrend. P2’s red candle completely engulfs P1’s blue candle.
- A risk-taker initiates a short trade at the close of P2 after ensuring P1 and P2 together form a bearish engulfing pattern. After confirming the day includes a red candle, the risk-averse trader will start the business the day after P2.
Will these analysis of candles only work on daily candle frame? or will it work on Intraday, weekly candle frame, etc…
It can be applied across all timeframes.
How where to I find zerodha pi software pls help me anyone if knows
Its no longer available, Kakavala. Please use Kite instead, it is far more powerful trading terminal 🙂
how does volume of trades in a OHLC candle at any given timeframe effect these patterns and trade trend
Prithuyash, there is a separate channel for volumes where I have discussed this. Check this – https://zerodha.com/varsity/chapter/volumes/
I didn\’t fully understand how the patterns fails
Which part is not clear, will be happy to explain.
Hey, can this multiple candle sticks patterns be used in lower time frames in intraday like 15 mints, 5 mints
Yes, you can. All candlestick patterns can be applied to all time frames.
hello sir … could you please recheck the video at 3.16 minute .. i think you unconsciously gave something minute wrong conceptions about bearish engulfing. please recheck sir i might be wrong if there is then please let me know sir.
This seems correct, not sure if I\’m missing any point 🙂
How to put a stoploss on piercing and dark cloud cover pattern ?
The high of the pattern works as as stoploss.
Sir, when will the morning n evening star trend fails?
Whenever the stoploss triggers.
Karthik,
Navya\’s comment seems to be rightbut it has not been corrected.
Rgds
Hi Karthik and team, just wanted to check and know if these videos are updated or not? Is there any changes in the content which is not here?
Btw, these videos are really really helpful
Regards
Robin
No changes in candlestick content Robin.
who is watching in 2024 ???????????????
Me 🙂
What to do if we have multiple patterns with in a timeframe, for example in case of Haveles engulfing pattern is also visible with piercing pattern(3-4 candles before piercing pattern) ?
Stick to the first pattern and go with it till either the SL is hit or the target is achieved.
Sir,
Your service is most appreciated.
Hindi men bhi video banaiye, please.
Thanks Rajesh. Do check this – https://www.youtube.com/watch?v=b6NP2fIThPQ&list=PLX2SHiKfualF-SttTwLvqnMViSbfxOHCY
Hi! In the chart of Reliance that is shown in the video (when bullish engulfing pattern is being explained), we can also see that on 1st Aug 19 there was a very good and convincing bullish engulfing pattern that was formed (with greater than average volumes + RSI was 27 on P1 and 32 on P2) but failed.
So, is there any other way in which we can confirm whether the trend will reverse or not?
No Souvik, there is no convincing way to figure that with conviction. These are all estimates only 🙂
The reliance chart that is shown as an illustration, has another bullish engulfing candle, however this didn\’t lead to a trend reversal, any possible explanation for that ?
Sir what is the difference between bullish harami and piercing pattern?? towards the end of a downtrend ,a red candle will be formed on day p1 and on day p2 green candle with gap up and engulfing half of red candle,can I consider this as bullish harami??
Yes, in BH the candle on P2 is contained within P1 and in PP, the candle on P2 is half or more (but not entirely) of P1 candle. When looking at candlesticks, more than the pattern itself, you need to pay attention to the price action. I\’ve discussed it here – https://www.youtube.com/watch?v=1kQjXFL4Mfc
Sir , will all this be applicable if we see it on a 15 min chart or a 5 min chart for intraday trading ? but it is too difficult to identify the trend if we analyis a single day chart on 5 to 15 min time frame how to resolve this ?
Yes, that would be ok too.
Sir, what is price action?
I didnt understand. Please Explain
Sir, what do u mean by buyers are in control or sellers r in control
It is just that they are more active compared to other market participant.
How come the open of D2 is priced lower than close of D1. What caused the price to drop between the close of D1 & open of D2.
Its just dad to day trading activity 🙂
A man of golden heart love you sir
Happy learning 🙂
At 3:14 of the video, notice that you erroneously mentioned D2 Close > D1 Open, this has to be D2 Close < D1 Open
Apologies for that, let me see what best we can do about that.
Yeah I too confused when you are explaining…please make the corrections ASAP.
Sorry, which part?
Hi, Is there a book available on Zerodha Versity?
No physical book. Everything is available online.
Very interactive learning video. Appreciate the efforts made
Happy learning!
thank you sir , I was clearing the doubt because in video Prateek says the close of day 2 is greater then day 1
Ah ok. Let me check the video again to get the context right.
sir , in bearish engulfing does the day 2 close < day 1 open
Yes, day 2 has a lower close compared to day 1.
The video talks about the three candlestick patterns and has a reference to dojis and spinning tops about which there was no mention in the last video…please clarify.
You can check that here – https://zerodha.com/varsity/chapter/single-candlestick-patterns-part-2/
No problem, your efforts are really appreciable!
Happy learning!
At 3:14 of the video, notice that you said the CLOSE of D2 is greater than the OPEN of D1. That is absolutely false according to me. Do check and do the necessary corrections in the video ASAP as it may be misleading for new investors/traders like me. BTW, love your explanations and continue doing the good work😊👍!
Navya, let me check that. Thanks for pointing it out 🙂
Hi Karthik, seems to be erroneous statement at interval 15:50 – 16:11. It should be \’bears are in full control\’ and not \’bulls are in full control\’, since it\’s a downtrend. Please review once.
Let me check this, Satyakam.
Wont this be a sign of a reversal..?!
Almost all candlestick patterns indicate reversals 🙂
As the Green Candle open is higher than the previous Red candle close it doesn\’t satisfy the BULLISH ENGULFING PATTERN condition the trend will not change and will continue the down
Yes, Suresh. It is ok if there is a small gap up compared to P1.
Sir,
If we have downtrend move and the last candle of that down move
Is red and next candle is green in which it\’s open is higher than privious day red candle close and the close of green candle is higher than open of red candle .
Now what will happen
That seems like a variation of a bullish engulfing pattern. You can go long provided you are satisfied with all other things in the checklist.