This document discusses various candlestick patterns used in technical analysis of stock markets. It describes bearish engulfing, bullish engulfing, hammer, hanging man, shooting star, morning star, and evening star patterns. For each pattern, it provides an explanation of the pattern formation and recommended trading strategies, such as whether to buy or sell upon pattern confirmation and using other technical indicators to determine price targets. The overall document serves to educate readers on key candlestick patterns and how they can be used to identify trend reversals and continuations in the market.

1. Stock MarketAnalysis
Candlestick Patterns
Himanshu Kumar (2101100047)
Mentor – Shlok Puri
Summer of Science 2022

2. Introduction
• Heavily utilized in technical analysis.
• The market's emotions are reflected
in candlestick patterns.
• Changes in emotion that provide
early indicators of a trend's reversal
or continuation.
• Displays the low, high, opening, and
closing prices for the specified time
period.
• The capacity to assess market
sentiment during a given period.

3. Bearish
Engulfing
Pattern
• When this pattern forms during an
uptrend, a top has formed.
• Markets start higher than the prior
close and close lower than the
prior open.
• This pattern suggests that
purchasing enthusiasm has been
beaten by selling pressure.
• Trading strategy:
Sell when a bearish engulfing
pattern forms.
Utilize other technical
indications to determine the aim.

4. Bullish
Engulfing
Pattern
• Formation of this pattern in a
downtrend indicates a
bottom formation.
• Markets open below the
previous close and end above
the previous open.
• This pattern indicates that
buying pressure has
overcome selling interest.
• Trading Strategy:
Buy on the formation of a
bullish engulfing pattern.
Determine the target using
other technical indicators.

5. Hammer
• Shows a long lower shadow and
a small body.The body can be
bullish (blue) or bearish (red)
• The longer the shadow and
smaller the body the more
bullish the pattern.A bullish
body gives a stronger signal than
a bearish body.
• The long shadow indicates
buying interest at lower levels.
• Trading Strategy:
Buy on a bullish candle close
after the hammer.
Determine target using other
technical indicators.

6. Hanging Man
• Shows a long lower shadow and a small
body.The body can be bullish (blue) or
bearish (red)
• The longer the shadow and smaller the
body the more bearish the pattern. A
bearish (red) body gives a stronger signal
than a bullish (blue) body.
• The pattern indicates that the market is
having problems moving higher and
selling interest is coming at higher levels.
• Trading Strategy:
Sell on a bearish candle close after the
hanging man.
Determine target using other technical
indicators.

7. ShootingStar
• This is a top reversal pattern.
• The pattern has a long top shadow
with a small body indicating selling
pressure at higher levels.
• Trading Strategy:
Sell on confirmation of the
shooting star pattern with another
bearish candle.
Determine target using other
technical indicators.

8. MorningStar
• This is a bottom reversal pattern.
• This is a three candlestick pattern.The
first candle is bearish, the second is
bullish with a small body and a gap
open below the close of the bearish
candle.The third candle is a bullish
candle confirming change in
sentiment.
• Trading Strategy:
Buy on a formation of the morning
star pattern.
Stop below the low of the middle
candle.
Determine target using other
technical indicators.

9. EveningStar
• This is a top reversal pattern.
• This is a three candlestick pattern.
The first candle is bullish, the
second is bearish with a small
body and a gap open above the
close of the bullish candle.The
third candle is a bearish candle
confirming change in sentiment.
• Trading Strategy:
Sell on a formation of the
evening star pattern.
Stop above the high of the
middle candle.
Determine target using other
technical indicators

10. Thank You