Candlestick Analysis Guide

Candlestick Chart Analysis

Candlestick charts are a powerful tool for understanding price movements and identifying potential trading opportunities. This guide will help you read and interpret candlestick patterns on Blanket's stock charts.

Understanding a Single Candlestick

Each candlestick represents price action for a specific time period (day, week, month, etc.) and shows four key pieces of information:

• Open Price - The price at the start of the period
• High Price - The highest price during the period
• Low Price - The lowest price during the period
• Close Price - The price at the end of the period

Candlestick Components

• Body - The rectangular part showing the range between open and close
• Wick/Shadow - The thin lines above and below the body showing high and low
• Color - Typically green (or white) for price increase, red (or black) for price decrease

Basic Candlestick Patterns

Bullish Patterns (Potential Price Increase)

• Green/White Candles - Close higher than open, indicating buying pressure
• Long Lower Wick - Sellers pushed price down, but buyers brought it back up
• Small Body with Long Wicks - Indecision, potential reversal

Bearish Patterns (Potential Price Decrease)

• Red/Black Candles - Close lower than open, indicating selling pressure
• Long Upper Wick - Buyers pushed price up, but sellers brought it back down
• Large Red Body - Strong selling pressure

Common Candlestick Patterns

1. Doji

A candlestick where open and close are nearly the same, creating a small body. Indicates indecision and potential reversal.

2. Hammer

A small body at the top with a long lower wick. Often signals a potential bullish reversal after a downtrend.

3. Shooting Star

A small body at the bottom with a long upper wick. Often signals a potential bearish reversal after an uptrend.

4. Engulfing Patterns

When one candle completely "engulfs" the previous candle's body. Bullish engulfing (green engulfs red) suggests upward momentum; bearish engulfing (red engulfs green) suggests downward momentum.

How to Use Candlestick Charts on Blanket

Step 1: Access the Chart

Navigate to any stock page and locate the price chart section.

Step 2: Select Candlestick View

If available, switch from line chart to candlestick view using the chart type selector.

Step 3: Choose Time Period

Select the time period (1D, 1W, 1M, etc.) that matches your analysis timeframe.

Step 4: Identify Patterns

Look for:

• Sequences of candlesticks forming patterns
• Changes in candle size and color
• Wick lengths indicating support or resistance
• Patterns at key price levels

Interpreting Patterns

Support and Resistance

• Support - Price level where buying interest is strong (often shown by long lower wicks)
• Resistance - Price level where selling interest is strong (often shown by long upper wicks)

Trend Identification

• Uptrend - Series of higher highs and higher lows, mostly green candles
• Downtrend - Series of lower highs and lower lows, mostly red candles
• Sideways/Consolidation - Price moving in a range, mixed candle colors

Important Considerations

• Patterns are not guarantees - They indicate possibilities, not certainties
• Context matters - Consider overall market conditions and company fundamentals
• Volume confirmation - Patterns are stronger when accompanied by high trading volume
• Timeframe matters - Patterns on longer timeframes are generally more reliable
• Combine with other analysis - Use candlestick patterns along with fundamental analysis and Blanket Pulse Rating

Best Practices

• Start by understanding basic candlestick components
• Practice identifying patterns on historical charts
• Don't rely solely on patterns - use them as one tool
• Consider the overall trend, not just individual candles
• Use patterns to confirm other signals, not as standalone indicators