BQLearning: What Are Doji, Morning Star Doji And Hammer Candlesticks?
This episode explains the Doji, Morning Star Doji and Hammer candlestick patterns in a trade.
BQ Learning is a special show that seeks to demystify financial markets, economic theories, legal processes and political structures.
In this series, we explain how technical analysis works; how to identify trading opportunities through it and decode various concepts associated with it.
Doji
A Doji candlestick indicates indecision between buyers and sellers in the stock market and it may signal a price reversal or trend continuation.
A Doji is formed when a stock’s open and close are virtually equal. The length of the upper and lower shadows—the high and low of the day, respectively—can vary, and the resulting candlestick looks like a cross.
Morning Star Doji
A Morning Star Doji is used by stock analysts to predict price movements of a security, derivative or currency over time. It comprises three candles—a large red candlestick, a small-bodied candlestick, and a green candlestick.
- The first is a long bearish candle, indicating a long move down.
- The second is a short candlestick indicating price consolidation and indecision.
- The third is a long bullish candlestick, gaping higher than the previous candlestick.
This indicates reversal and beginning of a new uptrend. In contrast, an Evening star Doji identifies an upcoming downtrend.
Hammer
A hammer is a price pattern that occurs when a stock trades significantly lower than its opening price, but rallies to close near its open. It suggests the market is attempting to determine a bottom.
Watch the full video here:
Watch the other episodes of BQLearning Technical Analysis series here:
Episode 1: BQLearning: Technical Analysis For Beginners
Episode 2: BQLearning: How Support And Resistance Levels Help To Identify Trading Opportunities
Episode 3: BQLearning: Decoding Breakout, Breakdown, Gap Up & Gap Down
Episode 4: BQLearning: How To Read Price Bars And Candlestick Charts
Episode 5: BQ Learning | What Are Moving Averages And How To Analyse Them
Episode 6: BQLearning: The Significance Of MACD Indicator
Episode 7: BQLearning: What Is Relative Strength Index?