Multiple Candlestick Patterns Insights and Strategies Boost Your Trading

  1. Technical Analysis
    1. How Technical Analysis Can Help You Make Informed Decisions in Mastering Stock Trading
    2. Technical Analysis Setting Realistic Expectations
    3. Introduction to Technical Analysis and Assumptions
    4. Technical analysis for Profitable Trades Analyzing Open, High, Low, and Close
    5. Candlestick Charts How Line and Bar chart Enhance Market Analysis
    6. Japanese Candlesticks History, Anatomy From Ancient Japan to Global Trading Phenomenon
    7. Time Frames in Technical Analysis Unlocking the Power of Choosing the Right Interval for Successful Trading strategy
    8. Candlestick Patterns How to Identify and Interpret Trading Signals
    9. Marubozu and Bullish Marubozu Understanding What is Essential Single Candlestick Patterns for Traders
    10. Marubozu Candlestick Setting Stop Loss The Ultimate Guide to Trading Patterns
    11. Spinning Top Candlestick Navigating Downtrends A Trader’s Guide to Identifying Reversal Signals
    12. Spinning Top and Doji How to Interpret and Navigating Market Uncertainty
    13. Paper umbrella and hammer candlestick pattern Unlock Profitable Trades
    14. Hanging man candlestick pattern Profitable share market trading Strategies
    15. Shooting Star Candlestick Pattern Boost Your Trading Success Guide
    16. Engulfing Patterns and Bullish Engulfing Signals Unlock Trading Opportunities
    17. Bearish Engulfing and Doji for Trading Success Profitable Strategies with Candlestick Patterns
    18. Multiple Candlestick Patterns Insights and Strategies Boost Your Trading
    19. Bullish Harami Candlestick Pattern for Trend Reversal Strategies
    20. Shorting Guide using the Bearish Harami Pattern Trade Reversals with Confidence
    21. Morning Star Candlestick Pattern and Gap Analysis To Maximise Your Profits
    22. Evening Star Candlestick Pattern Learn How to Identify and Trade to Boost Your Trading Success
    23. Support and Resistance Basics A Comprehensive Guide to Setting Targets and Navigate the Markets with Confidence
    24. Support and Resistance Learn How to Draw and Identify Key Levels Unlocking Trading Opportunities
    25. Support and Resistance Advanced Trading Strategy Analysing Reliability and Optimisation
    26. Volume Trends How to Leverage for Successful Trading Strategy
    27. Volume Analysis A Key Checklist for Successful Stock Trading
    28. Moving Averages A Comprehensive Guide for Trend Analysis in Stock Trading
    29. How to Use Moving Averages for Profitable Trading Strategy and Potential Opportunities
    30. Moving Average Crossover Boost Your Trading Success with A Reliable Strategy
    31. Technical indicators How to Use Technical Tools for Better Decision-Making Unlocking the Power of Trading
    32. Relative Strength Index RSI Analysing Overbought and Oversold Signals to Boost Your Trading Strategy
    33. MACD How to Interpret and Utilize Moving Average Convergence and Divergence for Profitable Trading
    34. Bollinger Bands The Power of Indicators in Trading and checklist
    35. Fibonacci Retracements Unravelling the Power in Stock Markets
    36. Mastering Fibonacci Retracement A Step-by-Step Guide for Effective Trading
    37. Dow Theory Decoding Unveiling the Principles of Technical Analysis
    38. Dow Theory Patterns Unlocking Trading Opportunities with Double and Triple Formations
    39. Trading Range Explained chart indicator example strategy Profit from Market Ranges
    40. Flag Pattern and Range Breakout How to Capitalise Trading Beyond Boundaries
    41. Risk reward ratio Understanding RRR in Dow Theory
    42. Technical Analysis Tools for Traders Charting Software Guide Enhance Your Trading
    43. How to Select Stocks for Trading Success and Building Your Opportunity Universe
    44. Short Term Trading Unleashing the Power of Scalping Strategies
    45. ADX Indicator and 7 more indicator tools for Trend Strength Analysis
Marketopedia / Technical Analysis / Multiple Candlestick Patterns Insights and Strategies Boost Your Trading

The Piercing Pattern

The piercing pattern is similar to the bullish engulfing; however, the engulfing should be between 50% and 100%. This can be seen visually or calculated. For example, P1’s Open-Close range should be 12, while P2’s must be greater than 6 but less than 12.

Provided the criterion is fulfilled, this trade set-up has similarities to the bullish engulfing: a risk taker may initiate the trade on P2 near closing, while a more conservative trader may wait until they verify a blue candle before beginning the next day. The stop loss is found at the bottom of the pattern.

The Dark Cloud Cover

The dark cloud cover bears a similarity to the bearish engulfing pattern but with a subtle variation. In the latter case, the red candle on P2 encompasses all of P1’s blue one; in contrast, the dark cloud cover reflects just 50- 100% of it. The trade set-up itself is identical to that of the bearish engulfing pattern. Think of it as a reversal of a piercing pattern.

A perspective on selecting a trade

Generally, stocks belonging to the same sector tend to experience similar price movements. This can be seen by looking at two pairs such as TCS and Infosys or ICICI Bank and HDFC Bank. They are largely equal in terms of size and business, and their performance is affected by the same external factors. However, although their price changes may be similar, they won’t always match perfectly. 

For example, if the banking sector sees a negative article, it’s likely that banking stocks will decrease – Axis Bankmight see a drop of 3%, but SBI’s stock could go down by 2% or even 1.5%. As a result, both stocks could form different patterns on their candle charts – for instance, a bearish engulfing or dark cloud cover.

These two patterns are clearly identifiable. When making a trade, I would prefer to bet on the bearish engulfing pattern instead of a dark cloud cover- its energy is more powerful due to engulfing the earlier day’s full candle. 

While this selection criterion is mostly adhered to, I will introduce a 6-point trading checklist later in this module. If the trade satisfies 3-4 of these points, it may be qualified for consideration. For instance, if ICICI Bank stock showed a piercing pattern and HDFC Bank a bullish engulfing one, the latter may be more tempting to pursue. 


    Get the App Now