Other Candlestick Forms

There are eight basic candle formations in candlestick analysis.

1. A long candle

A long candle represents a large price movement for the trading period.

•           The long green candle or ‘line' is a sign that buyers are firmly in control - a bullish candlestick

•           A long red line shows that sellers are in control - definitely bearish.

2. A short candle

A short candle represents a day of indecision and a balance point in the market.

3. Marabuzo

In Japanese Marubozu means close-cropped or close-cut. The meaning reflects the fact that there is no shadow extending from the body at either the open or the close. Marubozu are even stronger bull or bear signals than long lines as they show that buyers/sellers have remained in control from the open to the close there are no intra-period retracements.

Closing Marubozu

A Closing Marubozu has no shadow extending from the close end of the body, whether the federation is green or red. The red closing Marubozu (yasunebike) is considered a down trend candle and the green closing Marubozu is a stiff up trend candle.

Opening Marubozu

The Opening Marubozu has no shadow extending of the open cost end of the body if the body is green, there would be no lower shadow, making it a strong bullish line. The red Opening Marubozu, with no upper shadow, is a bearish line. The Opening Marubozu is not as strong as the Closing Marubozu.

4. Spinning Tops

Like a short period candle line, the Spinning Tops have small real bodies and with upper and lower shadows that are of greater length than the body's length and they represent indecision between the bulls and the bears. The colour of the body of a spinning top, along with the actual size of the shadows is not important. The small body relative to the shadows is what makes the spinning top.

DOJI

While the body of a candle line is so modest that the open and closing prices are equal, they are called Doji (simultaneous or concurrent) candles. The lengths of the shadows can vary. The absolute Doji session has the uniform opening and closing price, however, if the difference between the open and close prices is within a few ticks (minimum trading increments), it is more than okay to call it a Doji!

If the previous periods were mostly Doji, then a Doji period is not important. In almost all cases, a Doji by itself would not be significant enough to forecast a change in the trend of prices, only a warning of impending trend change. A Doji proceeded by a long green period in an uptrend would be meaningful. This particular combination of periods is referred to as a bearish Doji Star. A Doji means that there is uncertainty and indecision. According to Steve Nison in his book “Japanese Candlestick Charting Techniques”, Doji tend to be better at indicating a change of trend when they occur at tops instead of at bottoms.

5. Four Price Doji

This rare Doji line occurs when all four price components are equal that is, the open, high, low, and close are the same. This line could occur when a stock is very illiquid or the data source did not have any prices other than the close.

6. Long-Legged Doji

The Long-Legged Doji has long upper and lower shadows in the middle of the period's trading range, clearly reflecting the indecision of buyers and sellers. Through the trading period, the market moved lower and then sharply higher, or the reverse. It then closed at or very near the opening price. If the opening and closing are in the centre of the period's range, the line is referred to as a Long-Legged Doji. Long-legged Dojis, while they come after small candlesticks, show a surge in volatility and warn of a possible trend change.

7. Dragonfly Doji

The Dragonfly Doji, occurs when the open and close are close to or at at the high of the trading period. Like other Dojis, this one normally appears at market turning points. This Doji at the end of a downtrend is extremely bullish.

8. Gravestone

The Gravestone Doji is another form of a Doji period. If the upper shadow is quite long, it means that the Gravestone Doji is much more bearish. Prices open and trade higher all period only to close where they opened, which is also the low price for the period. This can only be interpreted as a failure to rally. Some Japanese sources claim the Gravestone Doji can be a bullish indication on the ground or at market low, not as beneficial a bearish one as it definitely portrays a sense of indecision and possible change in trend.