Indian Stock Exchange Nse/Bse Candlestick Pattern Part2

INVERTED HAMMER

While it is a bullish formation, inverted hammer rather than being an indication of 

exact point of reversal of trend, normally gets formed as a first step in process of reversal 

of trend from bearish to bullish. This formation is an indication that the bulls have made 

their first attempt to fight back. Long upper wick indicates that some selling pressure did 

emerge at a higher level. The appearance of an inverted hammer requires more 

confirmation in terms of breakout of prices above downward sloping trend line along with a gap up opening on the day after the formation appeared.

BULLISH BELT HOLD

Formed after a southward trend, a bullish belt hold formation gives first indication of

a possible change in trend from bearish to bullish. The difference between it and other

bullish candle formations is that if the bullish belt hold formation gets confirmed by

subsequent moves. Which should come in form of stock price staying above the lows

formed in this formation, reversal in trend lasts for a longer time period. If accompanied by

higher volumes, then the probability of the bulls making a comeback increases

BULLISH ENGULFING

This formation has a higher probability of successfully indicating a change in an

ongoing trend. Traders need to check where the bullish engulfing pattern has emerged. If it

is appearing after a phase of downward movement, it is indicative of possible reversal

from bearish to bullish. If it appears after a sideways movement or just after a short

correction of two to four trading sessions with shallow price damage, it may be an

indication of resumption of the upward trend. So, a Bullish Engulfing pattern may be a

reversal pattern or continuation pattern. Longer the second green candle, stronger the

strength of bullish indication emerging on the charts