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This is your go-to resource for demystifying the stock market from the scratch. Each day, we will present 10 carefully curated questions with answers that will cover essential concepts, strategies, and terminologies. Whether you have just entered into the market, or trying to starting your stock market journey, or looking to strengthen your foundation, our weekly post will guide you through the basics and beyond, making investing accessible and understandable for everyone. Happy reading.
Day 16: Basic Stock Market Concepts
Technical Analysis for Beginners:
1. What is Spinning Top?
A Spinning top is a
candlestick pattern that has a small real body with long upper and lower wicks
or shadows.
Like a doji it
also indicates indecision about the future trend of the market. However, the
spinning top gives us useful information about the current market condition. On
the basis of this information traders can make their positions in the market.
If the spinning top is
formed at the bottom in a down trend, it could mean that a bullish reversal
might happen. That means the market has made a bottom for the time being.
Conversely, if it is formed at the top in an uptrend, a bearish reversal might
happen. That means the market has made a top for the time being.
2. What is the
Three Inside Up Candlestick Pattern?
The Three Inside Up is a bullish reversal pattern that typically appears at the end of a downtrend. It signals a shift of sentiments of the market participants or a potential change in market direction from bearish to bullish. This candlestick pattern is consisted of three candles. The 1st candle is a large bearish candle. The 2nd candle is a small bullish or neutral candle. The third and final candle should be a big bullish candle that gives a closing above the high of the first candle.
The Three
Inside Up candlestick pattern indicates that buyers are active at this
level to push the price higher and they are gaining strength. As a result, the
selling pressure is decreasing leading to a potential beginning of an upward
movement. Or we can say that the strength of the buyers is higher than the
sellers.
3. What is the Three Inside
Down Candlestick Pattern?
The Three Inside Down is a bearish reversal pattern that typically
appears at the end of an uptrend. It signals a shift of sentiments of the
market participants or a potential change in market direction from bullish to
bearish. This Pattern is completely opposite pattern of the three inside up
Candlestick pattern. This pattern consists of three candles. The 1st candle is
a big bullish (green) candle the 2nd candle is a small bearish (red) or neutral
candle. The third or final candle should be a bearish candle which closes below
the low of the first candle confirming the strength of the sellers.
The Three inside down
candlestick pattern indicates that buyers are losing strength and
exhausted. Sellers have become active at this level to pull down the price
lower and they are gaining strength. As a result, the buying pressure is
decreasing leading to a potential beginning of a downward movement. Or we can
say that the strength of the sellers is higher than the buyers.
4.
What is the Three Outside Up Candlestick Pattern?
The Three Outside Up pattern is a three-candle
formation that forms on the chart indicating three trading sessions. It has
three candlesticks and is typically formed in a down trend or we can say
the pattern forms at the end of a down trend signaling a potential bullish
reversal to upside. It is considered a reliable pattern, offering traders an
opportunity to identify a shift from bearish to bullish market sentiment.
This pattern is formed over three trading sessions after a
recognizable downtrend, the first two sessions looks like a bullish engulfing
pattern.
The third candle confirms the pattern which is a reliable bullish
reversal pattern.
5. What is the Three Outside
Down Candlestick Pattern?
The Three Outside Down candlestick pattern consists of three
candlesticks that forms on the chart indicating three trading sessions. It has
three candlesticks and is typically formed in an uptrend trend or we can say
the pattern forms at the end of an uptrend, signaling a potential bearish reversal
to downside. It is considered as a reliable pattern, offering traders an
opportunity to identify a shift from bullish to bearish market sentiment.
This pattern is formed over three trading sessions after a
recognizable uptrend, the first two sessions look like a bearish engulfing
pattern.
The third candle confirms the pattern which is a reliable bearish
reversal pattern.
6. What is the Tweezer Top
Candlestick Pattern?
The Tweezer Top
candlestick pattern is a bearish reversal pattern consisting of two candles
forms at the end of an uptrend. The first candle is a bullish
one signaling a bullish trend continuation and the second one is bearish
which signals a potential reversal as it unable to surpass the high of the 1st
candle and closes lower. The two candles have the same high which marks the
resistance.
7. What is the Tweezer Bottom Candlestick
Pattern?
The tweezer bottom
candlestick pattern is a bullish reversal pattern consists of two candles. The
two candles are formed at the same height of support levels. This pattern forms
at the end of a down trend and indicates a potential shift of the market trend
from bearish to bullish.
This pattern signifies
that the market has exhausted at the support levels and signals a more buying
pressure may arise to absorb the selling pressure and consequently the market
tries to shift higher.
8. What is the Three White Soldiers
Candlestick Pattern?
The Three White Soldiers candlestick pattern consists of three candles forms after a
downtrend which indicates a bullish reversal pattern. The three candles which
are formed have no wick giving higher closings. This suggests that the buyers
have taken control of the market.
9. What is a Bullish Abandoned Baby Candlestick Pattern?
The bullish abandoned
baby candlestick pattern is a rarely found bullish reversal pattern forms after
a down trend. It consists of three candles. First one is a long bearish candle,
then a doji which gaps down, and thirdly a bullish candle that gaps up.
It indicates the end
of a down trend and buyers are gaining control over the market and trying to
push the price higher. We get the confirmation after forming the third candle
which opens gap up.
10. What is the Bullish Tri-Star Candlestick
Pattern?
The bullish tri-star
candlestick pattern is also a rarely found candlestick pattern indicating
bullish reversal signal. It forms with three doji candles in a row. The doji in
the middle forms at the lowest level of the pattern.
This pattern formation
reflects the complete indecision over the market after a recognized period of down trend. But with the formation of the third doji candle above the middle doji,
it suggests that the bears are losing control and buyers are gaining control
over the market.
If you have any other questions in your mind
relating to stock market basics or need any clarification, please put your
query into the comment box, We will try our best to clarify the same
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠 𝐈𝐧𝐬𝐢𝐠𝐡𝐭𝐬: Previous Topics
Weekly
Q&A for Stock Market Newbies - Part – 11
Weekly Q&A for Stock Market Newbies - Part – 12
Weekly Q&A for Stock Market Newbies - Part – 13
Weekly Q&A for Stock Market Newbies - Part – 14
Weekly Q&A for Stock Market Newbies - Part – 15
