explain term bull and bear market: Explained शेअर बाजार कोसळला! जाणून घेऊया ‘बुल’ आणि ‘बेअर मार्केट’ची स्थिती - understanding the term bull and bear market
understanding the term bull and bear market Marathi News from Maharashtra Times , TIL Network
Bearish Harami Definition
What Is a Bearish Harami?
A bearish harami is a two bar Japanese candlestick pattern that suggests prices may soon reverse to the downside. The pattern consists of a long white candle followed by a small black candle. The opening and closing prices of the second candle must be contained within the body of the first candle. An uptrend precedes the formation of a bearish harami.
This can be contrasted with a bullish harami.
Image by Julie Bang © Investopedia 2020
Key Takeaways A bearish harami is a candlestick chart indicator for reversal in a bull price movement.
It is generally indicated by a small decrease in price (signified by a black candle) that can be contained within the given equity’s upward price movement (signified by white candles) from the past day or two.
Traders can use technical indicators, such as the relative strength index (RSI) and the stochastic oscillator with a bearish harami to increase the chance of a successful trade.
Bearish Harami Explained
The size of the second candle determines the pattern’s potency; the smaller it is, the higher the chance there is of a reversal occurring. The opposite pattern to a bearish harami is a bullish harami, which is preceded by a downtrend and suggests prices may reverse to the upside.
A bearish harami received its name because it resembles the appearance of a pregnant woman. “Harami” is the Japanese word for pregnant.
Traders typically combine other technical indicators with a bearish harami to increase the effectiveness of its use as a trading signal. For, example, a trader may use a 200-day moving average to ensure the market is in a long-term downtrend and take a short position when a bearish harami forms during a retracement.
Trading a Bearish Harami
Price Action: A short position could be taken when price breaks below the second candle (harami candle) in the pattern. This can be done by placing a stop-limit order slightly below the harami candle’s low, which is ideal for traders who don’t have time to watch the market, or by placing a market order at the time of the break. Depending on the trader’s appetite for risk, a stop-loss order could be placed above either the high of the harami candle or above the long white candle. Areas of support and resistance might be used to set a profit target.
Indicators: Traders can use technical indicators, such as the relative strength index (RSI) and the stochastic oscillator with a bearish harami to increase the chance of a successful trade. A short position could be opened when the pattern forms and the indicator gives an overbought signal. Because it is best to trade a bearish harami in an overall downtrend, it may be beneficial to make the indicator’s setting more sensitive so that it registers an overbought reading during a retracement in that trend. Profits could be taken when the indicator moves back into oversold territory. Traders who want a larger profit target could use the same indicator on a larger time frame. For example, if the daily chart was used to take the trade, the position could be closed when the indicator gives an oversold reading on the weekly timeframe.
Doji
What Is a Doji?
A doji—or more accurately, “dо̄ji”—is a name for a session in which the candlestick for a security has an open and close that are virtually equal and are often components in patterns. Doji candlesticks look like a cross, inverted cross or plus sign. Alone, doji are neutral patterns that are also featured in a number of important patterns.
A doji candlestick forms when a security’s open and close are virtually equal for the given time period and generally signals a reversal pattern for technical analysts. In Japanese, “doji” means blunder or mistake, referring to the rarity of having the open and close price be exactly the same.
Key Takeaways A doji is a name for a session in which the candlestick for a security has an open and close that are virtually equal and are often components in patterns.
Alone, doji are neutral patterns that are also featured in a number of important patterns.
Doji formations come in three major types: gravestone; long-legged; and dragonfly.
Depending on where the open/close line falls, a doji can be described as a gravestone, long-legged, or dragonfly.
Image by Julie Bang © Investopedia 2019
What Does a Doji Tell You?
Technical analysts believe that all known information about the stock is reflected in the price, which is to say the price is efficient. Still, past price performance has nothing to do with future price performance, and the actual price of a stock may have nothing to with its real or intrinsic value. Therefore, technical analysts use tools to help sift through the noise to find the highest probability trades.
One tool that was developed by a Japanese rice trader named Honma from the town of Sakata in the 18th century, and it was introduced to the West in the 1990s by Steve Nison: the candlestick chart.
Every candlestick pattern has four sets of data that help to define its shape. Based on this shape, analysts are able to make assumptions about price behavior. Each candlestick is based on an open, high, low, and close. The time period or tick interval used does not matter. The filled or hollow bar created by the candlestick pattern is called the body. The lines that extend out of the body are called shadows. A stock that closes higher than its opening will have a hollow candlestick. If the stock closes lower, the body will have a filled candlestick. One of the most important candlestick formations is called the doji.
A doji, referring to both singular and plural form, is created when the open and close for a stock are virtually the same. Doji tend to look like a cross or plus sign and have small or nonexistent bodies. From an auction theory perspective, doji represent indecision on the side of both buyers and sellers. Everyone is equally matched, so the price goes nowhere; buyers and sellers are in a standoff.
Some analysts interpret this as a sign of reversal. However, it may also be a time when buyers or sellers are gaining momentum for a continuation trend. Doji are commonly seen in periods of consolidation and can help analysts identify potential price breakouts.
Example of How to Use a Doji
The following chart shows a gravestone doji in Cyanotech Corp.’s stock from February 2018 following a significant high-volume uptrend, which could indicate a bearish reversal over the near-term following the breakout.
Gravestone Doji Example.
In this example, the gravestone doji could predict a further breakdown from the current levels to close the gap near the 50- or 200-day moving averages at $4.16 and $4.08, respectively. Traders would also take a look at other technical indicators to confirm a potential breakdown, such as the relative strength index(RSI) or the moving average convergence divergence (MACD). Day traders may also put a stop-loss just above the upper shadow at around $5.10, although intermediate-term traders may place a higher stop-loss to avoid being stopped out.
What Is the Difference Between a Doji and a Spinning Top?
Candlestick charts can reveal quite a bit of information about market trends, sentiment, momentum, and volatility. The patterns that form in the candlestick charts are signals of such actions and reactions in the market. Doji and spinning top candles are quite commonly seen as part of larger patterns, such as the star formations. Alone, doji and spinning tops indicate neutrality in price, or that buying and selling pressures are, essentially, equal, but there are differences between the two and how technical analysts read them.
Spinning tops are quite similar to doji, but their bodies are larger, where the open and close are relatively close. A candle’s real body can generally represent up to 5% of the size of the entire candle’s range in order to be classified as a doji. Any more than that, it becomes a spinning top.
A spinning top also signals weakness in the current trend, but not necessarily a reversal. If either a doji or spinning top is spotted, look to other indicators such as Bollinger Bands to determine the context to decide if they are indicative of trend neutrality or reversal.
Limitations of a Doji
In isolation, a doji candlestick is a neutral indicator that provides little information. Moreover, a doji is not a common occurrence; therefore, it is not a reliable tool for spotting things like price reversals. When it does occur, it isn’t always reliable either. There is no assurance the price will continue in the expected direction following the confirmation candle.
The size of the doji’s tail or wick coupled with the size of the confirmation candle can sometimes mean the entry point for a trade is a long way from the stop loss location. This means traders will need to find another location for the stop loss, or they may need to forgo the trade since too large of a stop loss may not justify the potential reward of the trade.
Estimating the potential reward of a doji-informed trade can also be difficult since candlestick patterns don’t typically provide price targets. Other techniques, such as other candlestick patterns, indicators, or strategies are required in order to exit the trade when and if profitable.