Long green candlestick chart pattern formation



Usually the stock opens at or near the low of the day and moves up throughout the day and closes at or near the high of the day. The extent of the move up should be signification enough to get noticed. Usually its should be looked in comparison with the previous week’s data. All the above candlesticks in the picture represent long bullish formation. One rule you should always remember is closer the closing price near the high and longer the length of the body more important the candle becomes in the stock market analysis. Also if the market has fallen significantly and other indicators point to oversold condition, this increases the probability of bounce back. The significance and degree of bullishness decreases with the decrease in length of the body and increase in length of the upper shadow

Reversal

When the market is in extended downturn and a long green candle is formed, then it is usually a sign of reversal. It’s not guaranteed that the market would reverse, but probability of reversal has increased. When such incidents happen, you need to watch the market closely for other reversal signs

Breakouts

When the market is flat and if a bullish long candle is formed, then usually it’s a sign of breakout. If this candle formation happens with increasing volume, then the probability of breakout increases. Breakout can be breaking out of trend lines or crossing a critical moving average or breaking out of a range by crossing the resistance area.It’s better if the market trades through the area forming a long bullish candle

Near Support area

IIf a long green candle gets formed near a support area then usually it’s a sign that the support is respected and you can expect a bounce from there. This is usually a good signal for mean reversal strategy or an entry point after a short correction. Also traders can use this signal during range bound market

Long green candle as support

Usually a long candle acts as support in all the above 3 scenarios mentioned. Some traders trade this formation by keeping low of the green long candle as stop loss , whereas some traders wait for retracement and trade when the prices retraces about 40 to 50% of the long green candle. It all depends on the individual traders and their trading style. Usually the bottom end of the candle is a good support area.Sometimes after price moves up, corrects and retest this support area and then resumes its upward journey. Entry at this point gives a favourable risk/reward ratio for the traders

Normal green candle

Normal green candle has decent sized green body and also has shadows. Here the body size is big enough to be categorized as bullish candle. Eventhough the below candles are bullish, but it is less bullish than the long green candle

The following candles represents green candles with decreasing level of bullishness


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