How to use Stock Charts

WHAT ARE CANDLESTICK CHARTS AND PATTERNS?
The candlestick techniques stock daytraders use today originated in the style of technical charting used by the Japanese for over 100 years before the West developed the bar and point-and-figure analysis systems. In the 1700s, a Japanese man named Homma, a trader in the futures market, discovered that, although there was a link between price and the supply and demand of rice, the markets were strongly influenced by the emotions of traders. He understood that when emotions played into the equation, a vast difference between the value and the price of rice occurred. This difference between the value and the price is as applicable to stocks today as it was to rice in Japan centuries ago. The principles established by Homma are the basis for the candlestick chart analysis, which is used to measure market emotions surrounding a stock.

   Compared to traditional bar charts,
many traders consider candlestick charts
more visually appealing and easier to
interpret. Each candlestick provides an
easy-to-decipher picture of price action.
Immediately a trader can compare the
relationship between the open and close
as well as the high and low. The
relationship between the open and close
is considered vital information and
forms the essence of candlesticks.
Green (bullish) candlesticks, where the close is greater than the open, indicate buying pressure. Red (bearish) candlesticks, where the close is less than the open, indicate selling pressure.

Candlestick patterns are a series of consecutive candlesticks that can be used to forecast future behavior of a stock  uptrend, downtrend, reversal, breakaways, consolidations, etc. See next section for more details.

WHICH PATTERNS WILL THIS SCRIPT HUNT FOR “OUT OF THE BOX”?

This script hunts for known candlestick patterns that are used by traders to predict the behavior of the stock. The following is the list of these patterns:

DOJI (neutral) - Dojis form when a security\s open and close are virtually equal. The length of the upper and lower shadows can vary, and the resulting candlestick looks like, either, a cross, inverted cross, or plus sign. Doji convey a sense of indecision or tug-of-war between buyers and sellers. Prices move above and below the opening level during the session, but close at or near the opening level.


DRAGONFLY DOJI (bullish) - A Doji where the open and close price are at the high of the day. Like other Doji patterns, this one normally appears at market turning points.

GRAVESTONE DOJI (bearish) - A doji line that develops when the Doji is at, or very near, the low of the day.

HAMMER (bullish) - A hammer is a price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above opening price. This pattern forms a hammer-shaped candlestick, in which the body is at least half the size of the tail or wick. It\s is to referred to as a hammer, when this pattern occurs after a downtrend and a hanging man after a uptrend.

GRAVESTONE DOJI (bearish) - A doji line that develops when the Doji is at, or very near, the low of the day.

HANGING MAN (bearish) - A hanging man is a bearish candlestick pattern that forms at the end of an uptrend. It is created when there is a significant sell-off near the market open, but buyers are able to push this stock back up so that it closes near (but below) the opening price. Generally, the large sell-off is seen as an early indication that the bulls (buyers) are losing control and demand for the asset is waning.

PIERCING PATTERN (bullish) - A technical trading signal that is marked by a closing down day with a good-sized trading range, followed by a trading gap (drop) lower the following day that covers at least half of the upward length of the previous day\’s real body (the range between the opening and closing prices), and then closes up for the day. A piercing pattern often signals the end of a small to moderate downward trend.

DARK CLOUD (bearish) - A technical trading signal that is marked by a closing up day with a good-sized trading range, followed by a trading gap (rise) higher the following day that covers at least half of the downward length of the previous day's real body (the range between the opening and closing prices), and then closes down for the day. A piercing pattern often signals the end of a small to moderate upward trend.

BEARISH HARAMI (bearish) - A bearish Harami is a trend indicated by a large green candlestick followed by a much smaller red candlestick with a that body is located within the vertical range of the larger geen candle body. Such a pattern is an indication that the previous upward trend is coming to an end.

BULLISH HARAMI (bullish) - A bullish Harami is a trend indicated by a large red candlestick followed by a much smaller green candlestick with a that body is located within the vertical range of the larger red candle body. Such a pattern is an indication that the previous downward trend is coming to an end.

BULLISH ENGULFING (bullish) - A bullish engulfing pattern is a chart pattern that forms when a small red candlestick is followed by a large green candlestick that completely eclipses or engulfs the previous candlestick. The shadows or tails of the small candlestick are short, which enables the body of the large candlestick to cover the entire candlestick from the previous cycle. Such a pattern is an indication that the previous downward trend is coming to an end.



BEARISH ENGULFING (bullish) - A bearish engulfing pattern is a chart pattern that forms when a small green candlestick is followed by a large red candlestick that completely eclipses or engulfs the previous candlestick. The shadows or tails of the small candlestick are short, which enables the body of the large candlestick to cover the entire candlestick from the previous cycle. Such a pattern is an indication that the previous downward trend is coming to an end.

INVERTED HAMMER (bullish) - A doji line that develops when the Doji is at, or very near, the low of the day.A doji line that develops when the Doji is at, or very near, the low of the day.A doji line that develops when the Doji is at, or very near, the low of the day. A doji line that develops when the Doji is at, or very near, the low of the day. When this pattern occurs during a downtrend, it is refered to as an inverted hammer, a bullish signal.

SHOOTING STAR - A doji line that develops when the Doji is at, or very near, the low of the day.A doji line that develops when the Doji is at, or very near, the low of the day. A doji line that develops when the Doji is at, or very near, the low of the day. A doji line that develops when the Doji is at, or very near, the low of the day. When this pattern occurs during a downtrend, it is refered to as an shooting star, a bearish signal.

MORNING STAR (bullish) - A morning star is a bearish candlestick pattern consisting of three candles that have demonstrated the following characteristics: the first bar is a large red candlestick located within an downtrend; the middle bar is a small-bodied green candle, that closes below the first red bar; and, the last bar is a large green candle that opens below the middle candle and closes near the center of the first bar's body. This pattern is used by traders as an early indication the downtrend is about to reverse.

EVENING STAR (bearish) - An evening star is a bearish candlestick pattern consisting of three candles that have demonstrated the following characteristics: the first bar is a large green candlestick located within an uptrend; the middle bar is a small-bodied red candle, that closes above the first green bar; and, the last bar is a large red candle that opens below the middle candle and closes near the center of the first bar's body. This pattern is used by traders as an early indication the uptrend is about to reverse.

BULLISH KICKER (bullish) - A two-bar candlestick pattern that is used to predict a change in the direction of the trend for an asset\s price. This pattern is characterized by a very sharp reversal in price over the span of two candlesticks; traders use it to determine which group of market participants is in control of the direction. The bullish version is a two pattern from red to green.

BEARISH KICKER (bearish) - A two-bar candlestick pattern that is used to predict a change in the direction of the trend for an asset\s price. This pattern is characterized by a very sharp reversal in price over the span of two candlesticks; traders use it to determine which group of market participants is in control of the direction. The bearish version is a two pattern from green to red.

Phpcharts

FEATURES - see blue squares above
  1. This script's main panel is a combination highstock chart (see highsoft.com) that is fed "near realtime" from two FREE stock quote API calls. Realtime and historical stock price information comes from a service called Tradier (see tradier.com and the technical anlaysis (moving averages, etc) comes from a service called Alpha Vantage (see alphavantage.co). The combination chart displays stock quote area line graph on top pane, a candlestick chart in the main pane, volume chart in the third from top pane and then range finder for the entire chart in the bottom pane. 
  2. Real time 1 minute, 5 minute and 15 minute candlesticks, generated as trading day progresses.
  3. Candlesticks that follow defined pattern are hunted for and identified by these circular flags. Gray flag means neutral behavior (e.g. doji's), green flag means bullish behavior (e.g. bullish engulfing, etc), red flag means bearish behavior (e.g. bearish engulfing)
  4. Mouseover (hover) over a flag and popup (tooltip) description of the pattern found is displayed.
  5. Technical indicator line charts (see orange line  e.g. simple moving average, exponential moving average) are overlayed on top of price and candlestick charts, to help with identifying ssupport and resistance levels.
  6. Real time stock price quote in a area line chart
  7. Real time stock volume in a column chart
  8. Highstock range selector to zoom in and out of chart's date ranges
  9. Highstock range panning. For desktop/laptop, use shift+leftmouse and drag to pan. For tablet/mobile device, use two finger swipe.
  10. More zooming  toggle to zoom in by highlighting area to zoom into.
  11. OHLC (open, high low, close) quote every 5 seconds
  12. Countdown to when next candlestick will get generated
  13. Repsonsive nav bar to navigate to different stocks charts
  14. Top menu icons for liding panels settings, stock quote detail, candlestick realtime data, pattern flags sorted by counts