When it comes to short-term trading, candlestick patterns and candlestick reversal patterns play a crucial role in identifying potential turning points in market trends. For traders of Nifty and Bank Nifty, recognizing these signals early can help capture strong entries or exits. In this article, we’ll explore real chart examples of candlestick reversals in both indices and learn how to use them effectively for better decision-making.
What Are Candlestick Reversal Patterns?
Candlestick reversal patterns are chart formations that indicate a possible change in the current market direction — from bullish to bearish or vice versa. They reflect the battle between buyers and sellers and help traders gauge sentiment shifts before price action confirms it.
Some of the most popular candlestick reversal patterns include:
- Hammer and Inverted Hammer
- Bullish and Bearish Engulfing
- Morning Star and Evening Star
- Doji and Dragonfly Doji
- Piercing Pattern and Dark Cloud Cover
These patterns are especially useful in index trading because Nifty and Bank Nifty often react sharply around key support and resistance levels.
1. Bullish Engulfing Pattern in Nifty
A Bullish Engulfing pattern typically appears after a downtrend and signals a strong potential reversal. It forms when a large green candle completely engulfs the previous red candle, showing buyer dominance.
Example: In Nifty’s daily chart, a Bullish Engulfing appeared near the 19,100 support zone after a 5-day decline, leading to a 250-point rally in the following sessions.
2. Bearish Engulfing in Bank Nifty
The Bearish Engulfing pattern is the opposite — it indicates selling pressure after an uptrend. A large red candle engulfs the prior green candle, signaling a possible top reversal.
Example: On the Bank Nifty hourly chart, a Bearish Engulfing near 48,200 resistance marked the start of a 600-point correction as profit-booking intensified.
3. Morning Star Reversal in Nifty
The Morning Star is a three-candle bullish reversal pattern seen after a sustained downtrend. It consists of:
- A long red candle (selling pressure)
- A small indecisive candle (Doji or small body)
- A strong green candle (buyers reclaim control)
Example: A Morning Star appeared on the Nifty 4-hour chart around 19,300 support, preceding a short-term bullish reversal toward 19,700.
4. Shooting Star in Bank Nifty
A Shooting Star is a single-candle bearish reversal seen after an uptrend. It has a small body and a long upper wick, showing that bulls failed to sustain higher prices.
Example: In the Bank Nifty 15-minute chart, a Shooting Star formed after a strong intraday rally to 47,800, which immediately led to a 300-point pullback.
5. Doji Near Resistance Zone in Nifty
The Doji represents indecision, where the opening and closing prices are nearly the same. When a Doji forms near resistance, it often indicates a potential trend exhaustion.
Example: A Doji candle formed on the Nifty daily chart around 19,950 resistance, signaling uncertainty before a short-term reversal down to 19,650.
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