NUST Business School

FIN-329 Behavioural Finance

Candlestick Assignment

Submitted to:
Dr. Nabeel Safdar

Submitted by:
Mustafa Khan

BSAF 2K16 A
Date: 4th March, 2019.
 Three White Soldiers

This pattern is usually observed after a period of downtrend or in price consolidation. It consists of
three long green candles that close progressively higher on each subsequent trading day. Each
candle opens higher than the previous open and closes near the high of the day, showing a steady
advance of buying pressure.

This pattern can be seen on the weekly interval of 5th, 12th & 19th march 2017 in EUR/USD market.

The Bullish Engulfing

The Bullish Engulfing pattern is a two-candle reversal pattern. The second candle completely
‘engulfs’ the real body of the first one, without regard to the length of the tail shadows. The Bullish
Engulfing pattern appears in a downtrend and is a combination of one bearish candle followed by a
larger bullish candle. On the second day of the pattern, price opens lower than the previous low, yet
buying pressure pushes the price up to a higher level than the previous high, culminating in an
obvious win for the buyers. This was seen from 30th June 2013 to 7th July 2013 in a weekly interval in
EUR/USD market.
 The Morning Star

The Morning Star is a sign of hope and a new beginning in a gloomy downtrend. The pattern consists
of three candles: one short-bodied candle (called a doji or a spinning top) between a preceding long
bearish candle and a succeeding long bullish one. The color of the real body of the short candle can
be either red or green, and there is no overlap between its body and that of the bearish candle
before. It shows that the selling pressure that was there the day before is now subsiding. The third
bullish candle overlaps with the body of the bearish candle and shows a renewed buyer pressure
and a start of a bullish reversal, especially if confirmed by the higher volume.

This was during the month of March 2017 in a daily interval in the EUR/USD market.