COURSE NAME : FINTRON

SKILL OFFERING ID :
PROJECT TITLE : As a technical Analyst, analyze the historical stock
prices of a company using candlestick charts.
Identify and interpret different candlestick patterns,
including bullish and bearish candles, and explain
their significance in predicting price movements.
Discuss how a trader or investor can use candlestick
analysis or decision-making.
COLLEGE NAME : Swami Dayananda College of Arts and Science
COLLEGE CODE : 148
PROJECT SUBMITTED TO : NSE – Naan Mudhalvan
YEAR : IIIrd Year (2022-2025)
DEPARTMENT : Commerce
SEMESTER : 5th Semester
GROUP NUMBER : 6
MEMBERS OF THE GROUP : 6

NAME OF STUDENT NAAN MUDHALVAN ID

P. LOKESH B2032D9187D025F937E46B9D8986523D
C. MAHALAKSHMI 42251783B973F06A9EE4C3747EBE939D
G. MAHALAKSHMI 0612732111DDFDF87C64B601D6DA38BD
K. MAHESHWARI 10F73928C327215B29F49508C47144F8
N. MAHESWARI BDBFC6131E7C5A0A49D491D8C1E5A78D
N.MAHIZMATHI 84C2020D0666275BB104D55AA7A4675C

GUIDED BY : Dr. N. Arivarasan

SPOC NAME : Dr. S. Ganesamoorthy

Technical Analysis of Stock Prices Using
Candlestick Charts
Table of Contents
1. Introduction
2. Overview of Technical Analysis
3. Key Principles of Technical Analysis
4. Candlestick Charting: An Introduction
5. Structure of a Candlestick
6. Types of Candlestick Patterns
a. Bullish Candlestick Patterns
b. Bearish Candlestick Patterns
7. Interpretation of Candlestick Patterns
8. Case Study: Historical Stock Price Analysis of [Company Name]
9. Tools for Candlestick Chart Analysis
10. Trading Strategies Using Candlestick Analysis
11. Limitations of Candlestick Analysis
12. Conclusion
13. References
1. Introduction
Stock markets are dynamic and influenced by various factors such as market trends,
economic conditions, and investor sentiment. Technical analysis helps traders make informed
decisions by studying historical price patterns and trends. Among various tools, candlestick
charts are widely used for predicting price movements. This project explores how traders
analyze historical stock prices using candlestick charts and interpret bullish and bearish
patterns to make informed trading decisions.

2. Overview of Technical Analysis

What is Technical Analysis?

Technical analysis is a method of predicting future stock price movements based on historical
price and volume data. Unlike fundamental analysis, which evaluates a company's financial
health, technical analysis focuses on price patterns, trends, and indicators.

Importance of Technical Analysis:

• Identifying trends and reversals.

• Understanding market psychology.
• Helping traders make better entry and exit decisions.
• Aids in Entry and Exit Decisions
• Works for Short-Term and Long-Term Trading
• Helps in Risk Management
• Enhances Market Timing
• Applicable to All Financial Markets
3. Key Principles of Technical Analysis

1. Market Discounts Everything

Technical analysis assumes that all known information (earnings, economic factors, market
sentiment) is already reflected in the stock price. Analysts focus only on price movements
rather than external factors.

2. Price Moves in Trends

Stock prices follow a pattern of trends—upward (bullish), downward (bearish), or sideways

(consolidation). Recognizing these trends helps traders align their strategies with the market
direction.

3. History Repeats Itself

Market patterns and investor behaviors tend to repeat due to psychological factors.
Candlestick patterns that worked in the past often provide insights into future price
movements.

4. Support and Resistance Levels

• Support – A price level where demand is strong enough to prevent further decline.
• Resistance – A price level where selling pressure prevents further rise.
Identifying these levels helps traders make informed decisions on entry and exit points.

5. Volume Confirms Price Trends

• A price movement with high trading volume is more significant than one with low
volume.
• Increasing volume in the direction of the trend confirms its strength, while divergence
may signal a reversal.
6. Indicators and Oscillators

Technical indicators like Moving Averages, RSI (Relative Strength Index), and MACD
(Moving Average Convergence Divergence) help traders assess momentum, trend strength,
and potential reversals.

4. Candlestick Charting: An Introduction

Candlestick charting originated in Japan in the 1700s and was introduced to the Western world
by Steve Nison. Candlestick charts provide more visual insight into price movements than
simple line charts.

Why Use Candlestick Charts?

• Easy to interpret for identifying trends.

• Helps traders understand market sentiment.
• Provides insights into price momentum and reversals.
• Provides a Clear Visual Representation of Price Movements
• Helps in Market Psychology Analysis
• Useful for All Timeframes and Asset Classes

5. Structure of a Candlestick
Each candlestick consists of four key components:

1. Open Price – The price at which a stock opens during a trading session.
2. Close Price – The price at which the stock closes at the end of the session.
3. High Price – The highest price reached during the session.
4. Low Price – The lowest price reached during the session.
A bullish candle (green or white) forms when the close price is higher than the open price,
indicating upward momentum. A bearish candle (red or black) forms when the close price is
lower than the open price, indicating downward momentum.

6. Types of Candlestick Patterns

Candlestick patterns are classified into bullish (indicating a potential price increase) and
bearish (indicating a potential price decline) patterns. Traders use these patterns to make
informed trading decisions.

1. Bullish Candlestick Patterns (Indicating Uptrend)

1.1 Hammer

• A single candlestick pattern with a small body and a long lower shadow.
• Appears at the bottom of a downtrend and signals a potential reversal.
• The long lower shadow indicates that sellers pushed the price down, but buyers
regained control and drove it back up.

1.2 Bullish Engulfing

• A two-candlestick pattern where a small bearish candle is followed by a larger bullish

candle.
• The bullish candle completely engulfs the previous bearish candle’s body, indicating a
strong buying force.
• This pattern suggests a reversal of a downtrend.
1.3 Morning Star

• A three-candlestick pattern that signals a transition from a downtrend to an uptrend.

• Consists of:
• A long bearish candle.
• A small-bodied candle (either bullish or bearish) showing indecision.
• A long bullish candle confirming the reversal.

1.4 Three White Soldiers

• A strong bullish reversal pattern that appears after a downtrend.

• Composed of three consecutive long bullish candles with small wicks, showing strong
buying momentum.
• Each candle opens within the previous candle’s body and closes higher, indicating
continued strength.

1.5 Piercing Pattern

• A two-candlestick pattern occurring in a downtrend.

• The first candle is bearish, followed by a bullish candle that opens lower but closes
above the midpoint of the previous candle.
• Indicates that buying pressure is increasing, leading to a potential reversal.

1.6 Inverted Hammer

• Appears at the bottom of a downtrend, similar to a hammer but with a long upper
shadow.
• Suggests that sellers attempted to push the price down, but buyers took control.
• A confirmation candle (a bullish close the next day) is needed to validate the pattern.

1.7 Bullish Harami

• A two-candlestick pattern where a small bullish candle appears within the previous
bearish candle’s body.
• Signals that selling pressure is weakening and a bullish reversal may occur.
• Confirmation from the next bullish candle strengthens the signal.
2. Bearish Candlestick Patterns (Indicating Downtrend)

2.1 Shooting Star

• A single candlestick pattern with a small body and a long upper shadow.
• Appears at the top of an uptrend, indicating potential reversal.
• The long upper wick shows that buyers pushed the price higher, but sellers regained
control.

2.2 Bearish Engulfing

• A two-candlestick pattern where a small bullish candle is followed by a larger bearish

candle.
• The bearish candle completely engulfs the previous bullish candle’s body, indicating
strong selling pressure.
• Signals the end of an uptrend and the beginning of a downtrend.

2.3 Evening Star

• A three-candlestick pattern that appears at the top of an uptrend.

• Consists of:
a. A long bullish candle.
b. A small-bodied candle (either bullish or bearish) showing indecision.
c. A long bearish candle confirming the reversal.
2.4 Three Black Crows

• A strong bearish reversal pattern that appears after an uptrend.

• Consists of three consecutive long bearish candles with small wicks, showing strong
selling momentum.
• Each candle opens within the previous candle’s body and closes lower, indicating
continued weakness.

2.5 Dark Cloud Cover

• A two-candlestick pattern occurring in an uptrend.

• The first candle is bullish, followed by a bearish candle that opens higher but closes
below the midpoint of the previous candle.
• Indicates that selling pressure is increasing, leading to a potential reversal.

2.6 Hanging Man

• Appears at the top of an uptrend, resembling a hammer but in a bullish trend.

• Signals that buyers tried to push the price higher, but sellers took control.
• A confirmation candle (a bearish close the next day) is needed to validate the pattern.

2.7 Bearish Harami

• A two-candlestick pattern where a small bearish candle appears within the previous
bullish candle’s body.
• Signals that buying pressure is weakening and a bearish reversal may occur.
• Confirmation from the next bearish candle strengthens the signal.

7. Interpretation of Candlestick Patterns

Candlestick patterns provide insights into market sentiment, potential reversals, and trend
continuations. Traders interpret these patterns by considering their location within the overall
trend and using additional technical indicators for confirmation. Candlestick patterns can be
broadly classified into Reversal Patterns, Continuation Patterns, and Indecision Patterns.

1. Reversal Patterns

Reversal patterns indicate a potential change in the existing trend—either from bullish to
bearish or vice versa. These patterns are significant when they occur near strong support or
resistance levels.

I. Bullish Reversal Patterns (Indicate a shift from a downtrend to an

uptrend)

• Hammer
o A small body with a long lower shadow and little to no upper shadow.
o Indicates strong buying pressure after a downtrend.
o Significance: Suggests potential trend reversal if confirmed by the next bullish
candle.

• Bullish Engulfing
o A large green (bullish) candle completely engulfs the previous red (bearish)
candle.
o Indicates strong buying momentum.
o Significance: A confirmation signal if followed by an uptrend.

• Morning Star
o A three-candle pattern consisting of a long bearish candle, a small-bodied
indecisive candle, and a large bullish candle.
o Indicates a weakening downtrend and potential reversal.
o Significance: Stronger if the third candle has high volume.

• Piercing Pattern
o A two-candle pattern where the second bullish candle opens lower but closes
above the midpoint of the previous bearish candle.
o Suggests buyers are gaining control.
o Significance: Stronger if it appears at a support level.
II. Bearish Reversal Patterns (Indicate a shift from an uptrend to a
downtrend)

• Shooting Star
o A small-bodied candle with a long upper shadow and little or no lower shadow.
o Indicates rejection at higher price levels.
o Significance: Confirmation needed with a bearish candle following it.

• Bearish Engulfing
o A large red (bearish) candle completely engulfs the previous green (bullish)
candle.
o Indicates strong selling momentum.
o Significance: More reliable if it appears at a resistance level.

• Evening Star
o A three-candle pattern consisting of a long bullish candle, a small-bodied
indecisive candle, and a large bearish candle.
o Indicates a weakening uptrend and potential reversal.
o Significance: Stronger if volume increases on the third candle.

• Dark Cloud Cover

o A two-candle pattern where the second bearish candle opens higher but closes
below the midpoint of the previous bullish candle.
o Suggests sellers are gaining control.
o Significance: More reliable when appearing at a resistance level.
2. Continuation Patterns

Continuation patterns indicate that the prevailing trend is likely to continue after a brief
consolidation phase.

• Doji
o A small-bodied candle where the open and close prices are nearly equal.
o Indicates market indecision.
o Significance: A continuation signal if followed by a strong bullish or bearish
candle.
• Three White Soldiers
o Three consecutive bullish candles with higher closes.
o Indicates strong buying momentum.
o Significance: More reliable if seen after a downtrend.
• Rising Three Methods
o A bullish pattern where three small bearish candles are followed by a large
bullish candle.
o Indicates continued uptrend despite temporary selling pressure.
• Falling Three Methods
o A bearish pattern where three small bullish candles are followed by a large
bearish candle.
o Indicates continued downtrend despite temporary buying pressure.
3. Indecision Patterns

• Indecision patterns indicate uncertainty in the market. Traders usually wait for further
confirmation before making decisions.
• Spinning Top
o A small-bodied candle with long upper and lower shadows.
o Indicates uncertainty in both buying and selling pressure.
o Significance: A breakout above or below the spinning top determines the trend.
• Doji (Multiple Types)
o Neutral Doji – Open and close prices are almost the same, showing market
indecision.
o Dragonfly Doji – A Doji with a long lower shadow, indicating potential bullish
reversal.
o Gravestone Doji – A Doji with a long upper shadow, indicating potential bearish
reversal.
8. Case Study: Candlestick Chart Analysis of TCS Stock
(January 2025)

1. Introduction
• Selection of a company's stock for analysis (e.g., Reliance Industries, TCS, HDFC
Bank).
• Collection of historical stock price data over a specific time frame (e.g., past one year).

2. Stock Data for January 2025

The following table presents the daily Open, High, Low, Close (OHLC) prices along with
volume for TCS stock in January 2025:
Date OPEN HIGH LOW PREV. ltp close vwap 52W H 52W L VOLUME VALUE No of
CLOSE trades
31- 4,110.00 4,128.4 4,085. 4,100.05 4,114 4,112. 4,106.05 4,592.25 3,591.50 14,92,943 6,13,01,03,902.20 1,21,858
Jan- 5 25 .15 40
25
30- 4,099.90 4,129.9 4,058. 4,099.80 4,100 4,100. 4,098.87 4,592.25 3,591.50 15,31,251 6,27,64,04,777.90 97,767
Jan- 0 50 .00 05
25
29- 4,054.00 4,107.8 4,054. 4,040.30 4,105 4,099. 4,091.12 4,592.25 3,591.50 12,17,089 4,97,92,53,773.00 1,08,284
Jan- 5 00 .00 80
25
28- 4,070.80 4,102.0 4,028. 4,065.15 4,040 4,040. 4,057.30 4,592.25 3,591.50 24,68,272 10,01,45,14,674.15 1,50,121
Jan- 0 30 .00 30
25
27- 4,102.00 4,156.3 4,041. 4,152.35 4,067 4,065. 4,088.62 4,592.25 3,591.50 15,51,782 6,34,46,44,149.25 1,43,859
Jan- 5 05 .00 15
25
24- 4,104.00 4,178.0 4,104. 4,145.45 4,153 4,152. 4,155.62 4,592.25 3,591.50 19,10,099 7,93,76,40,859.20 99,760
Jan- 0 00 .10 35
25
23- 4,168.00 4,191.3 4,140. 4,156.60 4,148 4,145. 4,161.12 4,592.25 3,591.50 18,22,998 7,58,57,18,475.40 1,39,860
Jan- 5 05 .00 45
25
22- 4,050.00 4,163.1 4,044. 4,035.85 4,152 4,156. 4,132.48 4,592.25 3,591.50 24,09,223 9,95,60,65,096.70 1,53,702
Jan- 5 20 .00 60
25
21- 4,095.30 4,111.0 4,030. 4,077.80 4,038 4,035. 4,065.27 4,592.25 3,591.50 19,71,591 8,01,50,45,148.00 1,48,666
Jan- 0 00 .00 85
25
20- 4,145.80 4,145.8 4,068. 4,124.30 4,080 4,077. 4,085.51 4,592.25 3,591.50 12,87,799 5,26,13,20,398.80 1,48,489
Jan- 0 10 .00 80
25
17- 4,159.90 4,160.6 4,100. 4,206.30 4,130 4,124. 4,132.60 4,592.25 3,591.50 17,61,466 7,27,94,36,408.25 1,57,671
Jan- 0 05 .00 30
25
16- 4,260.00 4,294.0 4,191. 4,249.60 4,215 4,206. 4,212.91 4,592.25 3,591.50 26,37,705 11,11,24,18,871.40 1,76,306
Jan- 0 85 .00 30
25
15- 4,218.00 4,256.4 4,207. 4,233.05 4,255 4,249. 4,229.68 4,592.25 3,591.50 16,53,474 6,99,36,67,215.60 1,30,857
Jan- 5 45 .40 60
25
14- 4,302.00 4,313.9 4,219. 4,291.10 4,241 4,233. 4,252.06 4,592.25 3,591.50 34,41,709 14,63,43,69,218.50 1,80,842
Jan- 0 05 .15 05
25
13- 4,245.00 4,322.9 4,227. 4,265.65 4,299 4,291. 4,294.04 4,592.25 3,591.50 40,03,771 17,19,23,53,666.25 2,70,932
Jan- 5 40 .00 10
25
10- 4,200.00 4,297.0 4,170. 4,038.85 4,265 4,265. 4,240.63 4,592.25 3,591.50 78,94,300 33,47,68,09,439.65 4,36,975
Jan- 0 00 .00 65
25
9- 4,101.00 4,137.7 4,025. 4,108.40 4,044 4,038. 4,073.67 4,592.25 3,591.50 23,92,472 9,74,61,49,398.35 1,83,446
Jan- 5 30 .00 85
25
8- 4,034.90 4,126.0 4,017. 4,028.30 4,095 4,108. 4,056.18 4,592.25 3,591.50 21,81,277 8,84,76,52,251.50 1,80,073
Jan- 0 75 .05 40
25
7- 4,114.95 4,140.3 4,011. 4,095.00 4,031 4,028. 4,045.86 4,592.25 3,591.50 26,69,054 10,79,86,29,271.20 1,77,825
Jan- 5 55 .00 30
25
6- 4,105.50 4,149.6 4,066. 4,099.90 4,090 4,095. 4,107.14 4,592.25 3,591.50 20,85,593 8,56,58,22,653.70 1,58,660
Jan- 5 40 .00 00
25
3- 4,179.95 4,179.9 4,092. 4,175.75 4,097 4,099. 4,114.17 4,592.25 3,591.50 17,91,953 7,37,24,04,407.85 1,25,354
Jan- 5 30 .00 90
25
2- 4,120.00 4,183.0 4,096. 4,112.45 4,166 4,175. 4,159.77 4,592.25 3,591.50 17,20,835 7,15,82,73,705.25 1,24,549
Jan- 0 95 .00 75
25
1- 4,094.40 4,134.0 4,085. 4,094.80 4,112 4,112. 4,112.75 4,592.25 3,591.50 7,63,161 3,13,86,92,117.15 99,498
Jan- 0 45 .00 45
25
This is the candlestick chart for the data given for Open, High, Low, Close (OHLC) prices
along with volume for TCS stock in January 2025:

3. Candlestick Chart Analysis

Using this data, a candlestick chart was plotted for TCS stock in January 2025. The chart
highlights key trends, including bullish and bearish movements.

Key Observations from the Candlestick Chart:

1. Bullish Patterns Identified:

 a. Bullish Engulfing (16-Jan-25 & 17-Jan-25): This pattern indicated strong buying
momentum, leading to a breakout.
b. Morning Star (13-Jan-25 to 15-Jan-25): A clear reversal pattern suggesting the
end of a downtrend.
c. Three White Soldiers (10-Jan-25 to 13-Jan-25): A continuous bullish movement,
showing strong confidence among buyers.

2. Bearish Patterns Identified:

a. Shooting Star (30-Jan-25): Suggesting selling pressure and a potential reversal.
b. Bearish Engulfing (24-Jan-25): Confirmed the end of a bullish rally, leading to a
downward movement.
c. Evening Star (27-Jan-25 to 29-Jan-25): Indicated a possible trend reversal.

3. Key Support & Resistance Levels:

a. Support Level: Found near ₹4050, where the stock consistently rebounded.
b. Resistance Level: Found near ₹4300, where sellers stepped in to push prices
lower.

9. Tools for Candlestick Chart Analysis

• Candlestick chart analysis is most effective when combined with advanced trading
platforms and technical indicators. The following tools help traders analyze stock
price movements efficiently:

Popular Trading Platforms

• TradingView – Provides advanced charting tools, custom indicators, and real-time
market data.
• MetaTrader 4 & 5 – Popular forex and stock trading software with automated trading
features.
• Investing.com – Offers free real-time candlestick charts, technical indicators, and
market news.
• NSE & BSE Websites – Provide historical stock price data and company insights.
Technical Indicators Used with Candlestick Charts

To enhance the accuracy of candlestick pattern interpretation, traders use additional

indicators:

• Relative Strength Index (RSI) – Measures market momentum and identifies

overbought/oversold conditions.
• Moving Averages (MA) – Helps smooth price action and detect trend directions.
• MACD (Moving Average Convergence Divergence) – Indicates trend strength and
potential reversals.
• Bollinger Bands – Identify volatility and potential breakout points.
• Volume Analysis – Confirms price movement strength by analyzing trading volume.
• These tools and indicators help traders filter false signals and make informed trading
decisions.

10. Trading Strategies Using Candlestick Analysis

• Traders and investors use candlestick analysis to develop effective trading strategies.
Below are some popular approaches:

1. Swing Trading

• Uses bullish and bearish candlestick patterns to capture short-term price

movements.
• Example: A Bullish Engulfing pattern signals a buying opportunity, while a Bearish
Engulfing pattern signals a selling opportunity.

2. Breakout Trading

• Identifies key support and resistance levels where stock prices break out of a trend.
• Example: A stock forming a bullish flag pattern followed by a strong green candle
confirms a breakout.

3. Trend Following Strategy

• Traders follow the overall market trend using moving averages and candlestick
confirmation.
• Example: If a stock is in an uptrend and forms a Hammer at support, it signals a
buying opportunity.
4. Reversal Trading

• Focuses on identifying candlestick reversal patterns like Morning Star (bullish) and
Evening Star (bearish).
• Example: A Shooting Star at resistance signals a potential price drop.

5. Risk Management & Stop-Loss Strategy

• Traders use stop-loss orders to minimize risks in case the market moves against their
position.
• Example: A trader enters a buy trade at ₹4050 (support level) with a stop-loss below
₹4000 to limit potential losses.
• Using these strategies, traders can increase their chances of success and protect
their capital from market volatility.

11. Limitations of Candlestick Analysis

While candlestick charts are a powerful technical analysis tool, they have certain limitations:

• False Signals in Volatile Markets:

o Candlestick patterns can give misleading signals in highly volatile markets,
leading to losses.

• Requires Confirmation with Other Indicators:

o Relying only on candlestick patterns may not be accurate. RSI, MACD, or
Volume Analysis should be used for confirmation.

• Not Suitable for Long-Term Investing:

o Candlestick analysis is more effective for short-term trading rather than long-
term fundamental investing.

• Subject to Market Manipulation:

o Large institutional traders can manipulate price movements, creating false
candlestick patterns.

• No Guarantee of Future Performance:

o Just because a pattern worked in the past does not mean it will always predict
the future price movement correctly.
 • Traders should use candlestick analysis along with fundamental analysis and risk
management techniques for better accuracy.

12. Conclusion
Candlestick charts are a powerful tool in technical analysis, helping traders and investors
make informed decisions by identifying trend reversals and continuations. This project
analyzed TCS stock price movements for January 2025, highlighting key bullish and bearish
candlestick patterns and their impact on trading strategies.

Key Takeaways:

1. Candlestick patterns reflect market psychology and provide early signals for trend
changes.
2. Confirmation with other indicators like RSI, Moving Averages, MACD, and Volume
Analysis improves accuracy.
3. Risk management is crucial, with stop-loss and take-profit levels helping to minimize
losses.
4. Candlestick analysis is best suited for short-term trading, such as swing and day
trading.
5. For long-term investing, fundamental analysis should complement candlestick
patterns for better decision-making.

Final Thoughts

This study of TCS stock in January 2025 shows that candlestick chart analysis can
significantly enhance trading decisions when used correctly. However, no technical tool
guarantees 100% accuracy, and traders should combine multiple strategies, manage risks,
and stay updated with market trends for long-term success.

By mastering candlestick patterns, traders gain an edge in predicting price movements and
making informed investment decisions.
13. References
1. Nison, S. (1991). Japanese Candlestick Charting Techniques.
2. Murphy, J. J. (1999). Technical Analysis of the Financial Markets.
3. NSE India – TCS Stock Price and Market Trends