Reading Candlestick Patterns

Individual candles tell a story about the battle between buyers and sellers within a time period. Patterns formed by one or more candles can signal shifts in momentum.

Single-Candle Patterns

Doji

A candle with a very small body (open ≈ close). Signals indecision. The market couldn't decide on a direction. At key levels, a doji can precede a reversal.

Hammer / Pin Bar

A small body at the top with a long lower wick. Found at the bottom of downtrends, it shows sellers pushed price down but buyers rejected those levels aggressively. Bullish signal.

Shooting Star

The inverse — small body at the bottom, long upper wick. Found at tops, it signals buyer exhaustion. Bearish signal.

Marubozu

A large body with little to no wicks. Shows pure conviction — buyers (green) or sellers (red) dominated completely.

Multi-Candle Patterns

Bullish Engulfing

A small red candle followed by a larger green candle that completely covers (engulfs) the previous body. Strong bullish reversal signal at demand zones.

Bearish Engulfing

The opposite — a small green candle followed by a large red candle. Bearish reversal signal at supply zones.

Morning Star / Evening Star

Three-candle reversal patterns:

• Morning star (bottom): Large red → small body → large green = bullish reversal
• Evening star (top): Large green → small body → large red = bearish reversal

Context Is Everything

A hammer in the middle of nowhere means little. A hammer at a key support level after a prolonged downtrend is a high-probability reversal signal. Always combine candle patterns with structure and levels.

Key Takeaway

Learn to read candles in context, not isolation. The best setups combine candlestick signals with structural levels and confluence.