Candlestick Patterns Guide
Candlestick charts are widely used in trading to visualize price movements. Each candlestick shows
the open, close, high, and low of a given time period. Patterns formed by candlesticks can signal
market psychology and potential reversals or continuations.
• Doji: Open and close are nearly equal, showing market indecision. Often indicates a reversal
or continuation.
• Hammer (Bullish Reversal): Small body at the top with a long lower shadow. Appears after a
downtrend, suggesting buyers are returning.
• Inverted Hammer: Small body at the bottom with a long upper shadow. Appears after a
downtrend, can signal bullish reversal.
• Shooting Star (Bearish Reversal): Small body at the bottom with a long upper shadow.
Appears after an uptrend, suggesting selling pressure.
• Bullish Engulfing: A small red candle followed by a larger green candle engulfing it. Strong
bullish signal.
• Bearish Engulfing: A small green candle followed by a larger red candle engulfing it. Strong
bearish signal.
• Morning Star (Bullish): Three-candle pattern: red candle → small candle → strong green
candle. Signals reversal to the upside.
• Evening Star (Bearish): Three-candle pattern: green candle → small candle → strong red
candle. Signals reversal to the downside.
■■ Note: Candlestick patterns work best when combined with other tools such as
support/resistance, trend analysis, and volume. Always use stop-loss and risk management to
protect your capital.
