Candlestick Patterns Explained

Every candlestick is a battle between buyers and sellers compressed into one bar. Learn to read them and the chart starts telling you who is winning.

A candlestick shows four prices for a single time period: the open, high, low, and close. The thick part is the body (open-to-close); the thin lines are wicks (the extremes price reached and was rejected from). A green/up candle closes above its open; a red/down candle closes below.

Single-candle signals

Doji

Open and close are nearly equal, leaving a tiny body with wicks on both sides. A doji signals indecision — the prior trend may be stalling. After a strong run, a doji is an early warning that momentum is fading.

Hammer & Shooting Star

A hammer has a small body up top and a long lower wick — buyers slammed price back up after sellers pushed it down, a bullish reversal hint at support. A shooting star is the mirror image at the top: long upper wick, small body, bearish.

Pin Bar

Any candle with a long wick rejecting a level. Pin bars at support or resistance are among the cleanest price-action entries because they show a level being defended in real time.

Two-candle patterns

Bullish / Bearish Engulfing

A second candle whose body completely engulfs the prior candle's body. A bullish engulfing after a downmove means buyers overwhelmed the previous session's sellers — a strong reversal cue. Bearish engulfing is the opposite at a top.

How to actually use them

• Location is everything. An engulfing candle in the middle of nowhere means little. The same candle at a key support level, a fair value gap, or an order block is a high-probability signal.
• Confirm with context. Trend, volume, and higher-timeframe levels turn a candle from noise into a setup.
• Wicks = rejection. Trade in the direction the wick points away from.