Master every candlestick pattern — doji, engulfing, hammer, shooting star. Learn to read market psychology through candles like a professional.
About 8 minutes · One knowledge check
Ask about the video, the chart, or how this concept affects a trading decision.
Complete one planned decision at a time. The objective is to follow a defined process, not to pursue a particular outcome.
Record the setup, the decision taken and one action you would repeat or change.
Open decision journal →Use this full reference alongside the interactive lessons, knowledge checks and guided paper-practice exercise.
Candlestick patterns are visual formations made up of one or more candles on a price chart. They represent the battle between buyers and sellers during a specific time period and can signal potential reversals or continuations in price direction. Japanese traders developed this charting system in the 17th century to trade rice futures — and it remains one of the most widely used tools in modern trading.
Each candle has four components: the open, high, low, and close (OHLC). The body (the thick part) represents the range between open and close. The wicks (thin lines above and below) represent the extreme high and low reached during that period.
Doji: Open and close are nearly identical, leaving almost no body. This signals market indecision — neither buyers nor sellers are in full control. After a strong trend, a doji is often a warning of an upcoming reversal.
Hammer: A small body near the top of the candle with a long lower wick. This forms at the bottom of downtrends. The long lower wick shows that sellers pushed price down but buyers stepped in strongly and pushed it back up — a bullish signal.
Shooting Star: The opposite of a hammer. A small body near the bottom with a long upper wick. Found at the top of uptrends, it shows that buyers pushed price higher but sellers rejected those levels — a bearish signal.
Spinning Top: Small body with wicks on both sides. Like the doji, it signals indecision and is most significant after a strong directional move.
Bullish Engulfing: A small red candle followed by a large green candle that completely covers (engulfs) the red candle's body. Strong bullish reversal signal, especially at key support levels.
Bearish Engulfing: The opposite — a small green candle followed by a large red candle that engulfs it. Signals a potential reversal from bullish to bearish momentum.
Morning Star: A three-candle bullish reversal pattern: a large red candle, a small-bodied indecision candle, then a large green candle. This is one of the most reliable reversal signals in technical analysis.
Evening Star: The bearish counterpart to the morning star. Three candles: large green, small indecision, large red. Signals a top and potential reversal downward.
Candlestick patterns are most reliable when they form at key price levels — support, resistance, or significant moving averages. A hammer at a random location on a chart is less meaningful than a hammer forming exactly at a prior support level where buyers have previously stepped in.
Always confirm patterns with volume. A bullish engulfing pattern on above-average volume is a much stronger signal than the same pattern on thin, low volume.
Educational content only. Not financial advice. Always use proper risk management.
