Candlestick patterns help traders predict market moves by reading price actions visually. Hereโ€™s a step-by-step guide on 8 powerful candlestick patterns that every trader should know โ€” whether youโ€™re trading crypto, stocks, or forex.

1. Bullish Engulfing

What It Is: A two-candle reversal pattern at the bottom of a downtrend.

Structure:

First candle: small and red (bearish).

Second candle: large and green (bullish), fully engulfs the first.

Meaning: Buyers have overtaken sellers, indicating a potential uptrend.

Pro Tip: Enter long positions after confirmation with higher volume.

2. Morning Star

What It Is: A 3-candle reversal signal after a downtrend.

Structure:

First candle: long red (bearish).

Second candle: small-bodied (can be red or green), showing indecision.

Third candle: strong green (bullish) closing above half of the first candle.

Meaning: Transition from sellers to buyers, signaling a bullish reversal.

3. Bullish Pin Bar

What It Is: A single candlestick with a long lower wick.

Structure:

Small body near the top.

Long lower shadow.

Meaning: Buyers rejected lower prices, preparing for a price bounce upwards.

4. Bullish Harami

What It Is: A two-candle reversal pattern.

Structure:

First candle: large red (bearish).

Second candle: small green (bullish) completely within the first candleโ€™s body.

Meaning: Downtrend is weakening, and a potential bullish reversal is in play.

5. Bearish Engulfing

What It Is: A two-candle pattern signaling a bearish reversal at the top of an uptrend.

Structure:

First candle: small green (bullish).

Second candle: large red (bearish), completely engulfs the first candle.

Meaning: Sellers have overpowered buyers, price may drop soon.

6. Evening Star

What It Is: A 3-candle bearish reversal pattern after an uptrend.

Structure:

First candle: long green (bullish).

Second candle: small-bodied, indicating indecision.

Third candle: strong red (bearish), closing below the midpoint of the first candle.

Meaning: Indicates a shift from bullish to bearish momentum.

7. Bearish Pin Bar

What It Is: A single candlestick with a long upper wick.

Structure:

Small body near the bottom.

Long upper shadow.

Meaning: Buyers pushed the price up, but sellers rejected it sharply. Bearish pressure expected.

8. Bearish Harami

What It Is: A two-candle bearish reversal formation.

Structure:

First candle: large green (bullish).

Second candle: small red (bearish) fully within the first candleโ€™s body.

Meaning: Uptrend may weaken, signaling a price reversal downwards.

โœ… Conclusion

These patterns are powerful for spotting reversals or continuations in crypto trading. Always combine candlestick patterns with volume analysis and support/resistance levels for stronger signals.

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