Candlestick Patterns: A Trader’s Guide

Candlestick patterns are one of the most important tools in technical analysis, helping traders predict market movements. These patterns are divided into three categories: Bullish, Bearish, and Neutral.

This guide will explain the significance of different candlestick patterns and how traders use them to make informed decisions.

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🕯️ Understanding Candlesticks

A candlestick consists of:

- Body – The area between the open and close prices.

- Wick (Shadow) – The thin lines extending above and below the body, representing the high and low prices.

- Colors – A green (bullish) candle means the closing price is higher than the opening price, while a red (bearish) candle means the closing price is lower than the opening price.

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📈 Bullish Candlestick Patterns (Indicating Price Increase)

Single Candlestick Patterns

1️⃣ Hammer – A small body with a long lower wick, signaling a potential bullish reversal.

2️⃣ Inverted Hammer – Similar to the hammer but with a long upper wick, indicating reversal.

3️⃣ Dragonfly Doji – A doji with a long lower wick, suggesting strong buying pressure.

4️⃣ Bullish Spinning Top – A small body with long wicks, showing indecision but potential upward movement.

Double-Candle Patterns

5️⃣ Bullish Kicker – A strong green candle that gaps up from a red candle, showing strong bullish sentiment.

6️⃣ Bullish Engulfing – A large green candle completely engulfs a smaller red candle, signaling a reversal.

7️⃣ Piercing Line – A red candle is followed by a green candle that closes above the midpoint of the previous candle.

8️⃣ Bullish Harami – A small green candle forms within the body of a previous red candle, showing hesitation before a reversal.

9️⃣ Tweezer Bottom – Two candles with almost the same low price, indicating a support level.

Multiple-Candle Patterns

🔟 Morning Doji Star – A red candle, followed by a doji, and then a large green candle, signaling a strong reversal. $USDC