Unlock the power of candlestick patterns and gain a serious edge in the markets. Here's a quick, no-nonsense reference guide to help you read candles like a professional. Save this for your trading playbook
Single-Candle Patterns
One candle, big signals. Here's what to watch for:
* Hammer – Long lower wick with a small body on top. Often signals a potential reversal to the upside after a downtrend.
* Inverted Hammer – Long upper wick, small body at the bottom. Appears after a decline and hints at a bullish reversal.
* Marubozu – Full-body candle with no wicks. Strong buying pressure; typically indicates momentum continuation.
* Dragonfly Doji – Long lower wick with little to no body. Signals potential bullish reversal after a decline.
* Spinning Top – Small body with long upper and lower wicks. Indicates market indecision and potential for reversal or continuation.
Two-Candle Patterns
When two candles combine, they often hint at trend changes:
* Bullish Engulfing – A green candle fully engulfs the prior red candle. Bulls take over.
* Piercing Line – Green candle opens below the red, then closes above its midpoint. Often signals a bullish flip.
* Tweezer Bottom – Two candles with matching lows. Indicates strong support and potential bounce.
* Bullish Harami – Small green candle inside a larger red one. Suggests a pause or reversal upward.
* Bullish Kicker – Green candle opens above the red’s close and pushes higher. A strong sign of sentiment shift.
Three-Candle Patterns
Three candles offer confirmation and strength in trends or reversals:
* Three White Soldiers – Three consecutive green candles with higher closes. A classic sign of strong uptrend momentum.
* Morning Star – Red candle followed by a small-bodied candle (often a doji), then a green candle. Signals a trend reversal to the upside.
* Morning Doji Star – A variation of the Morning Star, but with a doji in the middle for added strength.
* Three Inside Up – A Bullish Harami followed by another green candle. Confirms a reversal.
* Three Outside Up – A Bullish Engulfing pattern followed by another green candle. Strong bullish confirmation.
* Three Line Strike – Three green candles followed by a strong red candle that doesn’t break the trend. Momentum often continues.
Pro Tip:
These candlestick patterns help you spot trend reversals and continuations before they become obvious. Use them to time your entries better, exit smarter, and avoid emotional decisions.
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