Understanding candlestick patterns can change your trading game. These formations tell the story of buyers vs. sellers โ and when learned properly, they can signal powerful entries and exits before the big move even starts.
Here are 5 patterns every trader must know:
๐น Hammer
Looks like: Small body with long lower wick
Appears: After a downtrend
Signals: Buyers stepping in, trend reversal
Tip: Wait for the next green candle for confirmation
๐น Bullish Engulfing
Looks like: Small red candle followed by a larger green candle
Appears: After a downtrend
Signals: Strong bullish momentum
Tip: Entry after engulfing candle closes
๐น Dragonfly Doji
Looks like: No top wick, long lower shadow
Appears: After a decline
Signals: Rejection of lower prices
Tip: Check volume for strength
๐น Piercing Line
Looks like: Red candle followed by a green one that closes over halfway up the red
Appears: At the bottom of a downtrend
Signals: Buyers are taking control
Tip: Watch for continuation candles
๐น Tweezer Bottom
Looks like: Two candles with same low
Appears: At the bottom of a dip
Signals: Double rejection of downside
Tip: Combine with RSI or support zone for confidence
๐ฅ Master these patterns and start recognizing price action like a pro. This is how smart traders avoid fakeouts and time their entries perfectly.
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