Here are some of the most common and widely used candlestick patterns, grouped by type (with brief explanations of appearance and meaning):
Bullish reversal patterns (often appear at the end of downtrends → potential upward move)
• Hammer → Single candle with small body (any color) at the top + very long lower wick (2–3× body) + little/no upper wick → Sellers pushed price down, but buyers strongly rejected lower levels.
• Bullish Engulfing → Two candles: large red candle followed by larger green candle that completely engulfs (covers) the previous body → Strong shift from sellers to buyers.
• Morning Star → Three candles: long red → small body/doji (gap down) → long green closing well into first candle → Classic bottom reversal signal.
• Inverted Hammer → Small body at bottom + long upper wick → Buyers tried to push up but met resistance; stronger if followed by confirmation candle.
Bearish reversal patterns (often at end of uptrends → potential downward move)
• Shooting Star / Hanging Man → Small body at bottom + very long upper wick (opposite of hammer) → Buyers pushed up, sellers took control by close.
• Bearish Engulfing → Large green candle followed by larger red that engulfs it → Buyers lose control to aggressive selling.
• Evening Star → Three candles: long green → small body/doji (gap up) → long red closing deep into first candle → Top reversal signal.
Indecision / Neutral patterns
• Doji → Open ≈ close (very small or no body), wicks can vary → Market in balance; indecision after strong trend often precedes reversal.
Continuation patterns (trend likely to keep going)
• Marubozu (Bullish = full green body, no wicks / Bearish = full red body) → Very strong directional conviction with no rejection.
These patterns work best with confirmation (next candle or volume), support/resistance levels, and overall trend context — never trade them in isolation.
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