Candlestick charts are one of the most popular tools for traders. They not only show how the price has changed, but also give clues about what might happen next. If you want to understand the market and trade more confidently, it is worth mastering several key candlestick patterns. Let's look at the most important and simple ones.
What is a candle?
A candlestick shows how the price has moved over a certain period of time. It has:
The body is the distance between the opening and closing price.
Shadows (tails) are the lines above and below that show the maximum and minimum for that period.
If the body is green (or white), the price has risen. If it is red (or black), the price has fallen.
❗️Top Candlestick Patterns❗️
1. Bullish Engulfing
This is a signal that the price is likely to go up.
The first candle is small and red.
The second candle is large and green, completely covering the first.
⁉️What does it mean: Buyers are taking control and the market is turning up.
2. Bearish Engulfing
The opposite of a bullish pattern. This is a signal for the price to fall.
The first candle is small and green.
The second one is a large red one, overlapping the first one.
⁉️What does it mean: Sellers dominate, the market turns down.
3. Hammer
It looks like a hammer: a small body on top and a long lower shadow.
⁉️What does it mean: The price fell sharply, but buyers were able to return it to the top. This is a good sign for growth.
4. Inverted Hammer
Looks like an inverted hammer: a small body at the bottom and a long upper shadow.
⁉️What does it mean: Buyers are trying to turn the market up. Often appears before growth.
5. Doji
A candle with a very small body, where the opening and closing prices are almost the same. It has long shadows.
⁉️What it means: The market is unsure of the direction. There may be a strong move up or down after the doji.
6. Morning Star
Consists of three candles:
Red candle - fall.
Small candle (any color) - pause.
Green candle - growth.
⁉️What does it mean: The market is turning up. Buy signal.
7. Evening Star
The opposite of the morning star. Also three candles:
Green candle - growth.
A small candle is a pause.
Red candle - fall.
⁉️What does it mean: The market is turning down. Sell signal.
💡How to use candlestick patterns?
Don't rush. One pattern is not a guarantee. Look at the overall trend and other signals.
Check the volume. If the pattern has a high trading volume, the signal is stronger.
Practice. Find patterns on old charts to better understand how they work.
Candlestick patterns are a powerful tool for market analysis. They help you understand what is happening on the chart and make more confident decisions. You don’t need to learn them all at once, start with the simplest ones and gradually add new ones. And most importantly, remember that even the strongest patterns work better in combination with other methods of analysis.
