Dear Friday Good Candlestick Patterns Every Trader Should Know
Candlestick patterns are the short stories the market tells about itself. A good trader learns to read them the way a good reader learns to read silence.
Here are the patterns worth knowing well before you trust anything more complex.
Doji
A Doji forms when open and close are nearly equal. It signals indecision — neither buyers nor sellers won the session. After a strong trend, a Doji can hint at reversal.
Hammer
A short body at the top of the candle with a long lower wick. After a downtrend, a Hammer suggests buyers absorbed the selling pressure — a potential reversal signal.
Shooting Star
The Hammer's mirror. A small body at the bottom, long upper wick, appearing after an uptrend. Sellers stepped in late and rejected higher prices.
Bullish Engulfing
A small red candle followed by a larger green candle that fully engulfs the previous body. Often a strong reversal signal after a downtrend.
Bearish Engulfing
The inverse — a small green candle swallowed by a larger red one. After an uptrend, this can mark a clear shift in momentum.
Morning Star
A three-candle pattern: long red, small-bodied indecision candle, then a strong green candle closing well into the first body. A reliable reversal signal at the bottom of a downtrend.
Evening Star
The bearish counterpart: long green, small indecision candle, then a strong red close into the first body. Appears at tops, signals exhaustion of the uptrend.
Examples and explanations
No single pattern guarantees direction. Read patterns in context — volume, support and resistance, and the broader trend. Confirmation on the next candle is what separates a setup from a signal.
Questions
Frequently asked
Engulfing patterns and Morning/Evening Star setups tend to be the most reliable when they appear at clear support or resistance levels with confirming volume.
Yes — stocks, forex, crypto, futures. Patterns reflect human psychology, which is consistent across markets, though reliability varies with liquidity and timeframe.
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