Candlestick patterns help traders understand market mood and price direction. Each candlestick shows the open, high, low, and close price for a specific time. By studying these patterns, traders can guess whether buyers or sellers are stronger. Candlestick patterns are easy to learn and very useful, especially for beginners.
One common pattern is the Doji. It forms when the opening and closing prices are almost the same. This shows confusion in the market, where buyers and sellers are equal. A Doji often appears before a trend change, especially after a strong uptrend or downtrend. Traders use it as a warning sign, not as a direct buy or sell signal.
Another important pattern is the Hammer and Shooting Star. A Hammer appears after a price fall and shows possible reversal upward. It has a small body and a long lower wick. A Shooting Star appears after a price rise and signals possible reversal downward. It has a small body with a long upper wick. These patterns show rejection of price levels.
Lastly, traders should know Engulfing patterns. A Bullish Engulfing pattern appears after a downtrend and signals a possible rise. A Bearish Engulfing pattern appears after an uptrend and signals a possible fall. In both cases, one candle fully covers the previous candle. While candlestick patterns are powerful, they work best when used with trend, support, and resistance for better results.
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