Hammer
Potential bullish reversal
A small body near the top of the candle with a long lower wick. After a decline, it can suggest that buyers rejected lower prices.
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SIKKA E SARKAR
Candlestick Academy
Understanding Candlestick Charts and Classic Trading Patterns
What Is a Candlestick Chart?
Candlestick charts show how the price of an asset changes during a particular period. They are widely used to study stocks, cryptocurrencies, foreign exchange, and commodities.
Each candle represents four prices: the opening price, highest price, lowest price, and closing price. These are commonly called Open, High, Low, and Close (OHLC).
Bullish Candle
A green candle means the closing price was higher than the opening price.
Bearish Candle
A red candle means the closing price was lower than the opening price.
Understanding the Body and Wicks
The thick part of a candle is called the real body. It shows the difference between the opening and closing prices. The thin lines above and below are called wicks or shadows. They show the highest and lowest prices reached during that period.
A candle on a five-minute chart represents five minutes of trading. On a daily chart, each candle represents one trading day. The meaning of a pattern depends partly on the timeframe and the surrounding market trend.
Six Classic Candlestick Patterns
These illustrations are simplified examples for learning, not live market signals.
Bullish Engulfing
Potential bullish reversal
A bearish candle followed by a bullish candle whose real body completely covers the previous candle's body.
Shooting Star
Potential bearish reversal
A small body near the bottom with a long upper wick. After an advance, it may suggest buyers failed to maintain higher prices.
Doji
Market indecision
Opening and closing prices are almost equal. It can indicate a temporary balance between buyers and sellers.
Morning Star
Potential bullish reversal
A three-candle formation: a strong bearish candle, a small-bodied candle, and then a strong bullish candle.
Bearish Engulfing
Potential bearish reversal
A bullish candle followed by a bearish candle whose real body completely covers the previous candle's body.
How Should Beginners Use Candlestick Patterns?
A single candle rarely tells the whole story. Traders often examine the overall trend, trading volume, nearby support and resistance levels, and whether subsequent candles confirm the initial pattern.
Candlestick patterns can fail, especially in volatile cryptocurrency markets. No pattern guarantees a price reversal or a profitable trade.