Candlestick patterns are named shapes of one to three candles on a price chart. A doji is a day neither side won. A hammer is a day sellers pushed the price down and buyers pushed it back. A shooting star is the mirror: buyers pushed it up and sellers pushed it back. An engulfing pattern is a day that wiped out the whole body of the day before.
Each one records a fight between buyers and sellers that already happened. None of them tells you what comes next on its own. Traders read a pattern together with where it formed: after a long rise, after a fall, or at a support or resistance level.
Below are the ten patterns beginners meet first, what each looks like and where traders look for it. The first lesson, how to read candlesticks, starts one step earlier with a single daily candle.
How do you read a candlestick chart?
Each candle is one period, one day on a daily chart. Its body runs from the open to the close. Its thin wicks reach the day's high and low.
Green closed above its open. Red closed below.
Three things say who won the day:
| Look at | What it says |
|---|---|
| The close | Near the high, buyers finished in control. Near the low, sellers did |
| The body | Big: one side moved the price a long way. Small: neither side got far |
| The wicks | A long wick marks a price the day reached and gave back |
The first lesson walks through all three on two charts.
What are the most common candlestick patterns?
In the table, body means the open to the close and range means the high to the low.
| Pattern | Candles | What it looks like | Where traders look for it |
|---|---|---|---|
| Doji | 1 | A body no more than a tenth of the day's range | After a long run |
| Dragonfly doji | 1 | A doji with almost no upper wick: a long lower wick, closing at the high | After a fall |
| Gravestone doji | 1 | A doji with almost no lower wick: a long upper wick, closing at the low | After a rise |
| Hammer | 1 | A lower wick at least twice the body, little upper wick | After a fall |
| Hanging man | 1 | The hammer's shape | After a rise |
| Shooting star | 1 | An upper wick at least twice the body, little lower wick | After a rise |
| Inverted hammer | 1 | The shooting star's shape | After a fall |
| Bullish engulfing | 2 | A red day, then a green day whose body covers the whole red body. Wicks don't count | After a fall |
| Bearish engulfing | 2 | A green day, then a red day whose body covers the whole green body | After a rise |
| Morning star, evening star | 3 | A big candle, a small-bodied one, then a big candle the other way closing deep into the first | After a fall, after a rise |
Traders look for a hammer after a fall as a sign that selling may be easing. They read a doji as a day of indecision, and an engulfing pattern as a shift in who controls the next few days.
Why does the same candle get two names?
The name records where the candle formed as well as its shape. A long lower wick with a small body on top is a hammer after a fall and a hanging man after a rise. A long upper wick is a shooting star after a rise and an inverted hammer after a fall.
The shape records the same day either way. Sellers pushed the price down during the day, and buyers pushed it back by the close.
Traders read it by what came before.
Do candlestick patterns always work?
No. Any pattern can fail.
A pattern describes a day that is over, and the days after it can go either way. A hammer can be followed by more selling, and a doji after a long rise can be a pause before the rise goes on.
A test of candlestick patterns on Thai stocks, the 50 in the SET50 index from 2006 to 2016, found that most had no significant predictive power. The few that did came with enough risk to cancel the gain.
That is why traders read a pattern as one piece of evidence beside the trend and the nearest support and resistance level, and wait for the next close to show which side followed through.
Which timeframe do candlestick patterns work on?
Patterns form on every timeframe, from one-minute charts to monthly ones. Each candle is one period, so a hammer on a weekly chart records a whole week of selling and buying back.
A pattern on a longer timeframe covers more trading. Many traders start from the daily chart.
The lessons use daily candles, where each candle reads as one day of buyers against sellers.
Where do the lesson charts come from?
They are generated by Tradicted's chart generator and shown with no ticker and no dates. The candles each question asks about are set by hand so each one matches its definition.
You cannot look up what happened next. The chart is all you read.
Candlestick charts came from Japan. Steve Nison's 1991 book Japanese Candlestick Charting Techniques brought them to Western traders.
Start with how to read candlesticks and mark where your first day closed.