How to Read Candlestick Patterns

Every candle on your chart is a small argument between buyers and sellers, settled over a fixed window of time. Once you can read that argument at a glance, a lot of “noise” on a price chart starts to look like structure instead.

The anatomy of a candle

A candlestick packs four numbers into one shape:

Open — where the argument started
Close — where it ended
High — the strongest push buyers managed
Low — the strongest push sellers managed

The rectangle between open and close is the body. The thin lines above and below are the wicks (or shadows). A long body means one side won decisively. A long wick means a side made a run and got rejected.

Five patterns worth knowing

Doji — open and close are nearly identical. Read it as indecision, especially after a strong trend leg.
Hammer — a small body near the top of the range with a long lower wick. A rejection of lower prices, often flagged as a possible reversal at the bottom of a move.
Shooting star — the inverse of a hammer: small body, long upper wick, appearing after an advance.
Engulfing candle — a body that fully covers the previous candle’s body. Bullish engulfing after a decline, bearish engulfing after an advance.
Inside bar — a candle whose entire range sits inside the prior candle’s range. A pause, not a signal on its own — context around it does the work.

Context beats memorization

No candle pattern means anything in isolation. A hammer at a random point on the chart is decoration; a hammer at a level you were already watching, on above-average volume, after a multi-leg decline, is information. Treat every pattern as a question the market is asking, not an answer it’s giving you.

In the terminal, drop the candles down to the timeframe you actually trade, mark your levels first, and only then look at what the candles are doing there. Pattern reading is a confirmation tool, not a standalone strategy.