A 9AM Traders Academy initiative
Candlestick Patterns Explained
Fourteen patterns that show up on every chart, drawn out and put in plain words. What each one looks like, what it says about buyers and sellers, and how traders usually act on it.
How to read a single candle
Each candle records four prices for one period: the open, the high, the low and the close. The thick part is the body. The thin lines above and below are wicks.
The body tells you who won the period. Green means the close finished above the open, so buyers had the better of it. Red means it closed below, so sellers did. The wicks show where price travelled and was turned back.
A candlestick pattern is simply one to three of these candles read together. It tells you who is gaining ground, not what will happen next.
Bullish reversal patterns
These shapes show up after a fall and hint that sellers are running out of steam.
How to spot it. Small body at the top of the candle, a lower wick at least twice the body, and almost no upper wick. It forms after a decline.
What it tells you. Sellers pushed price down hard, then buyers dragged it all the way back. Rejection of lower prices is the message. Most traders wait for a later candle to close above the hammer high and keep their stop under its low.
How to spot it. A red candle followed by a bigger green candle whose body fully covers the red body.
What it tells you. Buyers won back a full session of losses and more, all in one candle. It carries more weight near support. The stop usually sits under the green candle low.
How to spot it. A long red candle, then a green candle that opens lower and closes above the midpoint of the red body.
What it tells you. Sellers owned the open but lost it by the close. It is a softer signal than the engulfing, so wait for a candle that follows through before you trust it.
How to spot it. Three candles: a long red one, a small candle that stalls below it, and a long green one that closes well into the first body.
What it tells you. The small middle candle is where selling runs dry. The third candle is buyers taking charge. It is cleaner when it forms at a level that has held before.
How to spot it. Three long green candles in a row. Each opens inside the last body and closes near its high, with short wicks.
What it tells you. Steady buying over three sessions, not a one day spike. Be careful if it arrives after a big run already, because late buyers get trapped.
Bearish reversal patterns
The mirror set. They show up after a rise and hint that buyers are tiring.
How to spot it. Looks like a hammer, but it forms after a rise. Small body on top, long lower wick.
What it tells you. Sellers made a real attempt even though the candle closed near its open. On its own it only warns. A red candle that closes below its body next makes the warning count.
How to spot it. Small body at the bottom, upper wick at least twice the body, and almost no lower wick. It forms after a rise.
What it tells you. Buyers pushed up and got slapped back. The failed push is the signal. Traders often put the stop just above the wick high.
How to spot it. A green candle followed by a larger red candle that covers the green body completely.
What it tells you. Sellers erased a whole green session and then some. It works best at resistance, where the stop can sit above the red candle high.
How to spot it. A long green candle, a small candle gapping above it, then a long red candle that closes deep inside the first body.
What it tells you. The stall at the top shows buyers running out of road, and the red candle is sellers stepping in. It is the downside twin of the morning star.
How to spot it. Three long red candles in a row. Each opens inside the previous body and closes near its low.
What it tells you. Sellers in control for three straight sessions. After a long rally it can mark the start of a deeper pullback. After a steep fall it often means the move is already stretched.
Continuation and indecision patterns
Some candles say the trend is only resting, others say nobody is in charge yet.
How to spot it. Open and close are almost the same, with wicks on both sides, so the body is a thin line or a cross.
What it tells you. Neither side won. Alone it is only a pause. Where it appears (near a high, a low or mid range) and what the next candle does tell you far more than the doji itself.
How to spot it. A full body with no wicks, or close to none. Green opened at the low and closed at the high. Red is the reverse.
What it tells you. One side held control from the first trade to the last. A green marubozu that breaks above resistance shows real conviction, and the same goes for red below support.
How to spot it. A long green candle, three small candles that drift down but stay inside its range, then another long green candle that closes above the first.
What it tells you. A rest inside an uptrend. Sellers could not even break the low of the first candle. The close above the first candle is the cue most traders look for.
How to spot it. A long red candle, three small candles that drift up inside its range, then another long red candle that closes below the first.
What it tells you. A breather inside a downtrend. Buyers could not lift price past the first candle high. The close below the first candle is the cue that the fall resumes.
Five checks before you act on any pattern
A pattern that looks perfect on a screen can still fail. These five questions filter out most of the weak ones.
- What is the trend?A reversal pattern needs something to reverse. A hammer in a sideways market means very little.
- Where is it?Patterns at support, resistance or a past swing point count for more than ones in open space.
- Did the next candle agree?Wait for a follow-through candle. A pattern that gets ignored by the next candle has failed.
- Who showed up?Heavy volume on the signal candle is a sign that real money cared.
- Where is your exit?Decide the stop and the position size first. If the risk is too wide, skip the trade.
Candlestick pattern questions, answered
Which candlestick pattern is the most reliable?
None is reliable on its own. Engulfing patterns and the morning and evening stars tend to get the most respect, but they work best at levels that already matter, such as support, resistance or a recent swing high or low. Treat a pattern as a prompt to look closer, not as a promise.
Do candlestick patterns work in the Indian market?
Candles are just a way of drawing price, so they show up on NSE and BSE stocks, indices, commodities, forex and crypto alike. The pattern does not change with the market. What changes is how much it is worth, which depends on the trend, the level and how many people are trading it.
How many patterns should a beginner learn first?
Start with six or seven: hammer, shooting star, both engulfing patterns, doji and the two star patterns. Learning to read them on live charts matters more than memorising forty names.
Can I trade using candlestick patterns alone?
You can, but most traders add context: the trend, key price levels, volume and a clear stop-loss. A pattern with no context is a coin toss that looks like a signal. And no pattern guarantees a result, so risk only what you can afford to lose.
Learn to read charts with a mentor
Practise these patterns on live charts and get your questions answered in a free demo class.
Published by 9AM Traders Academy as a free learning initiative. This page is for education only and is not investment advice. Trading involves risk, and past patterns do not guarantee future results.