1. Candlestick Basics
A candlestick represents 4 prices for a given period—open, high, low, and close—in one bar.
- Bullish candle, green or white — Close > open; a rise.
- Bearish candle, red or black — Close < open; a decline.
- Body — The range between open and close.
- Wick — The range extending to the high and low.
2. Reversal Patterns
① Hammer
A long lower wick and short body at the end of a downtrend → bullish reversal signal.
② Hanging Man
A long lower wick and short body at the end of an uptrend → bearish reversal signal.
③ Doji
Open ≈ close. Market indecision and a possible trend change.
④ Engulfing
A candle that completely surrounds the previous candle.
Bullish engulfing = buy signal / bearish engulfing = sell signal.
3. Continuation Patterns
- 3 consecutive bullish candles → Three White Soldiers → strong upward movement.
- 3 consecutive bearish candles → Three Black Crows → strong downward movement.
4. Limitations of Candlestick Patterns
Candlestick patterns have limited reliability alone. Always analyze them together with volume, RSI, and support or resistance.
5. AI Goes Beyond Patterns
AI learns thousands of candlestick patterns and analyzes volume, indicators, and price simultaneously, detecting patterns people miss.