Decode the anatomy of a candlestick and learn the most reliable patterns — from doji and hammer to engulfing and morning star.
In this lesson you'll learn
The anatomy of a candlestick (open, close, wicks)
How to instantly read bullish vs. bearish candles
6 key single-candle patterns and what they signal
3 powerful multi-candle reversal patterns
Anatomy of a candlestick
Each candlestick represents one complete trading period (a day, an hour, a week, etc.) and encodes four pieces of information: the open, high, low, and close.
Sample 20-Day Candlestick Chart — Spot the Patterns
Bullish
Close > Open
High (top of wick)
Close (top of body)
Open (bottom of body)
Low (bottom of wick)
Bearish
Close < Open
High (top of wick)
Open (top of body)
Close (bottom of body)
Low (bottom of wick)
The body (the filled rectangle) shows the range between open and close — the most important part of the candle. The wicks (thin lines above and below) show how far price traveled before being rejected — the battle between bulls and bears.
Key single-candle patterns
These six patterns are the most widely watched on any time frame. Context is critical — a pattern at the top of an uptrend means something different than the same pattern at the bottom of a downtrend.
Bullish
Large body, small wicks
Bearish
Large body, small wicks
Doji
Open ≈ Close. Indecision
Hammer
Long lower wick. Bullish reversal
Shooting Star
Long upper wick. Bearish reversal
Pin Bar
Extreme wick rejection
Bullish / Bearish Marubozu
Continuation
Large body with tiny or no wicks. Indicates overwhelming momentum — buyers (green) or sellers (red) dominated the entire session with no pushback.
Doji
Reversal warning
Open and close are almost identical, creating a cross shape. Signals indecision — neither bulls nor bears won. Especially significant after a strong trend.
Hammer
Bullish reversal
Small body at the top of the range, long lower wick (2× body or more). Appears after a downtrend. Sellers pushed prices down but buyers pushed them back up — bulls are gaining.
Shooting Star
Bearish reversal
Small body at the bottom, long upper wick. Appears after an uptrend. Buyers pushed prices up but sellers pushed them back down — bears are gaining.
Powerful multi-candle reversal patterns
Multi-candle patterns require two or three consecutive candles and carry more statistical weight than single-candle patterns because they show a confirmed shift in momentum.
Bullish Engulfing
2 candlesBullish reversal
A red candle is immediately followed by a green candle whose body completely engulfs the red body. Shows buyers overwhelmingly took control in the very next session. Strong reversal signal after a downtrend.
Bearish Engulfing
2 candlesBearish reversal
A green candle followed by a red candle whose body completely engulfs the green body. Sellers took decisive control. Strong reversal signal after an uptrend.
Morning Star
3 candlesBullish reversal
A large red candle, then a small-bodied candle (often a doji) that gaps down, then a large green candle that closes into the first candle's body. One of the most reliable bullish reversal signals — especially at major support levels.
Evening Star
3 candlesBearish reversal
The mirror of the Morning Star: large green candle, then a small-bodied candle that gaps up, then a large red candle closing into the first candle's body. Reliable bearish reversal signal at resistance or after a prolonged uptrend.
Critical rule: context determines meaning
A hammer in the middle of a consolidation is meaningless. A hammer after a 15% decline at a major support level is a high-probability signal. Always consider where the pattern forms — at support or resistance, after a trend move, confirmed by volume. A pattern without context is just noise.
High-probability pattern setup
At a well-established support or resistance level
After a sustained trend move (not sideways)
Confirmed by above-average volume
On a daily or weekly chart (higher time frame)
Lower-reliability signal
In the middle of a choppy, sideways range
After a small, brief price move
On very low volume (no conviction)
On a 1-minute or 5-minute chart (noise-heavy)
Quick Knowledge Check
3 questions · test what you've just learned
1
What does a hammer candlestick pattern typically signal?
2
In a bullish engulfing pattern, which condition must be true?
3
A candlestick has a very long upper wick and a tiny body near the bottom of the range. What does this indicate?
✓ Key takeaways from Lesson 2
Each candlestick shows Open, High, Low, Close. Green (bullish) = close above open. Red (bearish) = close below open.
The body shows the open-to-close range. Wicks show the high/low extremes — how far price was pushed before being rejected.