Learn Candlestick Patterns: A Beginner's Guide Lesson 1&2

Lesson 1: Understand a single candlestick

Every candlestick represents price movement over a specific period, such as 5 minutes, 15 minutes, 1 hour or 1 day.

Bullish candle - usually green-The closing price is higher than the opening price. Buyers pushed the price upward during that period.

Bearish candle - usually red -The closing price is lower than the opening price. Sellers pushed the price downward during that period.

The three important parts are:

• Body: the area between the opening and closing prices.

• Upper wick: shows how high the price went.

• Lower wick: shows how low the price went.

Remember: a green candle does not automatically mean the next candle will rise, and a red candle does not guarantee the next candle will fall.

Lesson 2: The 6 candlestick patterns you should learn first

1.Hammer - potential bullish reversalA small body near the top with a long lower wick. After a decline, it may indicate that buyers are pushing back against sellers.

Look for: a downtrend followed by a hammer and confirmation from a bullish candle.

2. Bullish Engulfing - buyers gaining strength

A large bullish candle whose body covers the previous bearish candle's body.Look for: this pattern near support or after a clear price decline.

3. Shooting Star - potential bearish reversal

A small body near the bottom with a long upper wick. Buyers pushed the price higher, but sellers forced it back down.Look for: the pattern after an uptrend, preferably followed by a bearish candle.

4. Bearish Engulfing - sellers gaining strength

A large bearish candle whose body covers the previous bullish candle's body.Look for: this pattern near resistance or after a strong price rise.

5. Doji - market indecision

The opening and closing prices are almost equal. Neither buyers nor sellers clearly dominated the candle's closing price.Look for: the surrounding trend and the next candle before deciding what it means.

6. Morning Star - three-candle bullish reversal

A bearish candle, followed by a small-bodied candle, then a strong bullish candle.Look for: this sequence after a decline, with the third candle confirming renewed buying strength.

These are potential signals, not guarantees. The location of the pattern on the chart is just as important as its shape.