Candlestick Patterns — Trading Wiki

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Published by TradeHQ. Site creator: Anuga Weerasinghe. This page has no recorded editorial review date; the About page explains the site's editorial approach.

What Candlestick Patterns means

Candlestick patterns are names for formations built from opening, high, low and closing prices. Traders use them to describe price action; a formation alone does not establish a reliable reversal or continuation.

In depth

A candlestick summarizes opening, high, low and closing prices for a stated interval. Its body runs between open and close; wicks extend to high and low. A doji describes a small open-to-close difference under a chosen tolerance. Engulfing patterns compare at least two candles, while names such as morning star describe longer sequences. A candle does not disclose the order of every transaction within the interval or the identity and motives of participants. Pattern definitions and data quality matter. Comparing failed and successful examples is more informative than selecting a recognizable shape only after its later outcome is known.

Key points

• Single-candle examples include doji, hammer and shooting star; engulfing needs two candles
• Multi-candle: morning star, evening star, three white soldiers
• Context changes a pattern description but does not establish its success rate

Why it matters when you are learning

Read the open, high, low and close as observations. A candle shape does not reveal participant motives or the next price movement.

Worked exercise and its limits

For an invented candle with open $100, high $106, low $98 and close $104, identify body and wicks. An engulfing pattern needs at least two candles. OHLC values do not reveal the exact sequence of every trade within the interval.