
Candlestick patterns are the language of the market. Most traders stare at them and see nothing. Here is how to actually read them.
Every candle tells you 4 things: the open price, the close price, the highest point reached, and the lowest point reached.
The body of the candle shows the distance between open and close. A green body means price closed higher than it opened. A red body means it closed lower.
The thin lines above and below the body are called wicks. Long wicks mean price tried to move in that direction but got rejected. Buyers or sellers showed up and pushed it back.
A few patterns worth knowing:
1. Doji: tiny body, long wicks on both sides. The market is undecided. Neither side is winning. Expect a move soon.
2. Hammer: small body at the top, long wick below. Sellers tried to push price down, buyers fought back hard. Often signals a reversal up.
3. Engulfing candle: one candle completely swallows the previous one. Big shift in momentum. Direction depends on which way it engulfs.
Here is the part most people skip. One candle means little. Context is everything. A hammer at a key support level is powerful. A hammer in the middle of nowhere is just a candle doing candle things.
Always ask: where is this pattern forming? That question separates traders from gamblers.

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