Candle Patterns

Candlestick patterns are one of the most widely used tools in technical analysis. Originating from 17th-century Japanese rice trading, they provide visual information about market psychology, price momentum, and potential trend reversals. Each candlestick represents price movement during a specific time period—whether 1 minute, 1 hour, 1 day, or more. By studying candlestick patterns, traders try to anticipate whether buyers or sellers are gaining control and what the next move might be.

A candlestick consists of four key data points: open, high, low, and close. The body of the candle reflects the distance between the open and close, while the wicks (also called shadows) indicate the highs and lows. A bullish candle typically closes higher than it opens, while a bearish candle closes lower. When these candles form specific shapes or sequences, they become candlestick patterns.

Candlestick patterns fall into three major categories: bullish reversal, bearish reversal, and continuation patterns. Understanding each helps traders identify potential turning points and trend confirmations.