Candlestick patterns

How to read a single candle, why the same shape can mean opposite things, and how to plan a trade around a pattern without trusting it blindly.

A candlestick shows four prices for one period: the open, the high, the low and the close. The body spans the open and the close; it is usually green when the close is above the open and red when it is below. The thin lines above and below are the wicks, marking the high and the low that price reached but could not hold.

Candlestick patterns are shapes made by one, two or three candles. The same shape can mean different things depending on where it appears: a small-bodied candle with a long lower wick after a fall is read as a possible turn up, while the very same candle after a long rise is a warning. Always read the pattern inside the trend around it.

The patterns below are grouped as bullish, bearish or neutral, by the number of candles, and by whether they suggest a reversal of the trend, a continuation, or simple indecision. Each page explains the shape, how traders confirm it, where the stop-loss and target usually go, and how to size the trade. No pattern guarantees anything; many fail.

A downtrend, a small falling candle, then a larger rising candle whose body covers it completely₹480₹500₹520₹540₹560EngulfingTarget₹549Entry₹507Stop-loss₹486
Bullish2 candlesReversalBullish engulfing patternA two-candle pattern where buyers overwhelm the previous day's selling: how to recognise it, confirm it and plan the stop-loss, target and size.
A downtrend ending in a hammer: small body at the top, lower wick about three times the body, then a higher close₹480₹520₹540₹560HammerConfirmationTarget₹567Entry₹497Stop-loss₹462
Bullish1 candleReversalHammer candlestickA one-candle pattern that can mark the end of a fall: what it looks like, how traders confirm it, and how to plan the stop-loss, target and position size.
An uptrend, a small rising candle, then a larger falling candle whose body covers it completely₹440₹460₹480₹500EngulfingTarget₹451Entry₹493Stop-loss₹514
Bearish2 candlesReversalBearish engulfing patternA two-candle pattern where sellers overwhelm the previous day's buying: a possible short setup, and a warning for anyone holding the stock.
Left: a doji after a rise. Right: a doji after a fall. Open and close are almost equal₹440₹460₹480₹500₹520₹540₹560Doji after a riseDoji after a fall
Neutral1 candleIndecisionDoji candlestickA candle where the open and close are almost the same: a sign of indecision, not direction. What it means in context and how traders wait for the next candle.

Updated 2026-10-16

Educational content only. It is not investment advice and not a recommendation to buy or sell any security. Prices in examples and illustrations are made up. Patterns and rules fail often; past behaviour guarantees nothing.