I noticed that many beginners in trading ignore basic knowledge of candlestick patterns, even though this is one of the most reliable tools for analyzing the market. Candlestick patterns in trading are not just pretty charts; they are real signals about market sentiment.

When you look at a chart, candles show four key points: the open, the close, the high, and the low for the period. Together, they tell the story of the struggle between bulls and bears. Interestingly, this system dates back to the 1700s, when Japanese rice traders used similar methods. The West learned about candlestick patterns in trading only in the late 1980s, but now it is a primary tool for most traders.

Patterns are divided into several categories. There are bullish patterns, which signal an upward reversal or continuation of a rise. There are bearish patterns, warning of a decline. And there are reversal and continuation patterns, which show whether the trend will change or continue.

Let’s look at bullish reversal signals. The hammer is a classic. It forms when the price falls low, but then recovers and closes near the open. A long lower wick shows that sellers pushed down, but buyers took control. This is a potential bullish reversal.

Bullish engulfing looks like this: a small red candle, followed by a large green one that completely covers it. This means buying pressure has defeated selling pressure. Market sentiment shifts, and the price may move higher.

The morning star is a three-candle pattern. A long red candle, then a small one (regardless of color) that opens below, and then a long green candle. The small candle in the middle represents uncertainty, and the green candle after it indicates the strength of the bulls. A strong reversal signal.

The piercing line is also a two-candle pattern. A long red candle, followed by a green one that opens below the previous low but closes above the midpoint of the first candle. The close shows strength. This pattern is more often seen on stocks because of overnight gaps, but it can also appear on weekly charts of any assets.

An inverted hammer is a single candle with a small body and a long upper wick. It appears after a decline. The upper wick shows an attempt by buyers to push the price higher. A reversal may be on the way.

Doji is a pattern of indecision. When the open and close are almost the same, you get a candle with no real body. Neither buyers nor sellers control the situation. It can be a reversal or continuation signal, depending on the context.

Now let’s discuss bearish reversal patterns. Bearish engulfing is the mirror of bullish engulfing. A small green candle, then a large red one that engulfs it. Selling pressure is increasing, and sentiment shifts to bearish.

The evening star is the opposite of the morning star. A long green candle, then a small one (of any color) opening higher, and then a long red candle. The small candle indicates uncertainty after a rise, and the red candle after it shows the bears’ strength.

A shooting star is a single candle with a small body and a long upper wick, but it appears after an upward move. The upper wick shows an attempt by sellers to push the price down. A small body suggests a potential downward reversal.

Right now, the market is moving in an interesting way. БТЦ is holding around 79.51K, down 1.33% over the past 24 hours. ХРП is at 1.42, down 1.52%. СОЛ has fallen to 90.98, down 3.97%. In moves like these, candlestick patterns in trading become especially useful for understanding what’s happening.

The key to success in using candlestick patterns is context. One pattern on an uptrend is not the same as one on a downtrend. Look at volumes, the previous candles, and support and resistance levels. Candlestick patterns are a tool, not magic. Learn to read the market through these formations, and your analysis will become much more accurate.