I have noticed that many beginner traders often "buy at the top" frequently just because they don't know how to read candlesticks. Today, I want to share 7 basic candlestick patterns that I find really helpful when analyzing charts.

First is the Hammer candle – this has a very long lower shadow, a small body at the top, and almost no upper shadow. It usually appears at the end of a downtrend, signaling that the market is about to reverse and move upward. Conversely, the Inverted Hammer has a long upper shadow with a small body at the bottom, indicating buying pressure is starting to emerge, but you should wait for confirmation from the next candle.

The beauty of the Bullish Engulfing pattern is a large green candle "swallowing" the previous red candle – this is a strong signal that buyers have completely taken control. On the other hand, the Bearish Engulfing pattern occurs when a large red candle engulfs the previous green candle, warning that a downtrend is forming.

The Morning Star pattern consists of three candles – a long red candle, followed by a small candle (usually a doji), then a strong green candle. This is a clear reversal pattern indicating an upward trend. The Evening Star is the opposite – a long green candle, a small candle, then a large red candle – signaling increasing selling pressure.

Finally, there is the Doji – a candle where the opening and closing prices are nearly the same, with shadows that can be long or short. This indicates market indecision, preparing for a reversal or trend continuation.

In fact, understanding these 7 candlestick patterns not only helps you avoid basic mistakes but also is the first step to becoming a rational trader, not just entering trades based on emotions. Mastering how to interpret red candles and other signals is like learning to "read the market's vibe" – each trade will feel more confident, and you won't be panicked by market fluctuations.