If you are serious about trading, sooner or later you will face the need to understand candlestick patterns. Honestly, this is one of the most useful cheat sheets to have on hand, regardless of whether you are trading crypto, stocks, or forex.

The essence is that each candle tells a story. It consists of four key indicators: opening price, the highest for the period, the lowest, and closing price. A green candle means the close was higher than the open — a bullish signal. A red candle indicates a decline — a bearish trend. It seems simple, but when you start seeing these patterns on real charts, they become a powerful tool for identifying entry and exit points.

Let's start with bullish reversals. The hammer is a pattern with a small body at the top and a long lower shadow, showing that buyers regained the price after selling pressure. Bullish engulfing looks like a large green candle that completely covers the previous red one — a very strong signal. Then there is the bullish Marubozu, a long green candle without shadows, demonstrating confident buying momentum. Double bottom — two candles with equal lows at the bottom of a falling trend, often serving as support. And the morning star, a three-candle pattern signaling the start of an upward movement.

On the other hand, bearish reversals work on the opposite principle. The shooting star is a small body at the bottom with a long upper shadow, indicating the market couldn't sustain high prices. Bearish engulfing is a large red candle that covers the green one, showing dominance of sellers. Bearish Marubozu is a long red candle without shadows, representing pure pressure from the bears. Double top appears at the peaks of an upward trend with two nearly identical highs. The evening star is a three-candle pattern that often precedes a downward reversal.

There are also patterns that indicate market uncertainty. A spinning top with a small body and long wicks on both ends signals indecision. Doji, when the opening and closing prices are almost the same, often appears at reversal points. An arrow with a long lower shadow may indicate a potential bullish reversal, while a gravel doji with a long upper shadow suggests a bearish one.

Triple candle patterns are especially interesting. Three white soldiers are three strong green candles in a row, showing consistent buying demand. Three black crows are three long red candles, reflecting powerful selling pressure. Three inside up signals a reversal from bears to bulls, and three inside down — the opposite.

The strength of individual candles also matters. Long green candles reflect strong bullish momentum, long red ones — strong bearish sentiment. The size, shape, and length of shadows indicate the strength of the price movement.

What I’ve learned over years of trading is that patterns work best when combined with other technical analysis tools. Watch volumes, support and resistance levels, trend lines. This cheat sheet gives you a basic understanding, but real mastery comes with practice. Start noticing these patterns on charts, and your trading accuracy will significantly improve. The main thing — don’t rely on them blindly, but use them as part of a broader trading strategy.