Looking at candlestick charts without understanding anything is the worst feeling. I will share the 7 candlestick patterns I often use to read the market, helping you abandon emotional trading methods.

First is the Hammer – a candlestick with a long lower shadow, a small body at the top, and a short or no upper shadow. This usually appears during a downtrend, signaling a potential reversal to an uptrend. Conversely, there is the Inverted Hammer, with a long upper shadow and a body at the bottom, indicating buying pressure is starting to emerge but confirmation from the next candle is needed.

There are two stronger patterns: Bullish Engulfing and Bearish Engulfing. Bullish Engulfing occurs when a large green candle completely engulfs the previous red candle – a strong signal that buyers have taken control of the market. Conversely, Bearish Engulfing is when a large red candle covers the previous green candle, warning that a downtrend may be forming.

The Morning Star is a three-candle pattern: a long red candle, followed by a small candle (often a doji), and finally a strong green candle. This is a clear reversal signal to the upside. Conversely, the Evening Star features a long green candle, a small candle, and then a long red candle – indicating increasing selling pressure and a possible trend reversal downward.

Finally, there is the Doji, a candle where the open and close prices are nearly the same, with shadows that can be long or short. Doji indicates market indecision, which could be a sign of a reversal point or continuation of the previous trend, depending on the surrounding context.

Mastering these 7 patterns is not to make you a prophet, but to help you trade with a plan instead of emotions. Every time you see a green or red candle form, you will understand what the market is telling you. That’s the difference between a rational trader and a gambler in the crypto market.