Why Candlesticks Still Matter

Candlesticks compress supply and demand into discrete stories: who controlled the bar, where the battle happened, and where traders are trapped. Patterns offer context—not guarantees. Their power grows when aligned with trend, levels, and volume.

Visual montage: hammer, shooting star, engulfing, doji, morning/evening star, harami, tweezer.

Core Reversal Patterns (With Context)

• Hammer: Long lower wick in a downtrend at support; best with rising volume.
• Shooting Star: Long upper wick in an uptrend at resistance; confirmation on next bar.
• Bullish/Bearish Engulfing: Full body swallows prior body; stronger at key levels.
• Morning/Evening Star: Gap + indecision + confirmation; powerful on daily charts.

Continuation Patterns

• Rising/Falling Three Methods: Small pullback candles within a trend body.
• Marubozu: Full-body candle signalling initiative control; look for follow-through.
• Runaway Gaps: Context of trend acceleration; beware exhaustion later.

Confirmation Checklist

• Location: Is the pattern at a significant level or moving average?
• Trend: Does it align with HTF direction?
• Volume: Expansion on signal bar strengthens credibility.
• Follow-through: Next bar should not negate the signal.

Case study: hammer at daily support + volume pop + next-bar confirmation.

Common Mistakes

• Treating patterns as standalone signals without level/trend confluence.
• Ignoring timeframe: lower timeframes produce more noise and false signals.
• Forcing entries before confirmation.

The best candlestick patterns are location-dependent.

Quick Reference Table (Top 10)

Create a one-page cheat sheet with pattern, trend context, level requirement, and confirmation rule. Print it; use it.

One-page candlestick reference sheet.