Candlestick Patterns every trader should know

Candlestick patterns are graphical representations of price movements in financial markets, commonly used in technical analysis to predict future price movements. Each candlestick represents a specific time period (such as a day, hour, or minute) and consists of four components: the opening price, closing price, highest price (high), and lowest price (low).

Here are some commonly recognized candlestick patterns:

1. Doji: A Doji candlestick has a small or no real body, indicating that the opening and closing prices are very close to each other. It suggests indecision in the market.

1. Hammer: A Hammer candlestick has a small real body near the top of the candle and a long lower shadow. It indicates a potential bullish reversal when found at the end of a downtrend.

1. Shooting Star: A Shooting Star candlestick has a small real body near the bottom of the candle and a long upper shadow. It suggests a potential bearish reversal when found at the end of an uptrend.

1. Engulfing Pattern: An Engulfing pattern consists of two candlesticks, where the body of the second candlestick completely engulfs the body of the first. A bullish engulfing pattern occurs at the end of a downtrend and signals a potential reversal to the upside, while a bearish engulfing pattern occurs at the end of an uptrend and signals a potential reversal to the downside.

1. Morning Star: The Morning Star pattern is a bullish reversal pattern that occurs during a downtrend. It consists of three candlesticks: a long bearish candle, a short candle with a small body, and a long bullish candle. It suggests a shift in momentum from bearish to bullish.

1. Evening Star: The Evening Star pattern is the bearish counterpart of the Morning Star pattern. It occurs during an uptrend and consists of three candlesticks: a long bullish candle, a short candle with a small body, and a long bearish candle. It suggests a potential shift from bullish to bearish momentum.

1. Hanging Man: A Hanging Man candlestick has a small real body near the top of the candle and a long lower shadow. It can signal a potential bearish reversal when found at the top of an uptrend.

1. Inverted Hammer: An Inverted Hammer candlestick has a small real body near the bottom of the candle and a long upper shadow. It suggests a potential bullish reversal when found at the bottom of a downtrend