Lesson

Candlestick Patterns | Options Educator

Read candlestick charts and identify powerful reversal and continuation patterns.

In this lesson

Reading Candlestick Charts

  • Each candlestick shows open, high, low, close (OHLC)
  • Green/white = bullish (close > open)
  • Red/black = bearish (close < open)
  • Wicks show rejection of prices

Single Candlestick Patterns

  • Doji = indecision, potential reversal
  • Hammer after downtrend = bullish reversal signal
  • Shooting star after uptrend = bearish reversal
  • Context (where in trend) matters more than pattern alone

Multi-Candlestick Patterns

  • Engulfing patterns are strong reversal signals
  • Morning/Evening stars show trend exhaustion
  • Three soldiers/crows indicate strong momentum
  • Always wait for confirmation before trading patterns

Trading Candlestick Patterns

  • Always wait for confirmation before trading
  • Context (trend, levels, volume) determines pattern strength
  • Use proper stop loss below pattern low (bullish) or high (bearish)
  • No pattern works 100% - manage risk on every trade

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