Reading Candlestick Structure and Four Reversal Patterns
Summary
The document introduces the information in a candlestick: the open and close define its body, while the high and low define its wicks. It classifies candles as bullish, bearish, or neutral by comparing closing and opening prices. These descriptions apply to a selected chart timeframe and explain how each candle records price movement within that interval.
It then outlines four patterns often interpreted as possible reversals: bearish and bullish engulfing patterns, and morning and evening doji stars. The examples describe the sequence and relative size or position of candles used to recognize each pattern, and interpret them as shifts in buying and selling pressure. The article provides no testing, performance data, or rules for confirming signals, and its language about likely future moves should be treated as a technical-analysis interpretation rather than a guarantee. It is an introductory guide, not a complete trading system.
Key ideas
- A candle’s body spans its open and close, while its wicks mark the interval’s high and low.
- A close above the open is classified as bullish, and a close below it as bearish.
- Engulfing patterns use two candles and are presented as possible reversals.
- Morning and evening doji stars use three candles to suggest potential changes in direction.
- The document gives pattern descriptions but no empirical validation or signal confirmation method.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.