Recognizing Candlestick Types and Multi-Bar Patterns
Summary
This article introduces candlestick anatomy and describes how body and shadow shapes are commonly interpreted as evidence of buying pressure, selling pressure, or indecision. It surveys long and short candles, marubozu, doji, spinning tops, hammer and hanging-man forms, and stars. It notes that some patterns take their meaning from the trend in which they appear, so the same shape may be read differently in rising and falling markets.
The implementation section outlines a procedure for classifying candles from OHLC data, estimating short-term trend by comparing a candle close with a simple moving average, and assembling candle structures for pattern rules. Examples include multi-candle formations such as the evening star and display conventions for marking patterns on a chart. The article provides recognition rules and indicator implementation guidance, but no systematic performance evidence; pattern interpretations are presented as technical-analysis conventions rather than validated predictive results.
Key ideas
- A candlestick's body shows the open-to-close move, while its shadows show the high and low beyond that body.
- Common candle types include marubozu, doji, spinning tops, hammers, hanging men, and stars.
- Pattern interpretation depends on surrounding trend context, which the article estimates with a simple moving average.
- OHLC data can be classified into candle structures and combined to detect single- and multi-candle formations.
- The article offers implementation examples but does not establish that the patterns produce predictive or profitable signals.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.