In short
What a candle is made of
Each candle describes how price moved over a chosen period: a minute, an hour, a day. It has four prices: open, high, low and close.
If price rose from 1.00 to 1.10 over an hour, the hourly chart shows a bullish candle: the open at the bottom of the body, the close at the top. If it fell, a bearish one. Wicks mark where price reached but got pushed back.
How to read candles
- Big body, small wicks — one side fully controlled the period.
- Long lower wick — sellers pushed down but buyers bought it back. A sign of demand.
- Long upper wick — buyers pushed up but sellers brought price back. A sign of supply.
- Small body, wicks both ways (doji) — indecision, the sides are balanced.
The key patterns
- Pin bar. A candle with a small body and a long wick on one side. Bullish — a long lower wick at support; bearish — a long upper wick at resistance.
- Engulfing. The second candle's body fully covers the first one's in the opposite direction. Shows a sharp change of control.
- Harami (inside bar). A small candle inside the previous candle's body. A pause and a squeeze before continuation or reversal.
Location beats shape
A candlestick pattern is a reaction to a level. A pin bar in the middle of a move is just a candle. A pin bar at a strong level, trendline or demand zone signals that the level is being defended.
Use candles as a trigger, not as a system: first the level and context, then the candle that confirms the reaction.
Common mistakes
Trading patterns in mid-air
Without a level a pattern carries no information: such candles appear dozens of times a day.
Entering before the candle closes
Until it closes, a pin bar can easily turn into an ordinary candle with a big body.
Memorising a hundred patterns
Three or four are enough: pin bar, engulfing, harami, doji. The rest are variations.