Understanding Forex Candlestick Patterns: A Trader’s Guide


When you first open a forex chart, the colored bars may look confusing — but those shapes are called candlesticks, and they are one of the most powerful tools in technical analysis. Learning how to read candlesticks is like learning the language of the market.

What is a Candlestick?

A candlestick represents price movement within a set period of time (e.g., 1 minute, 1 hour, 1 day).
Each candlestick shows four key points:

  • Open: Where the price started.

  • Close: Where the price ended.

  • High: The highest price reached.

  • Low: The lowest price reached.

Visually, candlesticks make it easier to see market psychology — whether buyers or sellers are in control.

The Anatomy of a Candle

  • Body: The thick part (between open and close).

    • If the body is green/white → buyers pushed price higher.

    • If the body is red/black → sellers pushed price lower.

  • Wicks (or Shadows): Thin lines above and below the body, showing highs and lows.

Types of Candlesticks Every Trader Should Know

  1. Doji

    • Open and close are almost the same.

    • Signals market indecision.

    • Can hint at reversals when found at strong support/resistance.

  2. Hammer

    • Small body on top, long wick below.

    • Appears after a downtrend → suggests buyers are stepping in.

  3. Shooting Star

    • Opposite of hammer (small body at bottom, long wick above).

    • Appears after an uptrend → signals possible bearish reversal.

  4. Engulfing Patterns

    • Bullish engulfing: A large green candle completely covers the previous red one → strong reversal upward.

    • Bearish engulfing: A large red candle completely covers the previous green one → strong reversal downward.

  5. Spinning Tops

    • Small body, long wicks both ways.

    • Suggests indecision and upcoming volatility.

How to Use Candlesticks in Forex Trading

  • Don’t rely on a single candle. Look for patterns that form at key support or resistance zones.

  • Combine with trendlines and indicators to confirm setups.

  • Focus on higher timeframes (4H, Daily) if you’re a beginner, to filter out noise.

Final Thoughts

Candlesticks are the foundation of technical analysis. By learning to read them, you’re not just looking at price — you’re understanding how traders are thinking and reacting in real time.

In the next article, we’ll dive into candlestick patterns in combinations (like Morning Star, Evening Star, and Three Soldiers) and how to use them for high-probability trade setups.

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