How to Read Candlestick Patterns for Beginners (2025 Guide)

Candlestick patterns are one of the most popular tools in stock trading and technical analysis. They help traders understand market psychology, price movement, and potential trend reversals. If you’re new to trading, learning how to read candlestick patterns can significantly improve your decision-making and trading accuracy.

What is a Candlestick Pattern?

A candlestick pattern is a price chart representation showing the open, high, low, and close of a security for a specific time frame. Each candlestick tells a story of buyer and seller activity during that period.

• Green (or White) Candle → Bullish (price closed higher than open)
  
  

• Red (or Black) Candle → Bearish (price closed lower than open)
  
  

A single candle may reveal sentiment, but a pattern of multiple candles often signals stronger market direction.

How to Read a Candlestick (Structure Explained)

Each candlestick has four key components:

1. Open Price – Where the stock opened in that session
   
   

2. Close Price – Where the stock ended
   
   

3. Wick/Shadow – The high and low price range
   
   

4. Body – The difference between open and close
   
   

• If the body is long and green → Strong bullish trend.

• If the body is long and red → Strong bearish trend.

• If wicks are long → High volatility and market indecision.

Top Candlestick Patterns Beginners Must Know

1. Doji Candle

• Open and close are almost the same → Market indecision.
  
  

• Appears before trend reversals.
  
  

2. Hammer Candle (Bullish Reversal)

• Small body with a long lower wick.
  
  

• Suggests buyers are stepping in after a price drop.
  
  

3. Shooting Star (Bearish Reversal)

• Small body with a long upper wick.
  
  

• Indicates selling pressure at higher prices.
  
  

4. Engulfing Patterns (Bullish & Bearish)

• A large candle that fully “engulfs” the previous candle.
  
  

• Bullish Engulfing → Potential uptrend start.
  
  

• Bearish Engulfing → Potential downtrend start.
  
  

5. Morning Star & Evening Star

• Morning Star → Bullish reversal after a downtrend.
  
  

• Evening Star → Bearish reversal after an uptrend.
  
  

How to Use Candlestick Patterns in Trading (Beginners’ Strategy)

1. Combine with Support & Resistance → Candles near key levels are more reliable.
   
   

2. Use in Higher Timeframes → 1D or 1W charts give more accurate signals than 5-min charts.
   
   

3. Confirm with Volume → Higher volume strengthens candlestick signals.
   
   

4. Don’t Trade in Isolation → Combine with RSI, Moving Averages, or MACD for confirmation.
   
   

📌 Example: A Hammer Candle at major support with rising volume can indicate a strong bullish reversal.

Is Reading Candlestick Patterns Still Relevant in 2025?

Candlestick patterns are the foundation of technical analysis and an essential skill for beginners. By learning how to read candlestick patterns, you can identify potential reversals, continuations, and market sentiment.