Candlestick patterns: what the shape says and what it cannot

A pattern is a description, not a signal

A pattern name summarises a sequence of open, high, low, and close prices. A hammer, for example, says the session sold off and then recovered near the open. That is useful context. It is not an instruction to buy or sell.

Single-candle patterns

One candle can show rejection, indecision, or a one-sided session.

• Hammer and inverted hammer: a long shadow shows price was rejected at one end of the session.
• Doji: the open and close are nearly equal, a sign of indecision rather than direction.
• Marubozu: a full body with little or no shadow, showing one side controlled the session.
• Spinning top: a small body with shadows on both sides, another indecision shape.

Two-candle patterns

Two candles add a comparison: did the second session reverse the first, gap away from it, or fail at the same price?

• Engulfing: the second candle body covers the first, showing a shift in control.
• Harami: the second candle sits inside the first, a pause after a larger move.
• Kicker: a gap between two opposite candles, one of the stronger reversal shapes.
• Piercing line and dark cloud cover: the second candle closes well into the first candle body.
• Tweezers top or bottom: two sessions fail at the same high or low.
• Hanging man and shooting star: a long shadow after a move, warning that the prior direction is losing control.

Three-candle patterns

Three-candle formations describe a short sequence, such as a pause followed by a strong reversal or three sessions in the same direction.

• Morning star and evening star: a pause, then a strong candle in the opposite direction.
• Three white soldiers and three black crows: three consecutive sessions in the same direction, a continuation shape.

Context changes the meaning

The same candle can be a hammer after a decline and a hanging man after a rally. Sellers appearing at resistance is different from sellers appearing after a breakout. TickerLevels checks the preceding trend and uses that context to rank patterns rather than treating every shape as equally important.

What a pattern cannot tell you

A pattern does not know your timeframe, your risk, or the news. Detection thresholds are rules of thumb, and a pattern can fail. Treat the ticker note as a prompt to look at the chart and the levels, not as a trade call.

• A pattern can appear inside a wider range and have little effect.
• The same shape on a daily and a 15-minute chart can mean different things.
• News, earnings, and liquidity can overwhelm any candle shape.
• Use the pattern as context, alongside levels and volume, not as a standalone reason to act.

How TickerLevels detects patterns

The ticker read runs a candlestick-pattern scan on completed daily bars after the close. When a formation finishes on the latest completed candle, it appears under "What changed since the last close" with a link back to this guide. The scan uses the preceding trend for context and surfaces one ranked pattern, not a list of every shape that technically matched.