Candlestick Reading 101: The Only Chart Pattern Guide You Actually Need for Forex Trading

Think candlesticks are just fancy price bars? Think again. Japanese rice traders figured out 200+ years ago that these little sticks reveal everything about market psychology—and modern traders are still printing money off the same patterns.

What You’re Actually Looking At

Every candlestick shows 4 price points in one time frame:

• Open & Close: The thick body
• High & Low: The wicks (called shadows)

Green/white candle = price closed higher than it opened (buyers won) Red/black candle = price closed lower (sellers won)

Wick length = how much the price got pushed around before closing. Long wick = violent rejection. Short wick = smooth move.

Why Candlesticks Beat Everything Else

1) Shows actual trader emotion Unlike line charts, you see the battle between buyers and sellers, not just the final score.

2) Crystal clear patterns Certain shapes repeat over and over. Once you spot them, you can predict reversals before they happen.

3) Backed by actual history These patterns worked in 1800s rice markets. They work in 2024 forex. Why? Because human greed and fear never change.

The Foundation: Basic Patterns

Doji: The Indecision Candle

Open = Close (looks like a + sign)

What it means: Buyers and sellers are wrestling equally. If it shows up after a strong move, that trend is running out of steam.

Four types:

• Standard Doji: Random fighting, then close at open
• Gravestone Doji: Buyers pushed up hard, then got slapped down
• Dragonfly Doji: Sellers pulled down hard, then buyers fought back
• Four-Price Doji: Basically no volume/interest—skip it

Marubozu: The Conviction Candle

No wicks. Body takes up the whole candle.

• White Marubozu: Buyers in complete control the whole period. Open = low, Close = high
• Black Marubozu: Sellers never let go. Open = high, Close = low

Spinning Top: The “Meh” Candle

Small body, long wicks both sides.

What it means: Neither side is winning. After a rally? Buyers are weakening. After a drop? Sellers are tiring out.

Two-Candle Power Moves

Engulfing Patterns: The Reversal Confirmation

Bullish Engulfing (After a downtrend):

• Black candle → White candle (much bigger)
• White body completely swallows the black one
• Translation: “Sellers tried, but buyers just said NO”

Bearish Engulfing (After an uptrend):

• White candle → Black candle (much bigger)
• Black body erases yesterday’s gains entirely
• Translation: “This rally is OVER”

Tweezer Patterns: The Double-Top/Bottom

Two candles with matching wicks at the same price level (like tweezers gripping a point).

• Tweezer Top (after rally): Price keeps hitting the same ceiling. Next move is probably down
• Tweezer Bottom (after drop): Price keeps finding the same floor. Probably bounces up next

Three-Candle Sequences: Advanced Setups

Morning Star & Evening Star

Morning Star (Bottom reversal):

1. Big red candle (downtrend)
2. Small candle (indecision)
3. Big green candle (buyers take control) = Trend switching from down → up

Evening Star (Top reversal):

1. Big green candle (uptrend)
2. Small candle (indecision)
3. Big red candle (sellers take control) = Trend switching from up → down

Three Soldiers & Three Crows

Three White Soldiers (Bullish): Three consecutive green candles, each bigger or equal to the last, climbing the ladder → strong uptrend forming

Three Black Crows (Bearish): Three consecutive red candles, each bigger or equal to the last, falling down the ladder → strong downtrend forming

The Real Talk

Honestly? Pattern success rates hover around 50%. That’s the catch nobody mentions.

Why it still works:

• Combine patterns with support/resistance levels
• Wait for volume confirmation
• Always check the broader market context
• Use risk management (stop losses, position sizing)

A single candle pattern isn’t a golden ticket—it’s intel. The pros use it as ONE piece of the puzzle, not the whole picture.

Start paper trading these patterns on the lower timeframes (15m, 1h). Once you can spot them in your sleep and predict the next 3 candles, then risk real money.

The bottom line: Candlesticks aren’t magic. They’re just a language traders speak. Learn to read this language fluently, and the market starts making a lot more sense.