Basic Profitable Candlestick Patterns for Trading Beginners

Basic Profitable Candlestick Patterns for Trading Beginners

As someone new learning to trade, this post, Basic Profitable Candlestick Patterns for Trading Beginners will show you some common, basic candlestick patterns you will see on a price chart and what they actually mean. This is the sort of information I wish I had access to when I was learning to trade. It’s important to note that there are other ways price can be represented on a chart, our preference and the most common are candlestick patterns.

Messy Price Chart
Messy Price Chart

When learning to trade, you will often see price charts like this – lots of indicators, lines and mess, which can be confusing for even professional traders.

If you strip away everything you are left with raw price action. Mastering the language of the market and how price moves is a key ingredient to trading successfully.

Clean Price Chart
Clean Price Chart

Bullish and Bearish Candles

Basic Candlestick Patterns
Basic Candlestick Patterns

The coloured area of the candlestick is called the body. These represent open and close prices. In the bullish candle (where price has gone up), the open price is located at the bottom and the close price at the top. The reverse can be said for bearish candles (where price has gone down) – where the open price is located at the top and the close price is located at the bottom.

The wicks at either end of the candlestick body represent the price high and price low of the time period. For example, if this is a 1hr chart, each candle represents 1 hour of price action.

Doji Candles

Doji Candles
Doji Candles

Doji candles are formed when the open and close price is vertically the same. A doji candle represents indecision between buyers and sellers in the market.

Pin Bar Candles

Bearish Pin Bar Candlestick
Bearish Pin Bar Candlestick

This is a high test candle, or a bearish pin bar. A pin bar occurs when a currency pair trades significantly higher than its opening, but selling pressure pushes the price back down to closes below or very near the opening price. The high is “tested” before being rejected by the sellers in the market.

The upper wick should be at least twice the length of the body.

Bullish Pin Bar Candlestick
Bullish Pin Bar Candlestick

A low test candle or bullish pin bar is the opposite of a bearish pin bar. A bullish pin bar occurs when a currency pair trades significantly lower than its opening, but rallies later in the day and closes above or very near the opening price. The low is “tested” before being rejected by the buyers in the market.

Tweezer Top and Tweezer Bottom Candles

Tweezer Top Candlestick
Tweezer Top Candlestick

Bearish tweezer tops. Tweezer tops are formed by two or more candlesticks with equal, and protruding highs. This pattern indicates that buyers were not able to push price up any further, and that an up trend may be running out of steam.

Tweezer Bottom Candlestick
Tweezer Bottom Candlestick

Bullish tweezer bottoms. Tweezer tops are formed by two or more candlesticks with equal, and protruding highs. This pattern indicates that sellers were not able to push price down any further, and that a down trend may be running out of steam.

Bullish and Bearish Engulfing Candles

Bullish Engulfing Candles
Bullish Engulfing Candles

Bullish Engulfing candles. A bullish engulfing pattern can be seen after a period of downward market pressure. A bullish engulfing pattern is characterised by a bullish candle whose body, the open and close completely engulfs the previous 3 candle’s body which can show a change in sentiment.

Bearish Engulfing Candles
Bearish Engulfing Candles

Bearish Engulfing candles. A bearish engulfing pattern can be seen after a period of upward market pressure. A bearish engulfing pattern is characterised by a bearish candle whose body, the open and close completely engulfs the previous 3 candle’s body which can show a change in sentiment.

There you have it, these Basic Profitable Candlestick Patterns for Trading Beginners will help you on your trading journey.

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