Candlestick charts compress the battle between buyers and sellers into single, readable shapes. You do not need an encyclopedia of patterns - you need five, understood deeply.
1. The doji
Open and close nearly equal: indecision. After a strong trend, a doji is the market pausing for breath - and sometimes turning. On its own it is a warning, not a signal.
2. The engulfing bar
A candle whose body completely swallows the previous one. A bullish engulfing after a decline suggests buyers have seized control; the bearish version mirrors it. The bigger the engulfed candle, the louder the statement.
3. The hammer
A small body with a long lower wick, appearing after a fall. Sellers pushed price down, buyers slammed it back up. Hammers at well-watched support levels are among the most reliable reversal hints in trading.
4. The shooting star
The hammer's evil twin: long upper wick after a rally, showing buyers tried and failed to extend the move. Often marks short-term tops.
5. The inside bar
A candle contained entirely within the range of the previous one - compression before expansion. Traders place orders on both sides of the mother bar and let the breakout choose direction.
Context is everything
A hammer in the middle of nowhere is noise. The same hammer at a level where price reversed three times before, with a supportive news backdrop, is a trade. Patterns locate the moment; levels and context supply the meaning.