Reading a Single Candle
The body shows open-to-close; wicks show the extremes that didn't hold. Long lower wicks (hammers) mean sellers pushed down and buyers reclaimed — meaningful at support after a decline. Long upper wicks (shooting stars) mirror that at highs. Dojis — tiny bodies — signal indecision, meaningful mainly after strong trends. Location is everything: the same candle at a key level and in the middle of nowhere are different signals.
The Patterns Worth Knowing
Engulfing patterns (a body fully swallowing the prior one) mark momentum shifts. Morning/evening stars are three-candle reversals confirmed by the third candle. Inside bars show compression that often precedes expansion. Testing across large samples shows modest edges for a few patterns when combined with trend and level context — and none reliable enough to trade mechanically alone.
Using Them Properly
Patterns are triggers, not theses: idea first (level, trend, catalyst), candlestick confirmation second, risk placement third — stop beyond the pattern's extreme, giving a natural, definable risk. Skip the exotic pattern zoo; three-candle logic plus structure covers what works. And backtest on your instrument: pattern behavior differs meaningfully between forex, indices and small-caps.