Candlestick Patterns
A candle records Open, High, Low and Close for one interval. Its shape describes completed price movement; it does not guarantee what happens next. Use a closed candle, predefined context and an explicit SKIP rule.
Updated August 26, 2026 · Author: KOS
OHLC candle anatomy
Pin Bar (Hammer/Shooting Star)
A candle with a long wick and small body, showing rejection from a price level.
- Bullish pin bar: Long lower wick, price rejected downward move
- Bearish pin bar: Long upper wick, price rejected upward move
Test rule: Mark the zone first, wait for the candle to close, then require the plan's separate confirmation.
Engulfing Pattern
A candle that completely "engulfs" the previous candle's body.
- Bullish engulfing: Green candle completely covers previous red candle
- Bearish engulfing: Red candle completely covers previous green candle
Test rule: Record whether the second body fully covers the first body, where it occurs and what invalidates the scenario. Do not infer strength from the name.
Risk and primary source
A candlestick pattern does not guarantee profit. A binary contract can lose the full amount committed when the proposition is false at expiry.
Doji
A candle where open and close are nearly equal, creating a cross shape.
- Shows indecision in the market
- Neither buyers nor sellers won
- Often precedes reversals at extremes
How to trade: Doji alone isn't a signal. Wait for confirming candle after doji before entering.
Context Matters
Candlestick patterns are NOT standalone signals:
- ✅ Pin bar at resistance after uptrend = good signal
- ❌ Pin bar in middle of range = noise
- ✅ Engulfing after liquidity sweep = strong signal
- ❌ Engulfing in choppy market = unreliable
Always combine patterns with market structure and liquidity analysis.