What you will learn
- The four prices in every candle: open, high, low and close
- Body and wicks, and what each one tells you
- Why a candle is green or red
- 5 candlestick patterns on the real Bitcoin chart: big body, doji, hammer, shooting star and engulfing
- A hammer that worked and a hammer that failed, and why
- 3 rules to follow before trading any pattern
What is a candlestick?
A candlestick shows what price did during one period of time, for example one day on a daily chart or four hours on a 4H chart. Every candle is built from four prices: the open, the high, the low and the close.
The thick part of the candle is the body. It runs from the open to the close. The thin lines above and below the body are the wicks. They show the highest and the lowest price reached during that period.
A green candle means price closed higher than it opened, so buyers won that period. A red candle means price closed lower than it opened, so sellers won.
Body and wicks: the fight between buyers and sellers
Think of every candle as a tug of war. A long body means one side was clearly in control. A long wick means price was pushed to that level and then rejected, so the other side fought back before the candle closed.
5 candlestick patterns every beginner should know
- Big body candle: a strong move in one direction with small wicks. One side is clearly in control.
- Doji: the open and the close are almost the same. Neither side won, so the market is undecided.
- Hammer: a small body near the top and a long lower wick. Sellers pushed price down, but buyers pushed it back up. The lesson shows one hammer on the Bitcoin chart that worked and one that failed.
- Shooting star: a small body near the bottom and a long upper wick. Buyers pushed price up, but sellers rejected it. In the lesson, Bitcoin stopped near 87,000 three times, which is a resistance level.
- Engulfing: one candle swallows the whole body of the candle before it. On the daily Bitcoin chart, a small red candle on 2 September was fully swallowed by the green candle on 3 September, with a jump of about 5%. That is a bullish engulfing. The opposite happened when the red candle on 15 September swallowed the green candle of 14 September and price fell about 3.3%. That is a bearish engulfing.
3 rules before you trade any candlestick pattern
- Never trade a single candle on its own. Wait for confirmation.
- Location matters most. A pattern that forms at support or resistance matters far more than one in the middle of nowhere.
- No pattern works 100% of the time. Never take a trade without a stop-loss.
This lesson is for education only and is not financial advice. Trading is risky and you can lose money. Every example uses past market data and does not predict future results.
