Candlestick Patterns That Actually Work: The Complete Guide to Price Action Trading in 2026

You're staring at a chart. You see a bunch of candles. Some green. Some red. Some with long wicks. Some with no wicks at all.

To you, they look like random bars.

To profitable traders, they tell a story.

You see chaos. They see patterns.

You see confusion. They see signals.

You lose. They win.

Here's the difference:

They understand candlestick patterns. You don't.

Candlesticks are the language of the market. Every candle tells you who won the battle - buyers or sellers. Every pattern tells you what's likely to happen next.

Most traders ignore candlesticks. Or use them wrong.

Let's fix that.

Here's how to trade candlestick patterns like a pro in 2026.

What Are Candlesticks? (The Simple Explanation)

A candlestick shows you four things:

1. Open price - where price opened
2. Close price - where price closed
3. High price - the highest point reached
4. Low price - the lowest point reached

The parts of a candle:

Body = The range between open and close

• Green body: Close > Open (bullish)
• Red body: Close < Open (bearish)

Wick (or shadow) = The range beyond the body

• Upper wick: High to close/open
• Lower wick: Open/low to low

Example:

AAPL 15-min candle:

• Open: $175.00
• High: $176.50
• Low: $174.20
• Close: $176.00

Green candle with body from $175 to $176, upper wick to $176.50, lower wick to $174.20.

What this tells you:

• Buyers won (green candle)
• Price opened at $175
• Buyers pushed to $176.50
• Sellers pulled back to $174.20
• Buyers pushed again and closed at $176
• Buyers are in control

Every candle tells a story.

Every story helps you make better trading decisions.

The 10 Candlestick Patterns That Actually Work

Pattern #1: Hammer (Bullish Reversal)

What it looks like:

• Small body at the top
• Long lower wick (at least 2x the body)
• Little to no upper wick
• Can be green or red (green is more bullish)

What it means:

Price dropped. Sellers pushed down. Buyers stepped in at support and pushed back up. Buyers rejected lower prices.

Where to trade it:

• At a support level
• At the end of a downtrend
• After a pullback in an uptrend

Example:

AAPL drops to support at $170. Shows a hammer with:

• Small red body closing at $170.50
• Long lower wick to $169.80
• No upper wick

Signal: Buyers are defending $170. Reversal likely.

Entry: $171 (on close of hammer or next candle) Stop: $169.50 (below hammer wick) Target: $175 (next resistance)

Risk: $1.50 Reward: $4 R:R: 2.67:1

Pattern #2: Shooting Star (Bearish Reversal)

What it looks like:

• Small body at the bottom
• Long upper wick (at least 2x the body)
• Little to no lower wick
• Can be green or red (red is more bearish)

What it means:

Price rallied. Sellers pushed up. Buyers stepped in at resistance and pushed back down. Sellers rejected higher prices.

Where to trade it:

• At a resistance level
• At the end of an uptrend
• After a rally in a downtrend (short the rally)

Example:

TSLA rallies to resistance at $250. Shows a shooting star with:

• Small green body closing at $249
• Long upper wick to $251.50
• No lower wick

Signal: Sellers are defending $250. Reversal likely.

Entry: $248 (on close of shooting star or next candle) Stop: $252 (above shooting star wick) Target: $240 (next support)

Risk: $4 Reward: $8 R:R: 2:1

Pattern #3: Bullish Engulfing (Bullish Reversal)

What it looks like:

• First candle: Small red body
• Second candle: Large green body that fully engulfs the first candle's body
• Second candle opens below first candle's close
• Second candle closes above first candle's open

What it means:

Sellers were in control (red candle). Buyers overwhelmed sellers and took control (engulfing green candle). Strong reversal signal.

Where to trade it:

• At a support level
• At the end of a downtrend
• After a pullback in an uptrend

Example:

NVDA drops to support at $450. Candle 1: Small red body closing at $450.50 Candle 2: Large green body opening at $449, closing at $456 Candle 2 fully engulfs candle 1's body

Signal: Buyers overwhelmed sellers. Strong bullish reversal.

Entry: $456 (on close of engulfing candle) Stop: $448 (below both candles) Target: $470 (next resistance)

Risk: $8 Reward: $14 R:R: 1.75:1

Pattern #4: Bearish Engulfing (Bearish Reversal)

What it looks like:

• First candle: Small green body
• Second candle: Large red body that fully engulfs the first candle's body
• Second candle opens above first candle's close
• Second candle closes below first candle's open

What it means:

Buyers were in control (green candle). Sellers overwhelmed buyers and took control (engulfing red candle). Strong reversal signal.

Where to trade it:

• At a resistance level
• At the end of an uptrend
• After a rally in a downtrend

Example:

META rallies to resistance at $350. Candle 1: Small green body closing at $350.20 Candle 2: Large red body opening at $351, closing at $344 Candle 2 fully engulfs candle 1's body

Signal: Sellers overwhelmed buyers. Strong bearish reversal.

Entry: $344 (on close of engulfing candle) Stop: $352 (above both candles) Target: $330 (next support)

Risk: $8 Reward: $14 R:R: 1.75:1

Pattern #5: Morning Star (Bullish Reversal)

What it looks like: Three-candle pattern

• Candle 1: Large red body (bearish)
• Candle 2: Small body (can be red or green) that gaps down (body below candle 1's body)
• Candle 3: Large green body that closes at least halfway into candle 1's body

What it means:

Strong downtrend (candle 1). Indecision (candle 2). Buyers take control (candle 3). Strong reversal signal.

Where to trade it:

• At the end of a downtrend
• At a major support level

Example:

AMD in downtrend, drops to $120. Candle 1: Large red body from $125 to $121 Candle 2: Small red body at $120 (gaps below candle 1) Candle 3: Large green body from $120 to $124 (closes well into candle 1's body)

Signal: Downtrend ending. Buyers taking control.

Entry: $124 (on close of candle 3) Stop: $118 (below the pattern) Target: $135 (next resistance)

Risk: $6 Reward: $11 R:R: 1.83:1

Pattern #6: Evening Star (Bearish Reversal)

What it looks like: Three-candle pattern

• Candle 1: Large green body (bullish)
• Candle 2: Small body (can be red or green) that gaps up (body above candle 1's body)
• Candle 3: Large red body that closes at least halfway into candle 1's body

What it means:

Strong uptrend (candle 1). Indecision (candle 2). Sellers take control (candle 3). Strong reversal signal.

Where to trade it:

• At the end of an uptrend
• At a major resistance level

Example:

GOOGL in uptrend, rallies to $145. Candle 1: Large green body from $140 to $145 Candle 2: Small green body at $146 (gaps above candle 1) Candle 3: Large red body from $146 to $141 (closes well into candle 1's body)

Signal: Uptrend ending. Sellers taking control.

Entry: $141 (on close of candle 3) Stop: $147 (above the pattern) Target: $130 (next support)

Risk: $6 Reward: $11 R:R: 1.83:1

Pattern #7: Doji (Indecision/Reversal)

What it looks like:

• Body is a thin line (open ≈ close)
• Upper and lower wicks can vary
• Looks like a plus sign or cross

What it means:

Buyers and sellers are in balance. Neither side won. Indecision. Often signals a reversal.

Where to trade it:

• At support or resistance
• At the end of a trend
• After a strong move (reversal likely)

Example:

SHOP rallies to resistance at $70. Shows a doji:

• Open and close both at $70.10
• Upper wick to $71
• Lower wick to $69.50

Signal: Indecision at resistance. Reversal likely.

Entry: $69 (on break of doji low) Stop: $71.50 (above doji high) Target: $65 (next support)

Risk: $2.50 Reward: $4 R:R: 1.6:1

Pattern #8: Bullish Harami (Bullish Reversal)

What it looks like:

• Candle 1: Large red body
• Candle 2: Small green body completely inside candle 1's body
• "Harami" means "pregnant" in Japanese - the small body is "inside" the large body

What it means:

Strong downtrend (candle 1). Momentum slowing (candle 2). Sellers losing control. Possible reversal.

Where to trade it:

• At support levels
• At the end of a downtrend

Example:

COIN drops to support at $80. Candle 1: Large red body from $85 to $80 Candle 2: Small green body from $80 to $81.50 (completely inside candle 1)

Signal: Downtrend losing momentum. Reversal possible.

Entry: $82 (on break of candle 2's high) Stop: $79 (below the pattern) Target: $90 (next resistance)

Risk: $3 Reward: $8 R:R: 2.67:1

Pattern #9: Bearish Harami (Bearish Reversal)

What it looks like:

• Candle 1: Large green body
• Candle 2: Small red body completely inside candle 1's body

What it means:

Strong uptrend (candle 1). Momentum slowing (candle 2). Buyers losing control. Possible reversal.

Where to trade it:

• At resistance levels
• At the end of an uptrend

Example:

AMZN rallies to resistance at $175. Candle 1: Large green body from $170 to $175 Candle 2: Small red body from $175 to $173.50 (completely inside candle 1)

Signal: Uptrend losing momentum. Reversal possible.

Entry: $173 (on break of candle 2's low) Stop: $176 (above the pattern) Target: $165 (next support)

Risk: $3 Reward: $8 R:R: 2.67:1

Pattern #10: Three White Soldiers (Bullish Trend Continuation)

What it looks like: Three-candle pattern

• Three consecutive green candles
• Each candle closes higher than the previous
• Each candle opens within the previous candle's body
• Small wicks, bodies are the main feature

What it means:

Strong buying pressure. Buyers are in complete control. Uptrend likely to continue.

Where to trade it:

• During an uptrend (buy pullbacks)
• After a reversal confirmation

Example:

MSFT breaks above resistance at $400. Candle 1: Green from $400 to $403 Candle 2: Green from $402 to $405 Candle 3: Green from $404 to $408

Signal: Strong uptrend. Buy pullbacks.

Entry: $406 (pullback to $405 area) Stop: $402 (below candle 2 low) Target: $420 (measured move)

Risk: $4 Reward: $14 R:R: 3.5:1

How to Trade Candlestick Patterns (The Complete Process)

Step 1: Identify the Trend

First question: Is the market trending or ranging?

• Uptrend: Higher highs and higher lows
• Downtrend: Lower highs and lower lows
• Range: Sideways movement between support and resistance

Why it matters:

• Bullish patterns work best in uptrends or at support
• Bearish patterns work best in downtrends or at resistance
• Don't trade reversal patterns in strong trends (trend continuation is more likely)

Step 2: Identify Key Levels

Draw your support and resistance levels.

• Horizontal levels
• Trendlines
• Moving averages
• Fibonacci levels

Why it matters:

Candlestick patterns are most powerful when they occur at key levels.

Pattern at random location = maybe Pattern at key level = high probability

Step 3: Wait for the Pattern to Form

Don't anticipate.

Wait for the candle to close.

Why:

A pattern that looks like a hammer at 2:59 PM might turn into a doji by 3:00 PM (close).

Wait for the close to confirm the pattern.

Step 4: Check the Volume

Volume should confirm the pattern.

Bullish reversal:

• Volume should increase on reversal candles
• Shows buyers are stepping in with force

Bearish reversal:

• Volume should increase on reversal candles
• Shows sellers are stepping in with force

Low volume patterns = weak signals.

Step 5: Plan Your Entry

Three entry options:

Option A: On the close

• Enter immediately when pattern candle closes
• Most aggressive
• Don't wait for confirmation

Option B: On the break

• Enter when price breaks the pattern's high/low
• More confirmation
• Better risk/reward

Option C: On the retest

• Wait for price to retest the broken level
• Most conservative
• Might miss the move

My recommendation: Option B (on the break).

Step 6: Set Your Stop Loss

Place your stop beyond the pattern.

Long trades:

• Below the hammer's low
• Below the engulfing pattern's low
• Below the support level

Short trades:

• Above the shooting star's high
• Above the engulfing pattern's high
• Above the resistance level

Give the pattern room to breathe.

Step 7: Set Your Profit Target

Target the next support/resistance level.

Don't be greedy.

Markets move from level to level. Take profit at the next level.

The 10 Candlestick Trading Rules

Rule #1: Wait for the Close

Never enter before the candle closes.

The pattern isn't confirmed until the candle closes.

Rule #2: Trade at Key Levels

Patterns at random locations are weak.

Patterns at support/resistance are strong.

Always draw your levels first. Then wait for patterns.

Rule #3: Check the Volume

Reversal patterns should have increased volume.

Low volume = weak signal. Skip the trade.

Rule #4: Respect the Trend

Don't short bullish patterns in an uptrend.

Don't buy bearish patterns in a downtrend.

Trade with the trend, not against it.

Rule #5: Use Confluence

Single factor (pattern only) = maybe

Multiple factors (pattern + level + MA + trend) = high probability

Always look for confluence.

Rule #6: Don't Trade Every Pattern

You'll see patterns everywhere.

Most are not worth trading.

Only trade A+ setups.

Rule #7: Let the Pattern Fully Form

Don't anticipate.

Don't guess.

Wait for the complete pattern.

Rule #8: Combine with Other Analysis

Candlesticks + support/resistance = good

Candlesticks + S/R + moving averages = better

Candlesticks + S/R + MAs + trend = best

Rule #9: Set Proper Stops

Stops go beyond the pattern.

Not within the pattern.

Rule #10: Take Profits at Levels

Target the next support or resistance.

Don't hope for more.

Take your profits.

Candlestick Pattern Cheat Sheet

Common Candlestick Mistakes to Avoid

Mistake #1: Trading Patterns Without Context

You see a hammer at $150. You buy.

But you didn't check:

• Is there support at $150? No.
• Is the market trending? It's choppy.
• Is volume confirming? No, volume is low.

The pattern fails. You lose.

Fix: Only trade patterns at key levels with volume confirmation.**

Mistake #2: Entering Before the Close

At 2:55 PM, you see what looks like a hammer forming.

You buy immediately.

By 3:00 PM, the candle closes. It's not a hammer. It's a doji.

You entered on a false pattern.

Fix: Always wait for the candle to close before entering.**

Mistake #3: Ignoring the Trend

Market is in a strong uptrend.

You see a bearish engulfing pattern. You short.

Uptrend continues. You get stopped.

Fix: Don't trade reversal patterns against strong trends. Trade continuation patterns instead.**

Mistake #4: Not Using Confluence

You see a shooting star. You short.

But there's no resistance at that level.

Price keeps going up. You lose.

Fix: Only trade patterns at key support/resistance levels.**

Mistake #5: Trading Every Pattern

You see 10 patterns in one hour. You trade all 10.

Most fail. You overtrade. You lose.

Fix: Only trade A+ setups with multiple confluences.**

The 2026 Candlestick Edge

Here's what most traders don't understand:

Candlesticks are not standalone signals.

They're confirmation.

The best traders:

1. Draw their levels first (support, resistance, trendlines)
2. Identify the trend (up, down, ranging)
3. Wait for price to approach a level
4. Wait for a candlestick pattern at the level
5. Check volume
6. Check moving averages
7. Enter on the break

That's confluence.

That's how you trade candlesticks profitably.

Candlestick + Level + Trend + Volume = High Probability Trade

Your Candlestick Action Plan

This Week:

1. Learn the 10 patterns
2. Practice identifying them on charts (don't trade yet)
3. Print the cheat sheet

This Month:

1. Trade only hammer and shooting star patterns
2. Trade only at support/resistance levels
3. Start with 1-2 trades per day

This Quarter:

1. Master all 10 patterns
2. Add confluence factors (MAs, trend, volume)
3. Track your win rate for each pattern

Key Takeaways

• Candlesticks tell the story of each battle - buyers vs sellers, who won, who lost
• 10 patterns that work - hammer, shooting star, bullish/bearish engulfing, morning/evening star, doji, bullish/bearish harami, three white soldiers
• Wait for the close - patterns aren't confirmed until the candle closes
• Trade at key levels - patterns at support/resistance are much more powerful
• Check the volume - reversals should have increased volume
• Respect the trend - don't trade reversal patterns against strong trends
• Use confluence - pattern + level + MA + trend = high probability
• Don't trade every pattern - only trade A+ setups
• Set stops beyond the pattern - give the pattern room to breathe
• Target the next level - take profit at next support/resistance
• Start with 2 patterns - master hammer and shooting star first
• Track your results - which patterns work best for you?

Candlesticks are the language of the market.

Learn the language. Understand the patterns. Trade with confidence.

Every candle tells a story.

Are you listening?

ChartMini automatically identifies candlestick patterns, checks them against key support/resistance levels, and alerts you only when high-probability setups appear so you never miss a profitable candlestick trade.