How to Read Candlestick Patterns for Beginners (2025 Guide)

In this beginner’s guide, we’ll explain candlestick basics, key bullish and bearish patterns, and how to use them effectively in 2025 markets.

What is a Candlestick Pattern?

A candlestick pattern is a price chart representation showing the open, high, low, and close of a security for a specific time frame. Each candlestick tells a story of buyer and seller activity during that period.

• Green (or White) Candle → Bullish (price closed higher than open)
  
  

• Red (or Black) Candle → Bearish (price closed lower than open)
  
  

A single candle may reveal sentiment, but a pattern of multiple candles often signals stronger market direction.

How to Read a Candlestick (Structure Explained)

Each candlestick has four key components:

1. Open Price – Where the stock opened in that session
   
   

2. Close Price – Where the stock ended
   
   

3. Wick/Shadow – The high and low price range
   
   

4. Body – The difference between open and close
   
   

• If the body is long and green → Strong bullish trend.

• If the body is long and red → Strong bearish trend.

• If wicks are long → High volatility and market indecision.

Top Candlestick Patterns Beginners Must Know

1. Doji Candle

• Open and close are almost the same → Market indecision.
  
  

• Appears before trend reversals.
  
  

2. Hammer Candle (Bullish Reversal)

• Small body with a long lower wick.
  
  

• Suggests buyers are stepping in after a price drop.
  
  

3. Shooting Star (Bearish Reversal)

• Small body with a long upper wick.
  
  

• Indicates selling pressure at higher prices.
  
  

4. Engulfing Patterns (Bullish & Bearish)

• A large candle that fully “engulfs” the previous candle.
  
  

• Bullish Engulfing → Potential uptrend start.
  
  

• Bearish Engulfing → Potential downtrend start.
  
  

5. Morning Star & Evening Star

• Morning Star → Bullish reversal after a downtrend.
  
  

• Evening Star → Bearish reversal after an uptrend.
  
  

Is Reading Candlestick Patterns Still Relevant in 2025?

Candlestick patterns are the foundation of technical analysis and an essential skill for beginners. By learning how to read candlestick patterns, you can identify potential reversals, continuations, and market sentiment.