Forget memorizing dozens of candlestick patterns. Forget "hammer," "shooting star," "engulfing," "harami," and all those complicated names.
There's a simpler way.
Instead of memorizing patterns, understand the psychology behind them. Every candlestick tells a story about a battle between buyers and sellers and you only need to ask two simple questions to decode it.
The Problem With Traditional Candlestick Learning
Most traders start by trying to memorize patterns:
"A hammer has a long lower wick and small body""A shooting star has a long upper wick and small body""A doji means indecision"
Then they try to remember what each one "means." It's exhausting, confusing, and you end up second-guessing yourself constantly.
But here's the truth: You don't need to memorize anything.
Candlesticks aren't magic. They're just visual representations of price action of buyers and sellers fighting over control during a specific time period.
Once you understand the psychology, you can read ANY candle, even ones you've never seen before.
The Two Questions That Decode Every Candle
To understand any candlestick, just ask yourself these two questions:
Question 1: Where did the price close relative to the range?
This tells you who won the battle.
Every candlestick has a range from the lowest price (bottom wick) to the highest price (top wick). Where price closes within that range tells you whether buyers or sellers had control by the end.
If price closed near the HIGH of the range → Buyers won. They pushed price up and kept it there. Bullish signal.
If price closed near the LOW of the range → Sellers won. They pushed price down and kept it there. Bearish signal.
If price closed in the MIDDLE of the range → Nobody won. It's a tie. Neutral signal (indecision).
Where price closes within the range reveals who controlled the candle
Let's break this down:
Strong Buyers (93% of range): Price closed near the top. Buyers rejected lower prices and closed strong. This is bullish momentum.
Strong Sellers (7% of range): Price closed near the bottom. Sellers rejected higher prices and closed weak. This is bearish momentum.
Indecision (50% of range): Price closed in the middle. Neither side won. This is neutral wait for the next move to see who takes control.
Weak Buyers (57% of range): Price closed above open (green candle), but not near the high. Buyers tried but got pushed back. This shows hesitation, not confidence.
Question 2: How much price rejection occurred?
This tells you how strong the battle was and whether one side got completely shut down.
Rejection shows up as wicks (the thin lines above and below the body).
Long LOWER wick → Price tried to go lower, but buyers said "NO!" and pushed it back up. This is buyer rejection. Bullish,which in some case it's an hammer
Long UPPER wick → Price tried to go higher, but sellers said "NO!" and pushed it back down. This is seller rejection. Bearish.
Long wicks on BOTH sides → Both buyers and sellers fought hard, but neither could maintain control. This is indecision. that's Doji inshort , spinning top and more
Tiny wicks or NO wicks → One side dominated completely with zero resistance. This is very strong momentum in that direction.
Let's break this down:
Strong Buyer Rejection (long lower wick): Price tested much lower, but buyers stepped in hard and pushed it back up. They defended the lows. Bullish signal, especially at support.
Strong Seller Rejection (long upper wick): Price tested much higher, but sellers stepped in hard and pushed it back down. They defended the highs. Bearish signal, especially at resistance.
Equal Rejection Both Ways (long wicks both sides): Buyers tried to push up, sellers tried to push down. Both got rejected. It's a standoff. Neutral—wait for the winner.
Minimal Rejection (tiny or no wicks): One side won with almost no fight. Buyers (or sellers) were in full control from start to finish. This is very strong momentum—respect it.
Putting It All Together
Now let's use both questions to decode the famous candlestick patterns—without ever memorizing their names.
Example 1: The "Hammer" (Bullish Reversal)
Q1: Where did price close?
→ Near the high of the range (86%). Buyers won.
Q2: How much rejection?
→ Long lower wick. Buyers strongly rejected lower prices.
What it means:
Sellers tried to push price down (creating the lower wick), but buyers said "not today" and drove it back up. Price closed near the top, showing buyers took full control by the end.
Psychology: At support, this shows sellers lost their momentum. Buyers defended the level and are now in control. Bullish signal.
Example 2: The "Shooting Star" (Bearish Reversal)
Q1: Where did price close?
→ Near the low of the range (8%). Sellers won.
Q2: How much rejection?
→ Long upper wick. Sellers strongly rejected higher prices.
What it means:
Buyers tried to push price up (creating the upper wick), but sellers said "not so fast" and drove it back down. Price closed near the bottom, showing sellers took full control by the end.
Psychology: At resistance, this shows buyers lost their momentum. Sellers defended the level and are now in control. Bearish signal.
Example 3: The "Doji" (Indecision)
Q1: Where did price close?
→ In the middle of the range (54%). It's a tie.
Q2: How much rejection?
→ Long wicks on BOTH sides. Both buyers and sellers got rejected.
What it means:
Buyers tried to push up, got rejected. Sellers tried to push down, got rejected. Nobody won. The battle is ongoing.
Psychology: At key levels, this shows uncertainty. Neither side has momentum. Wait for the next candle to see who takes control. Neutral signal.
Example 4: The "Marubozu" (Strong Momentum)
Q1: Where did price close?
→ At the very top of the range (93%). Buyers dominated.
Q2: How much rejection?
→ Almost ZERO wicks. No rejection at all.
What it means:
Buyers were in control from open to close. Sellers didn't even try to fight back. This is pure bullish momentum with zero resistance.
Psychology: When you see this, respect the trend. Buyers are fully in charge. Very bullish don't fight it.
Why Context Always Matters
Here's the most important thing: No candlestick works in isolation.
The same hammer that's bullish at support can be meaningless in the middle of nowhere. The same shooting star that's bearish at resistance can be ignored if it appears randomly.
Context is everything:
Where is price? At support? At resistance? In the middle of a range?What came before? Is this a reversal or continuation?Is there volume confirming the move?
A hammer at support after a downtrend = Strong bullish signal.
A hammer in the middle of an uptrend = Who cares?
A shooting star at resistance after an uptrend = Strong bearish signal.
A shooting star in the middle of a downtrend = Ignore it.
The two questions tell you WHAT happened. Context tells you if it MATTERS.
Practice: Decode This Candle
Let's test your understanding. Imagine you see this candle:
Open: $100Close: $103High: $110Low: $102
Q1: Where did price close relative to the range?
→ Range is $102 (low) to $110 (high) = 8 points
→ Close at $103 = 12.5% of the range
→ Close near the LOW
Q2: How much rejection occurred?
→ Long upper wick ($110 high vs $103 close = 7 points)
→ Tiny lower wick ($102 low vs $100 open = small)
→ Strong rejection at the top
What it means:
Buyers tried to push price up to $110 but got destroyed. Sellers drove it all the way back down. Even though it's technically a "green" candle (close > open), the psychology is bearish.
This is basically a shooting star but you decoded it without memorizing the name.
The Simple System
Here's your new candlestick reading system:
Step 1: Look at the candle.
Step 2: Ask Question 1 → Where did price close relative to the range?
Near high = Buyers won (bullish)Near low = Sellers won (bearish)Middle = Tie (neutral)
Step 3: Ask Question 2 → How much rejection occurred?
Long lower wick = Buyers rejected lows (bullish)Long upper wick = Sellers rejected highs (bearish)Both = Fight ongoing (neutral)None = Momentum strong (very bullish or bearish)
Step 4: Check context → Is this at a key level? After what move?
That's it. No memorization. Just psychology.
Common Patterns Decoded (For Reference)
Once you understand the two questions, here's what the "famous" patterns actually are:
Hammer = Close near high + Long lower wick → Buyers rejected lows strongly
Shooting Star = Close near low + Long upper wick → Sellers rejected highs strongly
Doji = Close in middle + Long wicks both sides → Battle ongoing, no winner
Marubozu = Close near extreme + No wicks → One side dominated completely
Spinning Top = Close in middle + Small wicks → Weak battle, mild indecision
Engulfing = Current candle's range completely covers previous candle → Power shift
See? Once you know the psychology, the names don't even matter. You're reading price action, not memorizing patterns.
Why This Works Better
This approach is superior because:
No memorization required → Just understand the two questions and apply them to any candleWorks on every timeframe → Same psychology whether it's a 1-minute or daily candleAdapts to any market → Crypto, forex, stocks—price action is universalDevelops real skill → You're learning to read market psychology, not just pattern namesHandles unusual candles → You can decode candles you've never seen beforeYou're not a pattern-matching robot. You're a trader who understands what price is telling you.
Final Thoughts
Stop trying to memorize candlestick patterns. It's a waste of time and mental energy.
Instead, understand the battle:
Question 1: Where did price close? (Who won?)Question 2: How much rejection? (How strong was the fight?)
Every candle tells you who was in control buyers or sellers and how confident they were about it.
That's all you need.
Add context (support, resistance, volume, trend), and you've got a complete system for reading price action without memorizing a single pattern name.
The market isn't a textbook. It's a battlefield. Read the battle, not the names.
Your turn: Next time you see a candlestick, pause and ask yourself the two questions before checking if it has a "name." You'll be surprised how quickly this becomes second nature.
What's been your experience with candlestick patterns do you memorize them or read the psychology? Drop your thoughts below.
#Beginnersguide #candlestick_patterns