Encyclopedia Classification
Category: Technical Analysis • Price Action • Market Psychology
Discipline: Candlestick Interpretation • Pattern Recognition • Trade Confirmation
Prerequisites
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Article 195 — Price Action Trading: Candlesticks, Market Intent, and Reading the Story Behind Every Move
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Article 194 — Market Structure Analysis: Trends, Breaks of Structure, Reversals, and Multi-Timeframe Frameworks
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Article 188 — Volume Analysis: Understanding Participation, Conviction, and the Force Behind Price Movement
Related Articles
Price Action • Market Structure • Support and Resistance • Volume Analysis • Liquidity • Order Flow
Definition
Candlestick patterns are formations created by one or more candles that reveal potential shifts in:
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Buyer control.
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Seller control.
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Market hesitation.
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Momentum.
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Reversal probability.
A candlestick pattern does not predict the future.
It represents:
A visible record of the battle between supply and demand.
The central idea:
A candle pattern becomes meaningful only when it appears at the right location, during the right market condition, with supporting evidence.
Beginner Explanation
Many new traders memorize patterns:
"Hammer = Buy."
"Shooting star = Sell."
Professional traders think differently.
They ask:
Where did it happen?
A hammer:
In the middle of nowhere:
Low value.
A hammer:
At weekly support after liquidation:
Much stronger.
The candle is not the signal.
The context creates the signal.
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