What Are Candlestick Patterns?
Candlestick patterns are names given to particular bar shapes, defined by how large the body is relative to the range and where the wicks sit. They describe a continuous space of shapes, so bars shade from one named pattern into another rather than belonging to distinct categories.
There are dozens of names and two underlying variables. Once you can see the two variables, the names become a convenience rather than a subject.
How it works
A doji is a bar that opened and closed at nearly the same price. The conventional threshold is a body under about 10% of the range; the bar above measured 4%.
What it means is a session that went somewhere and came back — the argument on the candlesticks page, which is that a body says agreement and a wick says rejection.
A hammer is a small body with a long lower wick and almost none above. On this bar the lower wick is 62% of the range.
It says price went down and was pushed back. That is the whole content of the name.
An engulfing bar has a body that fully covers the one before it, in the opposite direction. Two bars instead of one, same idea: today undid everything yesterday agreed on.
They are all the same two numbers
Every single-bar name is a region of two measurements: what fraction of the range is body, and how that range splits above and below it.
On this chart body size ran from 4% to 91%, with a median of 46%. There is no gap in that distribution where “doji” stops and “small-bodied candle” starts — the threshold is a convention, and different sources use different ones.
So a bar can be a doji on one definition and not on another, and the market did not do anything different.
The count nobody publishes
This chart was not built to contain patterns. It is an ordinary price series, and it contains 16 named patterns across 54 bars.
That is roughly one every three and a half bars. Not because the market was signalling anything — because the definitions are broad and bars are varied.
Which is the honest reason a pattern alone cannot be a signal. If a shape appears every third bar, seeing one tells you almost nothing about what comes next.
What actually makes one matter
Location. A hammer at a level price has already reacted to twice is a different object from an identical hammer in the middle of nowhere.
The bar tells you a rejection happened. The chart tells you whether the rejection was at a price that mattered. One of those is information and the other is furniture.
The practical rule this site keeps arriving at: find the level first, then look at what price did when it got there. Scanning for shapes and then hunting for a reason is the same procedure backwards, and it always finds something.
The names carry no direction
Worth separating out, because the naming convention actively misleads on this point.
Most patterns come in a bullish and a bearish version of the same shape. A hammer and a hanging man are the identical bar — small body, long lower wick — and they get different names purely according to whether the preceding bars were falling or rising.
Same two numbers. Two names. Opposite claims.
So the direction is not in the pattern at all, it is in the trend you identified before you named it. The taxonomy has quietly packed your own read into the label and handed it back to you as though the candle said it.
The same is true of the inverted hammer and the shooting star, and of bullish and bearish engulfing. Whenever a pattern’s meaning depends on what came before, the meaning came from what came before.
A worked example
Mark the level before you look at any bars. From market structure and support and resistance.
Wait for price to reach it. Most of the time it does not, and there is nothing to do.
Then look at the bar. A long wick rejecting the level is worth something. A doji at the level says indecision at a place where indecision matters.
Name it if you like. The name changes nothing — it is a label for what you already saw.
And the invalidation is beyond the wick, which is a real price the bar gave you: if price closes past the low of that hammer, the rejection did not hold.
The original data
Across our study of 24,971 trading videos, 392 cover candlestick patterns. The median one gets 4,070 views, 75% never pass 50,000, and the median length is 10.1 minutes.
The corpus carries description text for 224 of those 392 — one of the largest samples in this glossary — and across those 224, three mention invalidation, failure, or what a bad read looks like.
Three out of two hundred and twenty-four, on a topic whose entire subject is shapes that appear every third bar.
When it fails
The textbook shape does nothing
A perfect hammer, and price was below its low within three bars.
Nothing was wrong with the identification. The shape was never a prediction — it was a description of one session, and the next three sessions were not obliged to agree.
The definitions are elastic
Different sources give different thresholds for how small a doji’s body must be, or how long a hammer’s wick. A bar that fails one definition passes another, and both books are equally confident.
You went looking for them
Sixteen in fifty-four bars. Scan a chart for named shapes and you will find them at that rate on any instrument, in any market, forever — including markets doing nothing at all.
You saw it after the reversal
Every reversal has a candle at the bottom of it. So does every continuation, and at the moment the bar closes those two are the same picture — which is why the level, not the shape, has to do the work.
Related
Candlesticks is the page underneath this one: what the four prices are, and what a body and a wick actually say.
Price action is reading bars without any of these names, which is mostly what experienced traders do.
And support and resistance is the thing that turns a shape into information.
I know the names and I do not trade the names. What I actually look for is a bar with a long wick at a level I already cared about, and whether that is called a hammer or a pin bar or a dragonfly doji has never changed a decision I made. The names are a vocabulary for talking about charts, and the moment I started treating them as a checklist I was finding four setups a day in markets that were doing nothing.
— Michael Whitman, from this video
This page is educational, not financial advice. Test every idea on your own charts before risking money.