Step-by-Step: Reading Candlestick Patterns for Beginners — Advanced 72

🎓 Step-by-Step: Reading Candlestick Patterns for Beginners — Advanced 72

Candlestick charts are the heartbeat of stock market analysis. Whether you’re trading stocks, forex, or crypto, understanding candlestick patterns gives you a clear view of market psychology — who’s in control: buyers or sellers.

At AI Computer Classes – Indore, students learn to decode candlestick charts with practical trading simulations. This guide will walk you step-by-step through the most essential and advanced 72 candlestick patterns, perfect for both beginners and professionals aiming to enhance their market strategy. 📈

🧩 What Are Candlestick Patterns?

Candlestick patterns visually represent price movements over time — each candle tells a story.

A single candlestick shows:

• Open price: where the price started.
• Close price: where the price ended.
• High and Low: the top and bottom shadows (wicks).

If the closing price is higher than the opening price, the candle is usually green (bullish).

If it’s lower, it’s red (bearish).

💡 Candlestick charts give a quick visual insight into market momentum and trend direction — much faster than reading numbers alone.

🧠 Step 1: The Structure of a Candlestick

Understanding each part of the candle is crucial before analyzing patterns.

🕯️ Components:

1. Body – The range between open and close.
2. Wick (or Shadow) – The highest and lowest prices of the session.
3. Color – Indicates market sentiment (green for bullish, red for bearish).

Example:

        │
     ┌──┴──┐
     │Body │ ← Green (Bullish)
     └──┬──┘
        │

This basic structure helps traders recognize how price reacted during that period.

📊 Step 2: Understanding Bullish vs Bearish Candles✅ Bullish Candles

• Closing price > Opening price
• Indicates buying pressure and upward momentum

❌ Bearish Candles

• Closing price < Opening price
• Indicates selling pressure and downward momentum

Knowing the difference helps identify entry and exit signals during trading sessions.

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🔎 Step 3: Single Candlestick Patterns

Single candlestick formations provide early signals of trend reversals or continuations.

🕯️ Common Single Candlestick Patterns:

1. Doji: Market indecision — open and close are almost equal.
2. Hammer: Bullish reversal; long lower wick shows buyers pushing price up.
3. Hanging Man: Bearish reversal; appears at market tops.
4. Shooting Star: Bearish reversal; long upper wick with small body.
5. Spinning Top: Uncertainty; small body with long shadows on both ends.

Example:

PatternSignalMarket EmotionHammerBullishBuyers regaining controlShooting StarBearishSellers rejecting higher pricesDojiNeutralIndecision between buyers & sellers

⚙️ Step 4: Double Candlestick Patterns

These patterns use two candles to confirm market sentiment.

🔥 Key Double Patterns:

1. Bullish Engulfing: A small red candle followed by a large green one — indicates strong buying reversal.
2. Bearish Engulfing: A small green candle followed by a large red one — signals selling pressure.
3. Tweezer Bottom: Two candles with identical lows — bullish reversal.
4. Tweezer Top: Two candles with identical highs — bearish reversal.

📘 Double patterns are highly reliable for short-term traders seeking quick entries and exits.

💹 Step 5: Triple Candlestick Patterns

Three-candle patterns confirm trend continuation or reversal more strongly.

🔍 Popular Triple Patterns:

1. Morning Star: Bullish reversal after a downtrend (red → small → green).
2. Evening Star: Bearish reversal after an uptrend (green → small → red).
3. Three White Soldiers: Three consecutive bullish candles — strong upward momentum.
4. Three Black Crows: Three consecutive bearish candles — strong downward trend.

💡 These triple formations are among the 72 advanced patterns traders at AI Computer Classes master through chart simulations.

📈 Step 6: Trend Reversal Patterns

Recognizing when a market trend is changing is key for profitability.

Bullish Reversals:

• Hammer
• Morning Star
• Piercing Line
• Bullish Harami

Bearish Reversals:

• Shooting Star
• Evening Star
• Bearish Engulfing
• Hanging Man

Use these with volume confirmation for stronger accuracy.

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🧮 Step 7: Continuation Patterns

Sometimes, candlestick formations confirm that a trend will continue.

Examples:

• Rising Three Methods (Bullish): A long green candle, followed by small red ones, then another big green — indicates ongoing buying strength.
• Falling Three Methods (Bearish): Opposite of the above, showing selling momentum.
• Marubozu: Candle with no wicks; pure buying (green) or selling (red) power.

These patterns often appear during strong trends or breakouts.

💻 Step 8: Applying Patterns in Power BI or Excel

At AI Computer Classes, students also learn to visualize stock data using Power BI and Excel.

Practical Task:

1. Import stock price data from Yahoo Finance.
2. Create a candlestick chart in Excel or Power BI.
3. Highlight patterns like Hammer or Engulfing automatically using conditional formatting.

🧠 Combining trading insights with data tools enhances your technical analysis skills and helps automate pattern detection!

📚 Step 9: Advanced 72 Candlestick Patterns

Professional traders categorize over 72 candlestick formations used across global markets. These include:

• Bullish/Bearish Engulfing (Major Reversal)
• Three Inside Up/Down
• Harami Cross
• Dark Cloud Cover
• Piercing Line
• Tri-Star Pattern
• Dragonfly Doji
• Gravestone Doji
• Concealing Baby Swallow

While remembering all 72 isn’t necessary initially, understanding their logic and structure helps in building a deeper reading of market sentiment.

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🧭 Conclusion

Candlestick charts are more than colorful graphics — they’re a visual language of the market. By learning to read patterns like Doji, Hammer, and Morning Star, you gain insight into crowd psychology and price action.

At AI Computer Classes – Indore, we bridge theory with practice. You’ll not only recognize candlestick patterns but also learn to confirm them using real trading platforms, Power BI, and Excel visualizations.

Whether you’re a beginner aiming to enter the stock market or a professional sharpening your analysis, this step-by-step guide sets the foundation for confident, data-driven trading.

Start decoding the markets — one candle at a time! 🕯️📊

📞 Contact AI Computer Classes – Indore ✉ Email: hello@aicomputerclasses.com 📱 Phone: +91 91113 33255 📍 Address: 208, Captain CS Naidu Building, near Greater Kailash Road, opposite School of Excellence For Eye, Opposite Grotto Arcade, Old Palasia, Indore, Madhya Pradesh 452018 🌐 Website: www.aicomputerclasses.com