A candlestick summarises price action over one period: where it opened, the highest and lowest prices reached, and where it closed. Patterns made of one or more candles are a compact way of describing how buyers and sellers behaved during that time.
Reading a single candle
- Body: the range between the open and the close. A close above the open is usually shown in green, a close below in red.
- Wicks: the thin lines above and below the body, showing the highest and lowest prices reached.
Common patterns
- Doji: the open and close are almost equal. It describes indecision within that period.
- Engulfing: a candle whose body completely covers the body of the previous candle in the opposite colour. It describes a shift in short-term control.
- Hammer and shooting star: small bodies with a long lower or upper wick, describing a rejected move within the period.
- Three White Soldiers and Three Black Crows: three consecutive strong candles in the same direction, describing persistent buying or selling.
Why context matters
The same pattern can mean very different things depending on the trend, the timeframe and the volume behind it. A Doji in a quiet range carries little information; one after a long, fast move describes something different. Patterns on very short timeframes are also more affected by noise.
How our apps use patterns
Novira Crypto and NBORSA show the most recent detected pattern on the detail screen as descriptive information. A pattern on its own does not produce a setup.
This article is for educational purposes only and does not constitute investment advice.