Technical analysis
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A candlestick shows four prices for one period — open, high, low and close. The body spans open to close and the wicks show the extremes, so one candle reveals who controlled that period: buyers or sellers. Candlestick patterns are short sequences of candles that traders read as signs of continuation or reversal; they are most useful at support and resistance levels and unreliable on their own.
| Pattern | Candles | What it suggests | Where it matters |
|---|---|---|---|
| Doji | 1 | Indecision — open and close almost equal | After a strong move |
| Hammer | 1 | Bullish rejection of lower prices (long lower wick) | At support after a decline |
| Shooting star | 1 | Bearish rejection of higher prices (long upper wick) | At resistance after a rally |
| Bullish engulfing | 2 | A green body fully covers the prior red body | At support |
| Bearish engulfing | 2 | A red body fully covers the prior green body | At resistance |
| Morning star | 3 | Red, small indecision candle, strong green — bottom reversal | After a downtrend |
| Evening star | 3 | Green, small candle, strong red — top reversal | After an uptrend |
| Inside bar | 2 | Range contraction before a breakout | Anywhere; trade the break |
| Three white soldiers | 3 | Three strong green candles — strong buying | Out of a base |
| Pin bar | 1 | Long wick rejecting a level | At a clearly marked level |
Academic tests on large US stocks, such as Marshall, Young and Rose's study of Dow Jones shares, found that candlestick strategies were generally not profitable. Patterns work better as a timing tool inside a broader plan than as signals by themselves. A hammer in the middle of nowhere means little; a hammer at a weekly support level with rising volume tells you much more.
A daily candle on PSX covers the exchange's single session. For forex and gold, which trade around the clock, a daily candle usually closes at 5 pm New York time — around 2 am or 3 am Pakistan time depending on US daylight saving. Patterns on higher time frames (daily, 4-hour) are generally more reliable than on 1- or 5-minute charts.
Har candle chaar qeematein dikhati hai — open, high, low, close. Body open se close tak, aur wicks sab se upar aur neeche ki qeemat. Doji, hammer, engulfing, morning star jaise patterns se traders reversal ya continuation ka andaza lagate hain, lekin akele yeh qabil-e-bharosa nahi — support/resistance par zyada kaam aate hain.
None is reliable alone. Engulfing patterns and pin bars at well-defined support or resistance on daily charts are the ones traders rely on most, but they still fail often.
The same logic applies, but crypto trades 24/7, so daily candle times differ between exchanges. Use the same exchange's chart consistently.
They look the same — small body, long lower wick. A hammer appears after a decline (bullish), a hanging man after a rally (bearish warning).
Free charting platforms let you replay past price action bar by bar, so you can practise spotting patterns without risking money.
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