Chart patterns are the footprints of emotion — showing where fear fades, greed builds, and balance breaks.
Chart patterns are visual frameworks traders use to interpret crowd behavior.
They highlight shifts in supply and demand, continuations of trends, or potential reversals.
While patterns can guide planning, they are not predictions.
Always combine them with risk management, confirmation tools (like the Money Line or Algo alerts), and a clear strategy before acting.
Lesson 1: Understanding Hollow Candlesticks
Goal: Learn how to read price data visually using hollow candlesticks.
Anatomy of a Candle
Part | Meaning |
Body | Distance between Open and Close. Shows the strength of buying or selling. |
Upper Shadow (Wick) | The high of the session shows how far buyers pushed before sellers stepped in. |
Lower Shadow (Tail) | The low of the session shows how far sellers pushed before buyers stepped in to defend. |
Hollow Candle | Close > Open → Buyers dominated (bullish). |
Filled Candle | Close < Open → Sellers dominated (bearish). |
The Wicks | Tell you “how far emotion stretched”. |
The Bodies | Tell you “who won”. |
Why Hollow Candles?
Hollow candlesticks make momentum easier to read:
Hollow = Buyers in control
Filled = Sellers in control
Transitions between hollow ↔ filled show trend reversals
Lesson 2: Bullish Patterns (Buyer Strength)
Objective: Identify patterns that show a shift from fear to optimism.
1. Hammer
Long lower wick, small body on top.
Buyers defended lows after heavy selling.
Use: Reversal near support zones.
2. Inverted Hammer
Long upper wick after a decline.
Buyers testing strength; next candle with a higher high, confirms reversal.
3. Bullish Engulfing
Small red (filled) candle followed by a large hollow candle.
Buyers fully absorb the prior selling.
Use: Strong reversal signal; best on volume rise.
4. Morning Star
Three-candle pattern: red → small → strong hollow.
Emotion shifts from panic to confidence.
5. Failed Breakdown
The second candle prints a lower low but closes above the prior red's low.
Indicates strong intraday recovery.
6. Three White Soldiers
Three consecutive hollow candles with higher closes.
Sustained buying pressure; continuation signal.
7. Dragonfly Doji
Long lower wick, open = close = high.
Buyers reclaimed control by end of session.
8. Bullish Harami
Small hollow candle inside a large red candle (inside bar).
Trend losing bearish momentum — early shift in sentiment.
Key Lesson: The best bullish patterns form after downtrends, and they are confirmed when the next candle closes above the pattern high.
Lesson 3: Bearish Patterns (Seller Strength)
Objective: Recognize exhaustion and trend reversals from greed to caution.
1. Hanging Man
Appears after an uptrend; long lower wick, small body.
Buyers lost steam, sellers testing control.
2. Shooting Star
Long upper wick, small body near lows.
Failed breakout attempt — warning sign for tops.
3. Evening Star
Opposite of Morning Star: hollow → small → red.
Transition from confidence to fear.
4. Dark Cloud Cover
Red candle closes below midpoint of prior hollow.
Indicates buyers failed to maintain strength.
5. Three Black Crows
Three long red candles, closing progressively lower.
Sustained selling — strong trend reversal.
6. Gravestone Doji
Long upper wick, open = close = low.
Rejection from higher levels — strong selling presence.
7. Bearish Harami
Small red candle within a prior hollow one.
Early warning of fading bullish momentum.
8. Bearish Engulfing
Green candle followed by a large full candle.
Sellers fully absorb the prior buying.
Use: Strong reversal signal; best on volume rise.
9. Failed Breakout
The second candle prints a higher high but closes below the prior green's high.
Indicates strong intraday selling.
Key Lesson: The strongest bearish setups appear after extended rallies when volume rises on the red (filled) candle.
Lesson 4: Neutral Patterns (Indecision or Pause)
Objective: Learn to interpret equilibrium moments — where neither side dominates.
1. Spinning Top
Small body, long upper and lower shadows.
Indicates tug-of-war — market in balance.
2. Doji
Open ≈ Close; little to no body.
Clear indecision; direction uncertain.
3. Tri-Star
Three Doji candles in a row.
Rare pattern — signals extreme indecision before a major move.
Key Lesson: Neutral candles don’t predict — they warn of tension building.
Always wait for the confirmation candle to determine breakout direction.
Lesson 5: Putting It All Together
Pattern Recognition Framework
Step | Focus | Action |
1 | Identify candle structure | Check if hollow (buyers) or filled (sellers). |
2 | Spot the pattern | Bullish, Bearish, or Neutral from visuals. |
3 | Confirm with volume | Strength increases reliability. |
4 | Check context | Trend direction + support/resistance. |
5 | Execute | Apply with risk-managed entry. |
Example Flow:
Hammer at support + hollow close + volume up = early reversal entry.
Shooting Star at resistance + filled candle + volume spike = sell/trim signal.
Lesson 6: Key Takeaways
Hollow = Buyers in control. Filled = Sellers in control.
Bullish patterns form after declines; bearish after rallies.
Neutral candles warn of transitions — not trade triggers alone.
Always confirm with trend, volume, and context.
Consistency and observation turn pattern recognition into an edge.
Key Lesson: You can’t control the market, but you can learn to read its language — one candle at a time.