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  1. Beginner
    Early Stages for Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Intermediate
    Identifying Scams
    2 Topics
  5. Brokers for Beginners
    5 Topics
  6. Technical Analysis
    13 Topics
  7. Advanced
    Using Indicators
    6 Topics
  8. Technical Analysis (Part 2)
    8 Topics
  9. Market Structure
    5 Topics
  10. Fundamental Analysis
    9 Topics
  11. Completion
    Risk Management for Beginners
    8 Topics
  12. Psychology for Beginners
    7 Topics
  13. Personal Psychology Questions
    2 Topics

Candlestick Patterns for Beginners

The great thing about using candlesticks, is that they form many different patterns that could easily help us determine the direction that price wants to go. To keep things simple, we’re going to start with a few easy candles to remember: doji, marubozu, and spinning top. This may all sound foreign to you, but bare with us. By the end of this beginners section you’ll know all the terminology!

Doji

Although looking at a doji on a chart, you may think it doesn’t show much, but it shows a lot! It shows us a lot of indecision in the market. This means that there are the same number of buyers, as there are sellers so the market isn’t really moving! Neither the bulls nor the bears can gain momentum. You will most likely see them at the end of a trend or near a support or resistance level, so play close attention to the candlesticks that follow.

Regular-Doji

Marubozu

A Marubozu is a candlestick pattern that gives you confirmation that the current trend is a true trend. Meaning, if price is heading up, and you see a reversal candle, most times a marubozu candle follows to confirm that price is about to head down. They consist of big bodies and barely have any wicks. They show you that momentum is clearly heading in whatever direction the marubozu is heading.

Marobuzo

Spinning Top

Spinning tops, just like dojis, show us indecision within the market. They have very small bodies, which tells us that price has a very little difference between it’s open and close. Both buyers and sellers were fighting to gain control, yet none succeeded. Oftentimes, if you see one form at the end of a downtrend, it indicates that the sellers have bounced out of the market , and a possible reversal could take place! Same goes with the opposite direction! If you see one form at the end of an uptrend, that could signal that momentum is slowing down, the buyers have left and there’s a potential reversal lying ahead.

Spinning-Tops

Seeing as we’ve touched base on a few of the basics, here’s a beginners guide to market direction! Now remember, don’t just form your bias based on candlesticks, there are still many other confluences you need to look for before choosing “BUY” or “SELL.”

NOTE: A “confluence” in the market means a sign. It’s a mixture of all the signs that you have that verify your reason for getting in a trade. For example: If someone asks you: “what were your confluences for getting in a trade?” Basically it means what were the signs you saw/what were your reasons for getting in!

Potential Confluences: (we’ll discuss more later).

  • Fundamental Announcement came out
  • Saw a candlestick pattern
  • Saw a candlestick pattern at a major level
  • Used Fibonacci
  • Moving Averages Crossed Over
  • Price broke the Trendline
  • Price is bouncing off the Trendline

And MANY MORE. We’ll go into this deeper as this section ends.

NEW-Indications-Bearish

Note that a Hammer and Hanging Man both look the same visually, as well as similarities between an Inverted Hammer and a Shooting Star. The only way to really tell the difference between them, will be to look at the market direction prior to seeing that candlestick.

NEW-Indications-Bullish