Candlestick Patterns

Candlestick patterns are a way of drawing price bars that dates back centuries to Japanese rice traders. Each 'candle' encodes four numbers for a period: the open, the high, the low, and the close. The body spans open-to-close; the thin 'wicks' mark the high and low. A close above the open is usually drawn hollow or green (buyers won); below, filled or red (sellers won).

Patterns are one or a few candles whose shape hints at what participants are feeling — conviction, hesitation, or a shift.

A handful of patterns carry most of the signal:

• Doji — open and close nearly equal, a tiny body. Indecision; the prior trend may be stalling.
• Hammer — a long lower wick after a decline. Sellers pushed down but buyers reclaimed the close — a potential reversal near support.
• Bullish/bearish engulfing — a big candle whose body fully swallows the prior one, signaling a decisive shift.

Candles are far more reliable in context — at a support/resistance level, with volume confirmation — than floating in the middle of a range.

Candlesticks are a compact, universal language for reading order flow at a glance — every charting tool speaks it. Their danger is over-reading: a single candle in isolation is noise. Used with trend, level, and volume, they help time entries and exits more precisely. They describe the present balance of power; they do not predict the future.

Entry Point Trading reads price structure like this as one input in its daily signal, then grades every call in the open.