Top 10 Candlestick Patterns Every Forex Trader Must Know

A candlestick represents one time period of price action — open, high, low, close. The body shows the open-to-close range; wicks show the high and low extremes. Patterns of 1–3 candles signal potential reversals or continuations. Originated in 18th-century Japanese rice trading by Munehisa Homma.

1. Doji — open equals close, signals uncertainty. 2. Hammer — small body, long lower wick after downtrend, bullish reversal. 3. Shooting Star — small body, long upper wick after uptrend, bearish reversal. 4. Bullish Engulfing — large green candle engulfs previous red. 5. Bearish Engulfing — large red candle engulfs previous green. 6. Morning Star — 3-candle bullish reversal. 7. Evening Star — 3-candle bearish reversal. 8. Spinning Top — small body, consolidation signal. 9. Three White Soldiers — three strong green candles, strong bull trend. 10. Hanging Man — hammer shape at top of uptrend, bearish.

Never trade a pattern in isolation. Confirm with: support/resistance level, volume spike, secondary indicator (RSI or MACD). Set stop-loss below the pattern low (for bullish) or above the high (for bearish). Minimum risk/reward: 1:2.

Gold is known for clean candlestick patterns — particularly around key round numbers ($2,000, $2,500, $3,000). Hammer and bullish engulfing at major support often signal strong moves. Use daily or 4-hour timeframes for most reliable signals on gold.