Candlestick Patterns

Candlesticks are used on stock charts to give data about price movements. How do you interpret them? What are some common patterns?

---

How To Read A Candlestick Chart

Candlesticks are used on stock charts to give data about price movements about a certain period of time. The data given in each candlestick is the opening price, closing price, highest price during the period, the lowest price during the period, and if the price rose or fell during the period. If the candlestick is green then the price rose during that period of time. If it is red then it fell. If the bar is green then the bottom of the colored bar is the opening price and the top is the closing price. If the bar is red then the top of the colored bar is the opening price and the bottom is the closing price. There are 2 lines coming out of the colored bar. The top line shows the highest price during the period of time. The bottom line shows the lowest price.

---

3 Black Crows

The 3 Black Crows are 3 red candlesticks that predict a decline in the future.

---

Abandoned Baby

The bullish abandoned baby is 3 candlesticks: a red one that follows a downward trend, then a low red, and a green candlestick. This usually predicts that an upward trend will follow. This is a pattern that has been seen most of the time, but there can be times where this is not true.

---

Evening Star

The Evening Star is when there is a green candlestick, then a higher red candlestick followed by a lower red candlestick, like the pattern in the picture above. Most of the time this predicts a decline in the future.

---

This post only covers 3 common candlestick patterns, but there are many more. It is also important to note that not all candlestick patterns are 100% accurate. They are to give you a general idea and not a definitive prediction of future stock prices.