Part 2 Introduction to Candlestick PatternsA. Call Options
A call option gives you the right to buy an underlying asset at a predetermined price within a specified time.
You buy a call option when you expect:
➡ The price of the asset will go up.
Example:
Nifty is at 22,000.
You buy a 22,000 CE (Call European) at a premium of ₹100.
If Nifty rises to 22,400, your call becomes more valuable, and you profit.
B. Put Options
A put option gives you the right to sell an underlying asset at a predetermined price within a specified time.
You buy a put option when you expect:
➡ The price of the asset will go down.
Example:
Bank Nifty is at 47,000.
You buy a 47,000 PE (Put European) at ₹120.
If Bank Nifty falls to 46,500, the put becomes more valuable.
Candlemodel
Part 1 Introduction to Candlestick PatternsWhat Are Options?
Options are financial contracts that give you the right, but not the obligation, to buy or sell an underlying asset (like a stock, index, commodity, or currency) at a specific price, called the strike price, before a fixed date known as expiry.
There are two types of options:
1. Call Options – Right to buy
2. Put Options – Right to sell
Options derive their value from the underlying asset; that’s why they are called derivatives.
Unlike stocks, options have a limited lifespan. They expire weekly, monthly, or quarterly depending on the market.
Real Knowledge of Candle patterns Candlestick patterns reflect the most important element in trading—market psychology and momentum. Each candle represents:
Open price
High
Low
Close
Candles show emotions like greed, fear, indecision, manipulation, and momentum.
Candlestick patterns can be categorized as:
1. Reversal Patterns
2. Continuation Patterns
3. Indecision Patterns
1. Reversal Candlestick Patterns
-Bullish Reversal Patterns
Hammer
Morning Star
Bullish Engulfing
Piercing Line
Dragonfly Doji
-Bearish Reversal Patterns
Shooting Star
Evening Star
Bearish Engulfing
Dark Cloud Cover
Gravestone Doji
Candle Patterns ExplainedBasics of Candlesticks
A standard candlestick contains:
Body: Difference between open and close
Wicks/Shadows: High and low
Color: Bullish (often green/white) or bearish (red/black)
The structure itself provides signals:
Long bodies → strong momentum
Small bodies → indecision
Long wicks → rejection or strong counterforce
No wick → full control by one side
Understanding this foundation helps interpret every pattern that follows.
Candle Patterns Candlestick charts represent price movement in a visually intuitive way. Each candle shows:
Open
High
Low
Close
The color (green or red) indicates bullish or bearish sentiment. Patterns form when candles combine to express a strong market bias.
Why Candle Patterns Matter
They show real-time market sentiment
Provide early entry signals
Indicate trend continuation or reversal
Help identify trap candles and false breakouts
Crucial for Volume Profile & Market Structure traders to read participant behaviour
Candlestick patterns are classified into:
A. Bullish Reversal Patterns
B. Bearish Reversal Patterns
C. Continuation Patterns
D. Indecision / Neutral Patterns
Candle Patterns 🔹 What Are Candlestick Patterns?
Candlestick patterns are formed by one or more candles on a price chart. Each candle shows:
Open price
High price
Low price
Close price
Candlestick patterns reflect the battle between buyers and sellers within a specific time frame.
🔸 Structure of a Candlestick
Body – Distance between open and close
Wick / Shadow – High and low prices
Bullish Candle – Close > Open
Bearish Candle – Close < Open
Components of a Candle (Body, Wick, High, Low)Types of Candlestick Patterns
Candlestick patterns are broadly divided into:
A. Single Candlestick Patterns
Formed by just one candle.
B. Double Candlestick Patterns
Formed by two-candle combinations.
C. Triple Candlestick Patterns
Formed by three-candle combinations.
Let’s dive into each category in detail.
Real Knowledge Of Candle Patterns Candlestick Patterns in Reversal Trading
Reversals are powerful when:
Patterns appear on key levels
Trend is exhausted
Volume divergence occurs
Examples:
Morning Star at support
Shooting Star at resistance
Engulfing candles at major swing points
Combining Candles with Indicators
Although candles alone are powerful, combining them with indicators increases win probability.
Best indicators:
RSI for overbought/oversold
Volume Profile / Market Structure
MACD for momentum shift
Moving averages for trend direction
Cadnle Patterns Mistakes Traders Make With Candle Patterns
Mistake 1: Trading Every Pattern
Not every hammer means buy; not every engulfing means reversal.
Mistake 2: Ignoring the Trend
Trend is king. Patterns against trend are less reliable.
Mistake 3: No Confirmation
Waiting for confirmation improves accuracy.
Mistake 4: Overlooking Market Structure
Support/resistance is more powerful than candle patterns.
Mistake 5: Using Candles Alone
Combine with other tools for best results.
Candle Patterns Candlestick patterns are one of the most valuable tools for traders. They visually represent the battle between bulls and bears and reveal hidden clues about upcoming market movements. Whether you're trading intraday, swing, or positional, these patterns help spot reversals, continuations, breakouts, and exhaustion points.
But remember: Candle patterns are most powerful when combined with trend analysis, support/resistance, volume, and market structure. Mastering them takes practice, but once you internalize their psychology, you can interpret charts with much more confidence and precision.
Candle Patterns Explained Candlestick patterns are one of the most powerful tools in technical analysis. They help traders understand price movements, market psychology, and potential trend reversals. Each candlestick represents four key data points for a specific time frame: Open, High, Low, and Close (OHLC). The body shows the open and close, while the wicks (shadows) show the high and low. By studying these candles in combinations, traders can forecast upcoming market moves.
1. Bullish Candlestick Patterns
2. Bearish Candlestick Patterns
3. Continuation Candlestick Patterns
Why Candlestick Patterns Matter
Candlestick patterns work because they capture market psychology — fear, greed, indecision, and momentum. When combined with volume, support-resistance, and trend analysis, they become a highly effective decision-making tool for traders.
Explain: Candle PatternWhat is a Candlestick Pattern?
A candlestick pattern represents the price movement of an asset (like a stock) during a specific time frame. It shows open, high, low, and close prices in one candle.
Structure of a Candle
Each candle has:
Body: The range between open and close price.
Wick (or shadow): The lines above and below the body showing high and low prices.
Color: Green (bullish – price up) or Red (bearish – price down).
Part 2 Candle Stick PatternUnderstanding Call and Put Options
There are two basic types of options: Call Options and Put Options.
Call Option:
A call option gives the holder the right, but not the obligation, to buy an underlying asset at a specific price (called the strike price) before a specific date (called the expiry date).
Put Option:
A put option gives the holder the right, but not the obligation, to sell an underlying asset at a specific strike price before expiry.













