How to analyze all Candlestick pattern psychology and risk and reward?

How to types all Candlestick Pattern in Forex Trading?
Candlestick patterns are a core part of forex technical analysis, used by traders to identify potential reversals, continuations, or indecision in price movements. They come from Japanese charting techniques and can be classified into single, double, and triple candlestick patterns.

How to trade candlestick pattern in forex trading

1. Single Candlestick Patterns

These are formed by just one candle and give quick clues about possible reversals.

Pattern	Type	Description
Hammer	Bullish Reversal	Small body, long lower wick; appears after a downtrend, signals buying pressure.
Inverted Hammer	Bullish Reversal	Small body, long upper wick; shows rejection of lower prices.
Shooting Star	Bearish Reversal	Small body, long upper wick; after an uptrend, signals selling pressure.
Hanging Man	Bearish Reversal	Same as hammer but after an uptrend.
Doji	Indecision	Open ≈ Close; signals market indecision and potential reversal.
Dragonfly Doji	Bullish Reversal	Long lower wick, no upper wick.
Gravestone Doji	Bearish Reversal	Long upper wick, no lower wick.
Spinning Top	Indecision	Small body, long wicks; reflects a battle between buyers and sellers.
Marubozu	Continuation	Full body (no wicks); strong momentum candle.

 

2. Double Candlestick Patterns

These patterns use two candles and often signal reversals or continuation depending on context.

Pattern	Type	Description
Bullish Engulfing	Bullish Reversal	A small bearish candle followed by a larger bullish candle that engulfs it.
Bearish Engulfing	Bearish Reversal	A small bullish candle followed by a larger bearish candle that engulfs it.
Tweezer Bottom	Bullish Reversal	Two candles with similar lows; rejection of lower prices.
Tweezer Top	Bearish Reversal	Two candles with similar highs; rejection of higher prices.
Piercing Pattern	Bullish Reversal	Bearish candle followed by a bullish candle closing above 50% of the first.
Dark Cloud Cover	Bearish Reversal	Bullish candle followed by bearish candle closing below 50% of the first.
Bullish Harami	Bullish Reversal	Big bearish candle followed by smaller bullish candle inside it.
Bearish Harami	Bearish Reversal	Big bullish candle followed by smaller bearish candle inside it.

 

3. Triple Candlestick Patterns

These involve three candles and are more reliable signals of reversals or continuation.

Pattern	Type	Description
Morning Star	Bullish Reversal	Bearish candle → small indecision candle → bullish candle confirming reversal.
Evening Star	Bearish Reversal	Bullish candle → small indecision candle → bearish candle confirming reversal.
Three White Soldiers	Bullish Continuation	Three consecutive bullish candles with higher closes.
Three Black Crows	Bearish Continuation	Three consecutive bearish candles with lower closes.
Three Inside Up	Bullish Reversal	Harami pattern followed by a bullish confirmation candle.
Three Inside Down	Bearish Reversal	Bearish Harami followed by bearish confirmation candle.

 

 Bonus: Advanced or Composite Patterns

Some traders also use combinations or variations of the above:

• Inside Bar → Continuation or reversal signal depending on breakout direction.
• Outside Bar → Engulfing-like candle showing strong volatility.
• Railway Tracks → Two opposite candles with equal size bodies (momentum reversal).
• Kicker Pattern → Strong momentum shift; first candle in one direction, second candle gaps and runs opposite.

 

Tips for Using Candlestick Patterns in Forex

1. Always confirm with trend indicators (like Moving Averages or RSI).
2. Look for patterns at key levels (support/resistance, trendlines, Fibonacci zones).
3. Use higher timeframes (H4, Daily) for more reliable signals.
4. Volume and volatility confirmation strengthen pattern validity.

 

Would you like me to provide Pine Script code to automatically detect all these candlestick patterns on TradingView?
It can highlight them directly on your chart for easier trading.

How to Trade all Candlestick pattern in Forex Trading entry and exit?

That’s an excellent question, and it’s one that separates beginner traders from those who trade with confidence and consistency.

Let’s break this down step-by-step, so you understand how to trade each candlestick pattern in Forex — from entry to exit.

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 First: Understanding Candlestick Patterns

Candlestick patterns represent price psychology — the fight between buyers (bulls) and sellers (bears).
They’re divided into three main groups:

1. Reversal Patterns → Indicate potential market turning points.
2. Continuation Patterns → Indicate trend continuation after consolidation.
3. Indecision Patterns → Indicate uncertainty before a move.

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 1. Reversal Candlestick Patterns

Pattern	Type	Entry Rule	Stop-Loss	Take-Profit
Hammer / Inverted Hammer	Bullish Reversal	Enter after the next candle closes above the hammer high	Below the hammer’s low	1.5–2× risk or next resistance
Shooting Star / Hanging Man	Bearish Reversal	Enter after next candle closes below the low	Above the pattern high	1.5–2× risk or next support
Bullish Engulfing	Bullish	Buy after candle closes above engulfing high	Below engulfing low	Next resistance or 1:2 RR
Bearish Engulfing	Bearish	Sell after candle closes below engulfing low	Above engulfing high	Next support or 1:2 RR
Morning Star	Bullish	Enter after the 3rd candle closes bullish	Below middle candle low	1:2 RR
Evening Star	Bearish	Enter after 3rd candle closes bearish	Above middle candle high	1:2 RR
Piercing Line	Bullish	Enter after bullish candle closes >50% of previous bearish body	Below recent low	Next resistance
Dark Cloud Cover	Bearish	Enter after candle closes <50% into previous bullish body	Above recent high	Next support

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 2. Continuation Candlestick Patterns

Pattern	Trend Type	Entry Rule	Stop-Loss	Take-Profit
Rising Three Methods	Bullish	Enter after breakout above pattern high	Below last small candle	1:2 RR
Falling Three Methods	Bearish	Enter after breakout below pattern low	Above last small candle	1:2 RR
Bullish Flag / Pennant	Bullish	Buy breakout above consolidation	Below consolidation low	Equal to pole’s height
Bearish Flag / Pennant	Bearish	Sell breakout below consolidation	Above consolidation high	Equal to pole’s height

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 3. Indecision / Neutral Patterns

Pattern	Type	How to Trade	Stop-Loss	Take-Profit
Doji	Neutral	Wait for breakout above/below the range	Below low (bullish), above high (bearish)	1:2 RR
Spinning Top	Neutral	Confirm with next candle direction	Same as Doji	1:2 RR

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 Confirmations to Improve Accuracy

1. Trend Context → Trade patterns in trend direction (e.g., bullish engulfing in uptrend).
2.  Support/Resistance → Stronger reversals occur near key levels.
3.  Volume → High volume adds reliability.
4. Timeframe → H4 and Daily are more reliable than M15 or M5.
5. Indicators → Combine with EMA, RSI, or MACD for extra confirmation.

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 Example Trade Setup (Bullish Engulfing)

1. Identify bullish engulfing near support in an uptrend.
2. Confirm RSI > 50 or price above EMA(50).
3. Enter Long after the candle closes above engulfing high.
4. Stop-Loss: below engulfing low.
5. Target: 2× risk or next resistance zone.

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 Common Mistakes

• Entering before candle closes.
• Ignoring the overall trend.
• Using patterns alone without confluence.
• No risk management (always use 1–2% of capital per trade).

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Would you like me to make a PDF cheat sheet with all candlestick patterns, including pictures, entry/exit points, and stop-loss examples for Forex trading? It’ll be great for quick reference while trading.