What it is
Candlestick patterns come from Japanese rice traders and were brought to Western traders by Steve Nison. They read the battle between buyers and sellers from the shape of one to three candles: long wicks show rejection, big bodies show control.
This tool labels them automatically so you do not have to memorise every shape. Switch to all patterns to include continuation and neutral ones as well as reversals.
How it is calculated
1. Measure each candle's body, upper wick and lower wick, and compare them with nearby candles. 2. Test those shapes against each pattern's rule. For example, a bullish engulfing is a down candle followed by an up candle whose body covers the whole body of the first. 3. A hammer has a small body near the top and a lower wick at least about twice the body. 4. Label each match on the candle that completed it, keeping the 25 most recent.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| pattern | all reversals | all reversals or all patterns | Show only reversal patterns, or every pattern including continuation and indecision ones. |
| most recent | 25 | 1 to 200 | How many of the latest patterns are labelled. |
How to read it
How to trade it
- 1
Mark key levels first: previous day high and low, pivots, round numbers.
- 2
Entry trigger: a reversal pattern forms at a level and the next candle breaks its high (for longs) or low (for shorts). On gold 15 minute, buy a break above a hammer at the previous day low.
- 3
Stop: beyond the pattern's extreme, for example 2 to 3 points below the hammer's low.
- 4
Target: the next key level, or 2 times the stop.
- 5
Ignore patterns that form away from any level.
A bullish pattern is proved wrong if price closes below its low; a bearish one if price closes above its high.
WickSpeak labels each pattern on the candles that made it and writes a plain-English reading: what the pattern is, how to trade it and what would prove it wrong. WickSpeak recognises 70 candlestick patterns in all, and Playbook can use a pattern as a condition in a play.
Best markets and timeframes
Candlestick patterns work on any market. They are most meaningful on 15 minute to daily charts of gold, US30 and NAS100, where each candle carries more trading.
Common mistakes
- Trading a pattern with no level behind it.
- Entering on the pattern candle instead of waiting for confirmation.
- Expecting patterns on a 1 minute chart to carry the same weight as on a daily chart.
Works well with
Questions traders ask
What is the most reliable candlestick pattern?
No pattern works on its own. Engulfing patterns and pin bars (hammers and shooting stars) are popular because their stop level is clear. Location at a key level matters most.
How many candlestick patterns are there?
There are dozens in common use. WickSpeak recognises 70 candlestick patterns, plus price action, chart and harmonic patterns, 146 in all.
Should I wait for confirmation after a candlestick pattern?
Usually yes. A break of the pattern's high or low on the next candle reduces false signals, at the cost of a slightly worse price.
Do candlestick patterns work on gold?
Yes, and gold respects key levels well, so patterns at the previous day high or low or at round numbers are worth watching on 15 minute to 1 hour charts.