Candlestick Charts — The Complete Guide
By Rohit Singh · Mr. Chartist, SEBI Registered Research Analyst
Japanese candlestick charts are the most powerful and widely used charting method in the world. Developed by Munehisa Homma, a legendary Japanese rice trader in the 1700s, candlestick patterns capture the battle between buyers and sellers in a visual, intuitive format. Each candlestick tells a story of the open, high, low, and close (OHLC) within a specific time period.
Key points
- Bullish (Green/White) Candle: Close > Open. Buyers dominated the session. The body shows the range from open (bottom) to close (top)
- Bearish (Red/Black) Candle: Close < Open. Sellers dominated. The body shows the range from open (top) to close (bottom)
- Upper Shadow/Wick: The thin line above the body. Shows the highest price reached but rejected. Long upper wick = selling pressure at highs
- Lower Shadow/Wick: The thin line below the body. Shows the lowest price reached but recovered. Long lower wick = buying at lows (support)
- Doji: Open ≈ Close (tiny or no body). Represents indecision — neither buyers nor sellers won. Important at trend extremes
- Marubozu: Full body with no shadows. Bullish Marubozu = extreme buying (opens at low, closes at high). Most powerful single candle signal
- Hammer: Small body at top with long lower shadow (2x+ body length). Appears at bottoms — signals potential reversal upward
- Shooting Star: Small body at bottom with long upper shadow. Appears at tops — signals potential reversal downward. Opposite of hammer
- Engulfing: Two-candle pattern where the second candle completely 'engulfs' the first. Bullish Engulfing at bottoms = strong buy signal
- Morning Star: Three-candle reversal at bottoms: Big red → Small body (star) → Big green. Highly reliable bullish reversal
- Evening Star: Three-candle reversal at tops: Big green → Small body → Big red. Highly reliable bearish reversal
- Three White Soldiers: Three consecutive long green candles with higher closes. Strong bullish continuation signal. Volume should increase
A Bullish Engulfing pattern on NIFTY at the 24,000 support level with 20% above-average volume: This is a textbook high-probability buy signal because (1) the pattern itself is bullish, (2) it forms at a known support level, (3) volume confirms institutional buying.
Candlestick patterns work best at key support/resistance levels. A Hammer at random price level means very little. A Hammer exactly at a strong support zone = high probability reversal. Context is everything. Mr. Chartist's book covers 35+ patterns with real NSE/BSE examples.
Written By
Rohit Singh
Mr. Chartist
With 14+ years of experience in Indian financial markets, Rohit Singh (Mr. Chartist) is a SEBI Registered Research Analyst, Amazon #1 bestselling author, and the founder of Investology — a premium trading ecosystem trusted by a 1.5 Lakh+ strong community across India.