Analysis
The handful of candlestick patterns that actually matter
Most candlestick guides list forty patterns. You need three, and even those are worthless without the level under them. A textbook hammer in the middle of nowhere is just a bar with a wick. The same hammer tapping a weekly support you drew last month is a trigger.
The three that earn their keep
- Engulfing: one candle's body fully swallows the prior body. It says the other side just got overwhelmed in a single bar. A bearish engulfing after a run into resistance on BTCUSD is worth more than the wick count.
- Pin bar / hammer: long wick, small body, price rejected from an extreme and closed back. The wick is the story — it shows where a move went and got thrown out.
- Inside bar: the whole range sits inside the previous candle. A pause, a coil. On EURUSD daily it often precedes the next leg; the break of the mother bar is the actual signal.
Why location is the whole game
A pattern is a trigger, not a reason. The reason is the level and the trend that led into it. Turn on TradingView's built-in 'All Candlestick Patterns' (Indicators, search 'candlestick') and it tags every hammer and engulfing on the chart, location be damned — which is exactly why a raw pattern scan hands you so many losers. At a marked line or a trendline you already trusted, the same candle confirms the level held. Mid-range it's just buyers and sellers fidgeting.
Timeframe scales the weight. An engulfing on the 5-minute is a scalp's worth of conviction; the same shape on the daily took a full session to print. Bigger candle, bigger commitment behind it.