Mastering Technical Analysis: Essential Patterns

Candlestick charts are a style of financial chart used to describe price movements of a security, derivative, or currency. Each candlestick provides a simple visual picture of price action.

The hammer is a bullish reversal pattern that forms after a decline. Hammers often mark bottoms or key support levels that help traders spot potential long opportunities.

A bullish engulfing occurs when a small red candle is followed by a large green candle that ‘engulfs’ it. This shows strong buying pressure and often signals trend reversals.

Not every pattern guarantees a reversal. Volume, trend context, and confirmation signals are essential to avoid traps and improve risk management.