You open your gold chart at 8 PM. Green candles. Red candles. Long wicks. Short bodies. What does any of it mean?
Here’s what most beginners don’t know. Those candles tell you exactly what buyers and sellers are doing. They show you who’s winning the battle. They warn you before trends reverse. They’re not random shapes, they’re stories.
This guide teaches you the most profitable candlestick patterns using real examples from gold, EUR/USD, and Bitcoin trades during Pakistan evening hours. You’ll learn which patterns actually work and which ones waste your time.
Our complete forex trading guide covers chart analysis basics. Check daily free signals to see how we use these patterns in live trades.
What Candlestick Charts Actually Show You
A candlestick shows four prices in one shape. Open, close, high, low. All packed into that little rectangle with lines sticking out.
The thick part? That’s the body. It shows where price opened and where it closed. Green body means price closed higher than it opened. Red body means price closed lower.
Those thin lines above and below? Wicks or shadows. They show the highest and lowest prices during that time period. Sometimes price spikes way up or down, then comes back. The wick captures that movement.
Think about it this way. You’re trading gold at 2580. A big green candle forms. Body is thick, wick on top is small. This tells you buyers controlled the entire session. They pushed price up strong and held it there.
Now imagine a red candle with long wicks on both sides and tiny body. Price went up, came down, went down, came back up. Nobody really won. Indecision. That’s a different story entirely.
Japanese rice traders figured this out 300 years ago. A guy named Munehisa Homma started drawing these patterns watching rice prices. He got rich. Really rich. Not because the patterns predict the future. But because they show you what just happened in a clear way.
Why Pakistani Traders Need Candlestick Skills
You’re checking charts after your job ends. Maybe 6 PM, 7 PM Pakistan time. London and New York sessions overlap. Markets are moving fast. You need to make quick decisions.
Candlesticks give you instant information. One glance tells you if bulls or bears won the last hour. No need to study ten indicators. Just read the candle.
For price action trading, candlesticks are your foundation. Everything else builds on top. Support, resistance, trendlines, they all work better when you understand what individual candles are telling you.
Plus, candlestick patterns work on any timeframe. 15 minute charts for scalping. 4 hour charts for swing trading. Daily charts for position trading. Same patterns appear everywhere.
Reading Single Candle Patterns
Some patterns form from just one candle. These are your quick signals. Fast information about what just happened.
Doji Candle
Tiny body. Open and close basically the same price. Long wicks on both sides usually. This shows perfect balance between buyers and sellers. Nobody won.
After a strong uptrend, doji warns you the trend might be tired. Bulls can’t push anymore. After a strong downtrend, doji suggests bears are exhausted. Neither side has energy left.
Real example from gold last week. Price dropped from 2640 to 2580 fast. Then a doji formed at 2580 on 4 hour chart. Next candle? Big green one. Price bounced to 2610. The doji warned the drop was ending.
Don’t trade dojis alone though. They just show indecision. You need context. Where did the doji form? At support? At resistance? After a long move? These factors matter more than the doji itself.
Hammer Candle
Small body at the top. Long wick below, twice as long as the body minimum. Little or no wick on top. Looks like a hammer.
This pattern forms at the bottom of moves. Price dropped during the session. Sellers pushed hard. Then buyers came in strong and pushed price all the way back up. Closed near the high.
The long lower wick shows rejection of lower prices. Sellers tried. Failed. Buyers took over. This often marks the bottom of a pullback in an uptrend.
Gold example. Price pulls back to 2585 in an uptrend. A hammer forms. Body at 2585, wick goes down to 2575. Next session? Price rallies to 2615. The hammer called the bottom perfectly.
Color matters less than shape here. Red hammer works same as green hammer. What matters is that long lower wick showing rejection.
Shooting Star
The opposite of a hammer. Small body at the bottom. Long wick above, twice the body length minimum. Little or no wick below. Looks like a shooting star falling down.
Forms at the top of moves. Buyers pushed price way up during the session. Then sellers came in hard and pushed it all the way back down. Closed near the low.
Bitcoin example from last month. Price rallied to 94500. A shooting star formed. Body at 94200, wick went up to 94600. Next sessions? Price dropped to 91000. The shooting star warned the rally was over.
Look for these at resistance levels. When price tests resistance and forms a shooting star, that’s your signal to sell or close longs.
Marubozu Candle
Long body. No wicks or very tiny wicks. One side completely controlled from open to close. Green marubozu means bulls dominated. Red marubozu means bears dominated.
These show strong momentum. When you see a green marubozu breaking through resistance, the breakout is real. When you see a red marubozu at resistance, selling pressure is massive.
EUR/USD example. Price consolidated at 1.1050 for days. Then a big green marubozu candle broke through 1.1060. No upper wick. Bulls controlled everything. Price went to 1.1150 over next week.
Marubozu candles confirm momentum. Don’t fight them. Trade in the direction they point.
Two Candle Reversal Patterns
Two candles together create more powerful signals. These patterns show shifts in momentum. Battle between buyers and sellers reaching a conclusion.
Bullish Engulfing
After a downtrend, a small red candle appears. Next candle? Big green candle that completely swallows the previous red candle. Opens below the red close, closes above the red open. Entire red candle fits inside the green one.
This shows decisive shift in power. Sellers had control. Then buyers came in so strong they erased all the selling and pushed even higher. Trend is reversing.
Gold example from our signals. Price dropped to 2570 support. Small red candle formed. Next 4 hour candle? Massive green engulfing candle. Went from 2568 to 2588. Completely ate the previous candle. We called buys there. Price rallied to 2620 over two days.
Size matters here. The bigger the green candle compared to red, the stronger the signal. Tiny engulfing patterns don’t count for much.
Bearish Engulfing
The opposite. After an uptrend, small green candle appears. Next candle? Big red candle that completely swallows the previous green. Opens above green close, closes below green open.
Shows sellers took over decisively. Buyers had control, then got crushed. Trend is turning down.
Silver example. Price rallied to 5850. Small green candle formed at resistance. Next candle? Huge red engulfing candle. Dropped from 5855 to 5790. We sold there. Price fell to 5720 over the next session.
Look for these at resistance levels. Engulfing patterns at resistance are some of the highest probability short setups you’ll find.
Piercing Pattern
During downtrend, a red candle forms. Next candle opens lower (gap down), then rallies strong and closes above the midpoint of the previous red candle. Needs to close more than halfway up the red body.
This shows sellers tried to push lower but buyers overwhelmed them. Strong reversal signal at support zones.
Gold at 2575 support. Red candle closes there. Next candle opens at 2570, then rallies to close at 2580. More than halfway up the previous red candle. Piercing pattern formed. Price reversed up to 2605.
Don’t confuse this with weak bounces. Must close above midpoint of previous candle. Otherwise it’s just a weak bounce that might fail.
Dark Cloud Cover
The opposite. During uptrend, green candle forms. Next candle opens higher (gap up), then sells off hard and closes below the midpoint of the previous green candle.
Shows buyers tried to push higher but sellers crushed them. Reversal signal at resistance.
Bitcoin at 93500 resistance. Green candle closes there. Next candle opens at 93600, then drops to close at 93200. Below midpoint of previous green candle. Dark cloud cover formed. Price reversed down to 91500.
These patterns work best at key levels. Random dark cloud covers in middle of nowhere don’t mean much. But at resistance? They’re powerful.
Three Candle Patterns
Three candle patterns give you even more confirmation. These are your highest probability setups when they form at the right places.
Morning Star
Three candles at the bottom of downtrend. First candle is red and long. Second candle is small body (can be red or green), shows indecision. Third candle is green and long, closes well into the first red candle.
Story is clear. Downtrend was strong (first red candle). Then momentum stopped (small second candle). Then bulls took over hard (third green candle). Reversal is happening.
Gold example at 2565 support. Long red candle dropped price there. Small doji formed next. Then massive green candle rallied price back to 2585. Morning star complete. We bought. Price went to 2615.
The middle candle is the star. It shows the pause before reversal. Without that pause, you just have two random candles. The pause is what makes the pattern work.
Evening Star
Opposite of morning star. Forms at top of uptrend. Long green candle, then small body showing indecision, then long red candle closing well into the first green candle.
Uptrend was strong, momentum stopped, bears took over. Reversal down coming.
Silver at 5870 resistance. Long green candle topped out there. Small spinning top formed. Then big red candle dropped price to 5820. Evening star complete. We sold. Price fell to 5750.
Three White Soldiers
Three consecutive strong green candles. Each one closes near its high. Each one opens within the previous candle’s body. They march up like soldiers.
This shows strong, sustained buying pressure. Bulls are completely in control. Uptrend is confirmed or starting.
EUR/USD example. After consolidation at 1.1040, three white soldiers formed. First candle 1.1040 to 1.1055. Second candle 1.1050 to 1.1068. Third candle 1.1065 to 1.1082. Perfect march upward. Uptrend confirmed. Price went to 1.1150.
Don’t chase these after they’re finished. Wait for a pullback. But when you see them breaking resistance, it confirms the breakout is real.
Three Black Crows
Opposite. Three consecutive strong red candles. Each closes near its low. Each opens within previous body. They signal down like crows diving.
Strong, sustained selling pressure. Bears control everything. Downtrend confirmed or starting.
Gold at 2640 resistance. Three black crows formed. First drop 2640 to 2622. Second drop 2625 to 2605. Third drop 2610 to 2588. Perfect march downward. Downtrend confirmed. Price went to 2565.
These are your warnings to exit longs or enter shorts. Fighting three black crows is painful. Trade with them, not against them.
Continuation Patterns
Not all patterns mean reversals. Some tell you the current trend will keep going after a brief pause.
Rising Three Methods
During uptrend, long green candle appears. Then three small red candles that stay within the green candle’s range. Then another long green candle breaks above.
The story? Uptrend paused. Bears tried to take over but failed. Bulls resumed control stronger than before. Uptrend continues.
Gold uptrend at 2590. Long green candle to 2605. Then three small red candles bouncing between 2595 and 2600. Then another long green candle to 2620. Rising three methods complete. Uptrend continues to 2640.
Use these to add to winning positions. When you’re long and see rising three methods, that’s your signal to add size.
Falling Three Methods
During downtrend, long red candle. Then three small green candles within the red candle’s range. Then another long red candle breaks below.
Downtrend paused, bulls tried to reverse but failed, bears resumed control. Downtrend continues.
Silver downtrend at 5800. Long red candle to 5760. Three small green candles between 5770 and 5780. Then another long red candle to 5720. Falling three methods. Downtrend continues to 5680.
How to Trade Candlestick Patterns Correctly
Knowing patterns is step one. Trading them profitably is step two. Most beginners mess up the execution even when they spot patterns correctly.
Wait for Pattern Completion
Don’t predict patterns. Wait for them to finish forming. That third candle in a morning star? Wait for it to close. Don’t enter halfway through hoping it completes.
I’ve seen traders enter on the small middle candle thinking they’re early. Then the third candle never forms properly. They lose money on a pattern that didn’t actually complete.
Patience pays here. Let the pattern finish. Confirm the story is complete. Then enter your trade.
Context Matters More Than Pattern
A hammer at random support means little. A hammer at major support that held three times before? That’s different. Context turns okay signals into great signals.
Look where the pattern forms. At support or resistance? After a long move or fresh trend? During high volume sessions or low volume Asian hours? These factors determine if the pattern will actually work.
Our support and resistance guide teaches you how to identify these key levels where patterns work best.
Combine with Volume
Patterns with volume confirmation work better. A bullish engulfing with huge volume? Much stronger than one on low volume. The volume shows real money flowing in, not just random price movement.
On platforms like TradingView, you can see volume bars below your candles. When patterns form with volume spikes, pay extra attention.
Use Stop Losses Always
Pattern trading without stops is gambling. Every pattern can fail. Market conditions change. News events hit. Your pattern setup breaks.
Place stops beyond the pattern’s range. Hammer at 2580? Stop goes at 2570, below the hammer wick. This limits damage when patterns don’t work.
Calculate position size based on this stop distance using position size calculators. Never risk more than 1-2% per trade.
Common Mistakes with Candlestick Patterns
Beginners make the same errors repeatedly. Avoid these and your win rate improves dramatically.
Seeing Patterns That Don’t Exist
You want to find a hammer so badly you convince yourself that mediocre candle counts. The wick isn’t quite twice the body. The body isn’t quite at the top. But you take the trade anyway.
Be strict with pattern rules. If it doesn’t meet all criteria, skip it. Another clean pattern comes tomorrow. Forcing marginal setups kills accounts slowly.
Ignoring Trend Direction
Trading bearish patterns in strong uptrends wastes money. The trend overpowers your pattern. You get stopped out. Then price continues trending up without you.
Trade with the trend. In uptrends, focus on bullish reversal patterns at support. In downtrends, focus on bearish reversal patterns at resistance. Don’t fight the bigger picture.
Using Wrong Timeframes
One minute candles show too much noise. Patterns form and break constantly. False signals everywhere. 15 minute candles are the minimum for pattern trading.
For Pakistani traders with jobs, 4 hour candles work best. They filter noise and show clear patterns during evening sessions when you’re available to trade.
Daily candles work great for swing trades you hold multiple days. Just make sure you’re using timeframes that match your trading style and schedule.
No Confirmation from Other Factors
Pattern at random price level? Weak setup. Pattern at support level? Better. Pattern at support level that aligns with trendline? Even better. Pattern at support, trendline, and round number like 2580? Now you have a great setup.
Look for confluence. Multiple factors agreeing. These high confluence setups have the best win rates.
Real Trading Examples from Pakistan Hours
Let me walk through actual trades using candlestick patterns during 6 PM to 9 PM Pakistan time. This is when London and New York overlap. Perfect for evening traders.
Gold Hammer at Support
December 3rd, 7 PM Pakistan time. Gold dropped to 2575 support on 4 hour chart. This level held twice before in previous weeks. Hammer candle formed. Body at 2576, wick down to 2571.
I entered buy at 2577 when next candle opened. Stop loss at 2568, below the hammer wick. First target at 2600 resistance. Second target at 2620.
Price rallied over next 12 hours. Hit first target at 2600 for +23 pips. Hit second target at 2620 for +43 pips total. Risk was 9 pips. Reward was 43 pips. Risk reward of 1 to 4.7.
The hammer showed rejection of 2575 support. The pattern at that key level created a high probability buy setup.
Bitcoin Shooting Star at Resistance
November 28th, 8:30 PM Pakistan time. Bitcoin tested 94500 resistance on 1 hour chart. This level rejected price three times in past week. Shooting star formed. Body at 94200, wick up to 94550.
Entered short at 94180 when next candle opened. Stop at 94600, above the shooting star wick. Target at 92500 support. Risk was 420 pips. Target was 1680 pips. Risk reward of 1 to 4.
Price dropped over next 18 hours. Target hit at 92500. Perfect 1680 pip move. The shooting star at key resistance warned the rally was exhausted.
Silver Bearish Engulfing
December 4th, 6:45 PM Pakistan time. Silver rallied to 5870 resistance during early evening. Small green candle closed at 5868. Next candle? Massive red engulfing. Opened at 5872, closed at 5815.
Entered short at 5810 on next candle open. Stop at 5880, above engulfing high. First target at 5750, second target at 5720.
Price dropped fast. First target hit in 4 hours for 60 pips. Second target hit next day for 90 pips total. Risk was 70 pips. Reward was 90 pips. Risk reward of 1 to 1.3.
Not the best risk reward but the engulfing pattern at resistance during high volume London/NY overlap made it worth taking.
Practicing Candlestick Pattern Recognition
Reading about patterns doesn’t make you good at spotting them. You need practice. Lots of it. Here’s how to develop this skill fast.
Historical Chart Analysis
Open gold 4 hour chart. Scroll back three months. Hide the right side. Walk forward candle by candle. Every time you see a pattern, mark it. Write down what pattern, where it formed, what happened next.
Do this for 50 patterns minimum. You’ll start seeing which patterns work at which locations. Hammers at support work. Hammers in middle of charts don’t. Engulfing patterns at key levels work. Random engulfing patterns fail.
This practice builds pattern recognition into your subconscious. After analyzing 100 historical patterns, you’ll spot them instantly on live charts.
Demo Trading Pattern Setups
Don’t jump to real money. Open demo account with your broker. Trade only candlestick pattern setups for one month. Track every trade in a journal.
Pattern type, location, confluence factors, result. After 30 trades, you’ll know which patterns you spot best and which ones you should skip.
Most traders discover they’re better at certain patterns than others. Maybe morning stars work great for you but shooting stars don’t. That’s fine. Focus on your best patterns.
Real Time Pattern Watching
Sometimes just watch charts without trading. See patterns forming live. Watch how price reacts. Does the pattern complete? Does price reverse as expected?
This observational learning builds intuition. You start feeling when a pattern will work versus when it’s going to fail. That feeling comes from watching hundreds of patterns play out.
Set aside 30 minutes few times per week just for watching. No trading. Just learning. Your pattern recognition improves faster than you expect.
Best Timeframes for Pakistani Evening Traders
You finish work at 5 or 6 PM. You have 3-4 hours before bed. Which timeframe should you use?
4 Hour Charts for Swing Trades
Check charts once at 6 PM when you get home. Look for patterns that completed on 4 hour chart. Enter trades that you’ll hold overnight or multiple days.
4 hour patterns are clean. Less noise than lower timeframes. You’re not glued to screens. Set stops and targets, then go about your evening. Check again next day.
Perfect for people with full time jobs. You’re not trying to watch charts constantly. Just checking for quality setups once or twice daily.
1 Hour Charts for Active Trading
If you enjoy actively trading during evening hours, 1 hour charts work well. Patterns form every few hours. You get multiple opportunities during your 3-4 hour window.
More active, more setups, but requires more attention. Good for days when you have time to focus on trading for few hours straight.
15 Minute Charts for Scalping
Only if you have experience and can fully focus. Patterns form quickly. Decisions must be fast. Stop losses are tight. One distraction and you miss entries or exits.
Not recommended for beginners. But experienced traders can catch 5-8 pattern setups during evening session using 15 minute charts. Quick profits but higher stress.
Start with 4 hour. Move to 1 hour after you’re consistently profitable. Only attempt 15 minute scalping if you have months of winning trades behind you.
Mental Game of Pattern Trading
Technical skills are half the battle. Mental discipline is the other half. You can know every pattern perfectly but still lose money if your head isn’t right.
Pattern FOMO
You missed a perfect hammer setup because you were making tea. Now you’re tempted to chase price after it already bounced 30 pips. Don’t.
The pattern was your signal. The signal passed. Wait for the next one. Chasing after patterns complete leads to bad entries and losses.
There will be another pattern tomorrow. And the day after. And the day after that. Markets produce patterns constantly. You only need to catch a few good ones each week to make money.
Revenge Trading After Failed Patterns
Your morning star setup failed. Stop loss hit. You’re frustrated. Now you see a marginal hammer that doesn’t quite meet all criteria. You take it anyway trying to recover the loss.
This is revenge trading. Emotional decisions. Recipe for losing more. When a pattern fails, accept it. Close your charts. Come back tomorrow fresh.
Good traders lose on patterns regularly. Maybe 40-50% of patterns fail even for experienced traders. The key is keeping losses small and letting winners run. Not avoiding all losses.
Overconfidence After Winning Streak
You nailed five pattern trades in a row. Now you think you can’t lose. You start seeing patterns everywhere. You take marginal setups. Your risk management gets sloppy.
Stay humble. Markets humble everyone eventually. Stick to your rules regardless of recent results. The moment you think you figured everything out is when the market teaches you a expensive lesson.
FAQ About Candlestick Patterns
Which candlestick pattern is most reliable
Engulfing patterns at key support or resistance levels have highest reliability, around 60-65% win rate when combined with proper risk management. Hammer and shooting star patterns at extreme levels work well too, approximately 55-60% win rate with good execution.
Can I trade using only candlestick patterns
Technically yes, but combining patterns with support, resistance, and trendlines dramatically improves results. Patterns alone give maybe 50% win rate. Patterns at key levels push that to 60-65%. Always look for confluence of multiple factors.
What timeframe is best for candlestick patterns
For Pakistani traders, 4 hour charts provide the best balance of clarity and trade frequency. Daily charts work for swing trades. 1 hour charts for more active trading. Avoid anything under 15 minutes as noise increases dramatically.
Do candlestick patterns work on all instruments
Yes, patterns work on forex, gold, silver, Bitcoin, indices, everything. Human psychology drives all markets the same way. Fear and greed create patterns regardless of what you’re trading. Some instruments show cleaner patterns due to higher liquidity.
How long does it take to learn candlestick patterns
Recognizing basic patterns takes 2-3 weeks of study. Trading them profitably takes 3-6 months of practice. Most traders need 100+ pattern trades before they develop good intuition for which setups work best for their style.
Should I wait for pattern completion or enter early
Always wait for completion. Don’t predict patterns. The pattern confirms only after all candles close. Entering early on incomplete patterns leads to false signals and unnecessary losses. Patience is profitable here.
Your Pattern Trading Checklist
Before taking any candlestick pattern trade, verify these factors:
Pattern completed fully (all candles closed)
Pattern formed at key support or resistance level
Pattern aligns with overall trend direction
Volume confirms the move (if volume data available)
Stop loss location is logical (beyond pattern range)
Risk reward ratio is minimum 1 to 1.5, preferably 1 to 2 or better
Position size calculated properly (1-2% account risk maximum)
Time to monitor trade or set alerts
If all factors check out, take the trade. If any factor is questionable, skip it. Better to miss a trade than force a marginal setup.
Quality beats quantity in pattern trading. Two high quality setups per week make more money than ten marginal setups daily.
Next Steps for Pattern Mastery
Start simple. Pick three patterns. Hammer, engulfing, and doji. Master these three completely before learning others. Most profitable traders use just 4-5 patterns consistently. They don’t need to know all 40+ patterns that exist.
Practice on historical charts first. Analyze 50 examples of your chosen patterns. See what they look like in different locations and timeframes.
Move to demo trading. Take 20-30 pattern trades with virtual money. Build confidence without risk. Track your stats. Which patterns work best for you? Which locations give best results?
Only then start real money trading. Begin with smallest position sizes. Risk 0.5% per trade initially. After 20 profitable pattern trades, increase to 1% risk. After 50 profitable trades, you can consider 2% risk on best setups.
Review our trendline trading guide to combine patterns with trend analysis. Check best trading platforms Pakistan for brokers with clean candlestick charts.
Candlestick patterns are your window into market psychology. They show you what just happened and hint at what might happen next. Combined with support, resistance, and proper risk management, they create a complete trading system.
Master these patterns and your trading transforms. No more guessing. No more hoping. You’ll read charts like you’re reading a story. You’ll know when to enter, when to exit, and when to stay away completely.
Start today. Open your charts. Find one clean pattern. Study it. Understand the story it tells. That’s your first step toward pattern mastery.
Risk Warning: Trading involves substantial loss risk. Candlestick patterns don’t guarantee profits. Use proper risk management, stops on every trade, and never risk money you cannot afford to lose. This is educational content, not financial advice.
Last Updated: December 5, 2025
Check our daily analysis to see how we use candlestick patterns in real time market conditions.
