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Section 2 · Module 2.3

Candlestick & Chart Patterns

7 min read

Pattern explorer

Doji

Open ≈ close — indecision

Try it: Reveal the mistake after you guess — patterns fail often.

Patterns Are Probabilities, Not Prophecies

Remember: Use patterns with trend, volume, and a stop — never shape alone.

After candlestick anatomy, traders often catalogue repeating shapes. Patterns fail often — use them with trend context, volume, and risk limits from the Risk module.

Single- & Two-Candle Ideas

  • Doji: Open ≈ close — indecision; more meaningful after a strong trend.
  • Hammer / shooting star: Long lower or upper wick suggesting rejection of lows/highs.
  • Bullish / bearish engulfing: A larger opposite-colour body wraps the prior candle — potential reversal clue.

Classic Chart Patterns

  • Head and shoulders: Three peaks with a higher middle; neckline break often watched as a trend-shift map (not a guarantee).
  • Flags & pennants: Brief consolidations after a sharp move — continuation studies.
  • Triangles: Converging highs/lows; breakout direction debated until price leaves the coil with volume.
  • Double top / bottom: Re-test of a prior extreme that fails to extend.

How to Study Them on NSE Charts

  • Mark structure on daily charts first; then check if lower timeframes agree.
  • Ignore patterns that only appear by ignoring wicks or huge gaps.
  • Combine with support / resistance tools and position sizing — never pattern-only entries.

Knowledge check

A doji after a long uptrend is best read educationally as:

Tap an answer — you get instant feedback.