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Learn to Trade — Patterns & Concepts

Accurate, plain-English explainers for the candlestick patterns and price-action concepts every trader needs — what each one is, what it signals, how to spot it, and the one caveat that keeps you out of trouble.

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Candlestick Patterns

Bearish EngulfingBearish reversalA two-candle pattern where a large red candle completely engulfs the prior green candle's body — sellers took over decisively.Bullish EngulfingBullish reversalA two-candle pattern where a large green candle completely engulfs the prior red candle's body — buyers took over decisively.DojiNeutral / indecisionA candle whose open and close are almost equal, leaving a tiny body — the market's tug-of-war ended in a draw.Evening StarBearish reversalA three-candle top: a big green candle, a small indecisive 'star', then a big red candle — the rally rolls over.HammerBullish reversalA small body near the top of the range with a long lower wick, appearing after a decline — buyers rejected lower prices.Hanging ManBearish reversalThe hammer shape — small body up top, long lower wick — but appearing after an uptrend, warning the rally may be tiring.Inverted HammerBullish reversalA small body near the bottom of the range with a long upper wick, appearing after a decline — an early sign buyers are testing higher.MarubozuContinuation / strengthA candle that is almost all body with little or no wick — one side dominated the whole session.Morning StarBullish reversalA three-candle bottom: a big red candle, a small indecisive 'star', then a big green candle — the reversal takes hold.Pin BarReversalA single candle with a long wick and a small body — a sharp rejection of one direction that 'pins' price back.Shooting StarBearish reversalA small body near the bottom of the range with a long upper wick, appearing after a rally — buyers were rejected at the highs.Spinning TopNeutral / indecisionA small body with upper and lower wicks of similar length — a session of pushing both ways that settled near the middle.Three Black CrowsBearish reversalThree consecutive strong red candles, each closing lower — a decisive show of selling pressure.Three White SoldiersBullish reversalThree consecutive strong green candles, each closing higher — a decisive show of buying strength.Tweezer BottomBullish reversalTwo or more candles with matching lows at the bottom of a decline — price hit the same floor twice and bounced.Tweezer TopBearish reversalTwo or more candles with matching highs at the top of a rally — price hit the same ceiling twice and was rejected.

Trading Concepts

Break of Structure (BOS)Smart-money conceptWhen price closes beyond the most recent swing high or low, confirming the trend is continuing.Change of Character (CHoCH)Smart-money conceptThe first break of structure against the prevailing trend — an early warning the trend may be turning.Fair Value Gap (FVG)Smart-money conceptA three-candle imbalance where price moved so fast it left a gap that the market often returns to 'fill'.Liquidity Sweep / Stop HuntSmart-money conceptA sharp push past an obvious high or low to trigger clustered stop-losses, then a snap back the other way.Market StructureCore conceptThe sequence of swing highs and lows that defines whether a market is trending or ranging — the skeleton of price.Moving AverageIndicator conceptA line that smooths price by averaging it over a chosen number of periods, making the trend easier to read.Order BlockSmart-money conceptThe last opposite-direction candle before a strong, impulsive move — a zone where large orders are assumed to have been placed.Position SizingRisk conceptDeciding how large a trade to take so that a loss costs only a fixed, small percentage of your account.Risk-Reward RatioRisk conceptHow much you stand to gain versus how much you risk on a trade — the ratio of target distance to stop distance.RSI DivergenceMomentum conceptWhen price and the RSI momentum indicator disagree — price makes a new extreme the RSI does not confirm.Supply & Demand ZonesCore conceptPrice areas where a strong imbalance between buyers and sellers previously caused a sharp move — and may again.Support & ResistanceCore conceptThe price floors where buyers step in (support) and ceilings where sellers step in (resistance).TrendCore conceptThe overall direction price is moving — up (higher highs and higher lows), down (lower highs and lower lows), or sideways.

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