Single-Candle Signals

Four candles worth knowing by name

A handful of single candles appear so often, and carry such clear meaning, that they have names. Learn these four — but learn the mistake attached to each just as carefully.

• Doji — open and close almost equal, wicks on both sides. A candle of indecision: neither side won. It can mark a pause or a potential turning point. Mistake: trading every doji. Most dojis mean nothing; only a doji at a meaningful level, after a strong move, is worth attention.
• Hammer — small body, long lower wick, appearing after a decline. Sellers drove price down, buyers slammed it back up. A potential bullish reversal at support . Mistake: buying the hammer without waiting for the next candle to confirm the reversal.
• Shooting Star — small body, long upper wick, appearing after a rise. Buyers pushed up, sellers rejected them. A potential bearish reversal at resistance . Mistake: shorting it without structure confirming you are actually at resistance.
• Marubozu — a full body with little or no wick. Total dominance by one side for the whole period — strong momentum, bullish or bearish. Mistake: chasing it mid-move without checking whether volume supports the strength it implies.