Technical analysis

3 Candlestick Patterns Every Trader Should Know

Astron Team · 09/24/2026 · 4 min read

Anyone who starts studying candlestick charts soon discovers there are dozens of catalogued patterns, with names ranging from harami to three white soldiers. The good news is you don't need to memorize all of them. A handful of simple, well-understood formations is already enough to read the battle between buyers and sellers with much more clarity.

In this article you'll get to know three classic candlestick patterns: the engulfing pattern, the hammer, and the shooting star. We'll explain how each one forms, what it reveals about the market's moment, and how to use it within a strategy with risk management, without relying on luck.

1. The engulfing pattern

The engulfing pattern is formed by two candles and tends to appear at points of possible trend reversal. In a bullish engulfing, a small red candle is followed by a larger green candle, whose body completely engulfs the body of the previous candle. This shows that sellers lost strength and buyers took control of the following session.

A bearish engulfing works the opposite way: a small green candle is followed by a red candle that fully engulfs its body, signaling that sellers regained control after a rally.

Imagine a stock trading at R$ 40.00. In one session, it opens at R$ 40.00 and closes at R$ 39.50, forming a small red candle after several days of decline. In the next session, the stock opens at R$ 39.40 and closes at R$ 40.70, a green candle that completely engulfs the previous body. That's a bullish engulfing: a sign that selling pressure may be losing ground.

2. The hammer

The hammer is a single candle that appears after a series of declines. It has a small body near the top of the candle and a long lower wick, usually at least twice the size of the body, with little or no upper wick. This shape tells a specific story: during the session, the price fell sharply, but buyers reacted strongly and pushed the price back near the high.

An example with numbers helps drive the point home. Suppose an asset opens the day at R$ 19.90, falls to R$ 18.00 during the session, and then closes at R$ 19.80. The candle's body is small (between R$ 19.80 and R$ 19.90), but the lower wick is large, reaching down to R$ 18.00. This forms a hammer, and the signal gains more strength if the next candle closes above the hammer's high, confirming the buying reaction.

It's important to remember that a hammer on its own doesn't guarantee a reversal. It works best as an alert that needs confirmation on the following candle, not as an automatic buy signal.

3. The shooting star

The shooting star is the mirror image of the hammer and appears after a series of rallies. It has a small body near the bottom of the candle and a long upper wick, with little or no lower wick. The reading goes like this: buyers tried to push the price further up during the session, but sellers reacted and pushed the price back near the low.

One example: an asset opens at R$ 25.00, rises to R$ 27.50 during the day, but closes at R$ 25.20. The body is small, between R$ 25.00 and R$ 25.20, while the upper wick extends up to R$ 27.50. This formation is a shooting star and suggests that buying strength may be running out, especially if it comes after several consecutive up candles.

How to use these patterns without relying on luck

No candlestick pattern works well on its own. The first rule is to always look at the context: a hammer in the middle of a sideways range says much less than a hammer at the bottom of a clear downtrend. The second rule is to seek confirmation, whether through the close of the following candle or through another technical indicator, such as a moving average or trading volume.

The third rule, and perhaps the most important, is to define where you'd be wrong before entering the trade. If you buy after a hammer, for example, it makes sense to place the stop a little below the hammer's own low: if the price goes back down there, the pattern is no longer valid. If you're testing these patterns on a platform like Astron, it's worth starting with a demo account, logging every trade, to understand how each formation behaves on the asset you follow before risking real capital.

Trading involves risk, and no chart pattern guarantees a result. The value of the engulfing pattern, the hammer, and the shooting star lies in organizing your reading of the market and helping define entry and stop points with more criteria, not in predicting the future with certainty.