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Whale Trading

Candle Patterns Part 1: Reading Psychology from Single Candles

In Chart Basics – Candles we looked at what a single candle contains:

  • Open
  • High
  • Low
  • Close

and what the body, upper wick, and lower wick represent.

Now we are going to start putting the label “pattern” on top of that structure.
But the underlying perspective does not change.

Instead of “this shape means buy/sell,”
we ask:
“At this price area,
what kind of battle does this shape summarize?”

That is the reading skill we want to build.

1. Single Candle Types We Will Focus On

In this article we focus on single candles.
We will mainly cover four types:

  1. Long lower wick candles (pin bar / hammer type)
  2. Long upper wick candles (shooting star type)
  3. Large bullish and bearish candles (wide bodies)
  4. Dojis: candles with almost no body

For all four, the name itself matters less than:

  • The ratio of body vs wicks
  • The level where the candle appears (support/resistance)
  • The direction of the prior move
  • The accompanying volume pattern

We will keep the shape description minimal and instead keep pulling in context from: Support & Resistance basics, Swing vs Correction, and Volume analysis.

2. Long Lower Wick: Evidence of Strong Defense Below

This is the type often called a “pin bar” or “hammer.”
Structurally, it looks like this:

  • The lower wick is at least twice the size of the body
  • The upper wick is short or almost nonexistent
  • The close is relatively near the top of the candle

2-1. How This Shape Is Formed

Inside a single candle, the rough sequence is:

  1. Price opens near the open
  2. Strong selling pushes price down toward the low
  3. Heavy buying steps in around that area
  4. Buyers push price back up,
    and the candle closes near the top

On the chart it simply looks like “a candle with a long lower wick,”
but it compresses the story of failed selling + defensive buying in the lower zone.

2-2. Where the Signal Becomes Stronger

This pattern can be a candidate signal for a bounce when it appears at:

  • A major support zone confirmed on higher timeframes
  • Near a previous swing low
  • Near the last segment of a sharp down move

Especially when:

  • The lower wick comes with clearly increased volume,
    it may reflect a mix of stop-loss selling and fresh buying at that level.

2-3. Things to Watch Out For

  • Seeing a long lower wick in the middle of nowhere and
    assuming “this must be the bottom” is risky.
  • In the middle of a strong downtrend,
    these patterns often lead to a short bounce followed by new lows.

In short:
A long lower wick tells you “there was a strong defense below once,”
but it does not guarantee “this is the ultimate bottom.”

3. Long Upper Wick: Price Keeps Getting Hit from Above

This is the opposite of the long lower wick and is often called a “shooting star.”

  • The upper wick is at least twice the size of the body
  • The lower wick is short or almost nonexistent
  • The close is near the bottom of the candle

3-1. How This Shape Is Formed

  1. Price opens near the open
  2. Strong buying pushes price up toward the high
  3. Heavy selling hits that area
  4. Price is pushed back down,
    and the candle closes near the bottom

In other words, it compresses the story that chasing buyers are blocked,
and sellers manage to push price back down in that upper zone.

3-2. Where the Signal Becomes Stronger

You pay closer attention when this appears:

  • After a prolonged uptrend, at a higher timeframe resistance
  • Near a historical high or previous swing high
  • In the final stretch of a sharp rally where things look overextended

If volume expands at the wick:

  • That upper zone may reflect exhaustion buying + active selling.

3-3. Things to Watch Out For

  • A long upper wick at the top of a range or resistance
    does not automatically mean a crash is coming.
  • In strong trends:
    • Long upper wicks can appear multiple times
    • Price may simply consolidate and then break through to new highs

In short:
A long upper wick can signal that “supply keeps showing up above,”
but assuming “this is definitely the top” and betting heavily on it is dangerous.

4. Large Bullish and Bearish Candles: When One Side Dominates

A large candle simply means the body is much bigger than usual.

  • Large bullish candle: the close is far above the open, wicks are relatively small
  • Large bearish candle: the close is far below the open, wicks are relatively small

4-1. Basic Interpretation of a Large Bullish Candle

  • Throughout the session (or timeframe),
    buyers dominated the market
  • Especially when:
    • Price has been in a sideways range or choppy action
    • And a large bullish candle breaks out above the range

it can act as a structurally meaningful breakout candidate.

However, as mentioned in Chart Basics – Timeframes:

  • A single large candle on the 1-minute chart
    may barely be visible on the daily chart.

So when you look at a large bullish candle, get into the habit of:

  • Checking how it appears on higher timeframe structure.

4-2. Basic Interpretation of a Large Bearish Candle

A large bearish candle is the mirror image:

  • Sellers dominate throughout the session (or timeframe)
  • Especially:
    • A large bearish candle that breaks below a support zone
    • Or strongly breaks down below the bottom of a prior range

In later price action:

  • Even if price bounces,
    the middle to upper part of that large candle
    can often act as strong resistance.

4-3. The Trap Around Large Candles

  • Sometimes, after a long down move,
    a final “panic” shows up as a huge bearish candle.
  • In uptrends, a last burst of “euphoria” can appear
    as a huge bullish candle right before the top.

So when you see a large candle, always ask:

  • Is this early or late in the swing?
    (Swing vs Correction)
  • Where are we within the swing
    on the higher timeframe?

5. Dojis: More About “Hesitation” than Direction

A doji is a candle where the open and close are almost the same.

  • The body is very small
  • The upper and lower wicks can be relatively long

5-1. What a Doji Is Telling You

A doji usually says:

“In this area, neither side managed to push through decisively.”

  • After a strong trend:
    • A doji may signal that the dominant side is losing strength
  • In the middle of a range:
    • It may simply mean the day was a waiting game with no strong conviction

5-2. Where a Doji Becomes Meaningful

Dojis can be more meaningful when they appear:

  • Just below a higher timeframe resistance,
    especially if several dojis appear in a row
  • Near support after an extended down move

In those cases you can think in terms of:

  • “The prior imbalance of power is
    moving back toward balance”
  • “A new direction may soon be decided”

5-3. Don’t Overinterpret Dojis

  • A doji alone is not a “strong reversal signal.”
  • The market may simply be taking a breather,
    and the previous trend can resume on the very next candles.

The key with dojis is that
they tell you “neither side is clearly winning right now,”
not “a reversal is guaranteed.”

6. Common Principles When Using Single Candles

We have talked about four single candle types,
but the operating principles are shared.

  1. Never judge by shape alone

    • The same long wick or large body
    • Can mean completely different things depending on
      where it appears.

  2. Always combine them with three elements:

  3. Timeframe changes the weight of the signal

    • A pin bar on the 1-minute chart may be relevant for scalping,
      but mean little for a daily swing.
    • A pin bar on the daily chart,
      when you zoom into lower timeframes,
      is composed of many smaller patterns bundled together.

7. Next Step: Expanding into Multi-Candle Patterns

In this article we focused on the basic psychology of single candles:

  • Long wicks = attempts in one direction + rejection
  • Large candles = one side’s dominance becoming obvious
  • Dojis = temporary balance where neither side fully commits

In the next article (Candle Patterns Part 2), we will look at:

  • Patterns made of two or more candles
    (for example inside bars, engulfing patterns, morning/evening star, etc.)
  • How the psychological stories behind single candles
    combine into a bigger picture

And we will keep asking the same question:

Rather than “what is this shape called,”
we ask,
“At this price area,
what kind of battle does this pattern summarize?”