Single candlestick patterns are important to understand if you want to learn price action trading.
Shooting Star
A shooting star is a bearish reversal pattern. It has a short real body, a long upper shadow, and a very short or no lower shadow. The real body is at the bottom end of the session’s candle. It is important for the upper shadow to be at least twice the size of the real body.
The color of the real body of the shooting star is not that important. For the shooting star to be applicable, the market must be in an uptrend.
The above chart shows a shooting star on GBPUSD daily chart. The shooting star is marked and satisfies the above criteria. As you can see, the market was in a clear uptrend before the formation of the shooting star.
Hammer
Hammer is a bullish reversal pattern. It has a short real body, a very small upper shadow, and a very long lower shadow. The real body is at the top of the pattern. The color of the pattern does not matter.
For the pattern to be applicable the market must be in a downtrend. It is also important for the lower shadow to be at least twice the size of the real body.
The above chart shows a hammer on AUDNZD 4-hour chart. Hammer is marked on the chart and satisfies the above criteria. As you can see, the market was in a clear downtrend before the formation of the hammer.
Inverted Hammer
Inverted Hammer is a bullish reversal pattern. It has a short real body, a very small lower shadow, and a very long upper shadow. The real body is at the bottom of the pattern. The color of the pattern does not matter.
For the pattern to be applicable the market must be in a downtrend. It is also important for the upper shadow to be at least twice the size of the real body.
Hanging Man
Hanging man is a bearish reversal pattern. It has a short real body, a very small upper shadow, and a very long lower shadow. The real body is at the top of the pattern. The color of the pattern does not matter.
For the pattern to be applicable the market must be in an uptrend. It is also important for the lower shadow to be at least twice the size of the real body.