Candlestick patterns are useful for Price Action Trading , they provide useful information about the market. They are quite effective when used in conjunction with other technical indicators and tools. I find the hammer and evening star especially useful because they can serve as warning signs of price reversal.
A candlestick is a visual representation of data concerning price movement for a specified period of time. This data includes the open, high, low and close prices of the specific time period. The time period depends on the timeframe selected: 1 minute, 15 minutes, 30 minutes, 1 hour and so on and so forth.
1. Hammer & Shooting Star
A Hammer is a candlestick with a long lower shadow 2-3 times the length of its body and has no or little upper shadow. It usually appears in a downtrend indicating a possible bullish reversal, but a bullish confirmation is needed before entering a buy trade.
2. Evening & Morning Star
These star patterns are composed of 3 candles, with long first and third candles, and a doji or short middle candle.
There’s normally no gap before and after the middle candle, but if there is, the gap would be very small.