We can start by looking at how to perceive single candlestick patterns now that you know about fundamental candlestick patterns like turning tops, marubozus, and dojis.

A candlestick of this sort appearing on a graph indicates a potential market reversal. These types of Japanese candlesticks have four essential patterns.

The Hammer and the Hanging Man

Hanging Man and the Hammer look identical, but their implications depend a lot on past price action and value.

Their bodies are different (either they are a dark color, or they are white), plus their lower shadows are long and their upper shadows are missing.

In a downtrend, a Hammer is close to finishing a reversal, and in an uptrend, Hanging Man is close to finishing the reversal.

Hammer patterns are bullish reversal patterns that structure during downtrends. A base is being hammered out by the market, hence the name.

Hammers signal when the price action is falling and will start rising again once the base is reached.

Sellers lowered prices, yet buyers had the option of pulling out by closing at the open. As seen by the long lower shadow, sellers pushed costs downwards.

You shouldn’t submit a buy order simply because you see a hammer structure in a downtrend! Before the trigger can be pulled, more bullish affirmation is needed.

A normal illustration of affirmation is the belief that the right half of the hammer will close over the opening of a white candlestick.

A Hammer Should Meet the Following Criteria:

1. Shadows are several times longer than the original body.
2. Upper shadows are almost nonexistent.
3. At the upper end of the range of the genuine body, there is a higher price.
4. It doesn’t matter what color the body is in real life.
5. As well as stamping a top or solid opposition level, the Hanging Man is a bearish reversal pattern.
6. Amid increasing costs, a Hanging Man arrangement shows how merchants have started to dwarf purchasers.
7. Vendors pushed costs lower during the meeting, as evidenced by the long shadow on the lower left.
8. Just close to the opening, buyers had the option of pushing the price up.
9. This should raise alarms as it indicates that there are no buyers left to increase the price.

A list of Criteria for a Hanging Man:

1. There are several times as many lower shadows as there are body parts.
2. Upper shadows are practically nonexistent.
3. At the upper end of the range of the genuine body, there is a higher price.
4. While the color isn’t important, a darker body is more bearish than one that’s white.

Shooting Star and Inverted Hammer

The Inverted Hammer can also be confused with the Shooting Star. You can only tell if you’re in an uptrend or downtrend by which trend you’re in.

Inverted Hammers are bullish reversal candlesticks. Candlesticks with a Shooting Star indicate a bearish reversal.

Two delicate candlesticks (filled or empty), with long upper shadows, and little or none at the bottom.

Inverted Hammer and Shooting Star Candlestick Patterns

Towards the end of a downtrend, the Inverted Hammer is seen, while toward the end of an uptrend, the Shooting Star appears.

Hammer inverted

A falling price suggests a change in direction when an inverted hammer occurs. Buyers may have attempted to increase the price, as evidenced by the long upper shadow.

Whatever the case, sellers noticed what the buyers were doing, laughed, and made a conscious effort to lower the price.

They managed to close the meeting close to opening since they had eaten enough Wheaties for breakfast.

The fact that sellers could not reduce the value any further is a good indication that all those who are looking to sell have successfully done so.

Additionally, what will become of the sellers if none of them remain? Buyers.

Star-Shooting

Inversion hammers are reversal patterns that look like the Shooting Star. However, they occur when prices have been rising.

Despite being pushed back toward its base, it has opened at its low and mobilized.

As a result, buyers attempted to push costs up, but sellers came along and surpassed them. Since all buyers are overwhelmed, this is a positive bearish signal.