Candlestick Pattern

A candlestick pattern is a visual formation created by a stock's price movement over a set time period—usually shown on a price chart where each "candle" represents one day (or hour, week, etc.). You'll see these patterns everywhere in technical analysis, the practice of predicting price moves by studying charts rather than company fundamentals. Traders watch for repeating shapes because history suggests certain patterns often precede price jumps or drops. For example, a "hammer" pattern—where the price drops sharply then recovers to close near the open—might signal a potential bounce. While patterns can be useful clues, they're not guarantees; many factors influence stock prices beyond what a chart shows.