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 movements by studying charts rather than company fundamentals. Traders watch for repeating shapes because history suggests certain patterns tend to precede price moves in predictable directions. For example, a "hammer" pattern—where a stock drops sharply then recovers to close near its high—is thought to signal a potential bounce upward. While patterns can be useful tools, they're not crystal balls; many traders combine them with other research before making decisions.