The BEST Candlestick Pattern Guide You'll EVER FIND

Finance-focused subtitle summary (Candlestick trading education)

Core claims / framing

• The speaker argues most candlestick patterns “don’t actually work,” claiming 99% are ineffective based on their testing.
• They propose six “top” candlestick patterns that they say have worked reliably.
• The approach emphasizes using candlesticks together with price action and key levels to improve entry quality and win rate.

Instruments / tickers mentioned

• EUR/USD (referred to as the “Euro dollar pair”)

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Candlestick basics covered (relevant concepts)

• Candlesticks show OHLC for each time period:
  • Open
  • High
  • Low
  • Close
  • (Compared to line charts that show only the close.)
• Wicks (“shadows”) and body size are interpreted as buyer vs. seller strength.
  • Green candle: close > open (buyers stronger)
  • Red candle: close < open (sellers stronger)

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The “top six” candlestick patterns (method + how to trade them)

1) Engulfing pattern (2 candles)

Condition

• The 2nd candle body fully covers the 1st candle body.
• Colors must be opposite.

Bullish engulfing

• 1st candle: red
• 2nd candle: green
• Potential upward reversal
• Entry: buy at the close of the large (green) candle
• Stop-loss: bottom wick of the green candle

Bearish engulfing

• 1st candle: green
• 2nd candle: red
• Potential downward reversal
• Entry: sell at the close of the large (red) candle
• Stop-loss: top wick of the red candle

Notes

• “The bigger the 2nd candle,” the higher the chance.
• The speaker also advises confirming other factors (without specific numeric criteria).

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2) Pin bar (1 candle)

Condition

• A large wick on one side and a small body.

Bullish pin bar

• Green with a long lower wick
• Concept: the move is rejected (sellers push low; buyers reclaim by close)
• The speaker prefers waiting for an additional green candle as confirmation
• Entry: buy after confirmation / after the candle closes
• Stop-loss: bottom of the pin bar’s wick

Bearish pin bar

• Red with a long upper wick
• Preferred: wait for an additional red candle confirmation
• Entry: sell after confirmation
• Stop-loss: top of the pin bar’s wick

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3) Three-bar continuation pattern (3 candles)

Structure

• Candle 1: large body (larger than average)
• Candle 2: smaller body opposite color (ideally ≤ half the first candle’s body)
• Candle 3: large body closing in the continuation direction

Bullish continuation

• Candle 1 & 3: large green
• Candle 2: small red
• Entry: buy at the close of candle 3
• Stop-loss: bottom wick of candle 2

Bearish continuation

• Candle 1 & 3: large red
• Candle 2: small green
• Entry: sell at the close of candle 3
• Stop-loss: top wick of candle 2

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4) Three-bar reversal pattern (3 candles)

Structure

• Candle 1: large near full-body
• Candle 2: smaller candle with same color as candle 1
• Candle 3: large full-body opposite color

Success guidance

• Stronger if: candle 3 body size ≥ candle 1 body size
• Weaker if: candle 3 body < candle 1 body size

Bullish reversal (downtrend → possible uptrend)

• Candle 1 & 2: red
• Candle 3: green
• Entry: buy at the close of candle 3
• Stop-loss: lows of candle 2

Bearish reversal (uptrend → possible downtrend)

• Candle 1 & 2: green
• Candle 3: red
• Entry: sell at the close of candle 3
• Stop-loss: highs of candle 2

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5) Breakout candles (consolidation → breakout)

Condition

• First, at least 3 consolidation candles with small bodies (direction unclear)
• Then a large-bodied breakout candle whose color decides direction

Colors

• Bullish breakout: breakout candle green
• Bearish breakout: breakout candle red
• Consolidation candle color doesn’t matter—only that they’re small.

Trade

• Bullish: buy at the close of the breakout candle
  • Stop-loss: opening price of breakout candle
• Bearish: sell at the close of the breakout candle
  • Stop-loss: opening price of breakout candle

Expectation

• Typically expects continuation in the breakout direction.

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6) Shrinking candles (3 shrinking same-color candles + reversal candle)

Structure

• At least 3 consecutive candles of the same color, each getting smaller
• Then a large opposite-color candle confirms reversal

Additional quality tip (as stated)

• For the bullish version: look for the 4th candle close above the 2nd candle.

Bullish shrinking

• Candles 1–3: red shrinking
• Candle 4: green
• Entry: buy at the close of the green candle
• Stop-loss: below the previous candle

Bearish shrinking

• Candles 1–3: green shrinking
• Candle 4: red
• Entry: sell at the close of the red candle
• Stop-loss: high of the previous candle

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Advanced framework: “Combine patterns with price action” strategy

Step-by-step methodology described

• Use higher timeframes first
  • Prefer timeframe ≥ 1 hour
  • The speaker claims lower timeframes make patterns less effective
• 1) Identify a key level
  • Support/resistance, dynamic levels, trend lines, Fibonacci, etc.
• 2) Wait for price to interact again
  • Mentions “third retracement” as example context
• 3) Require candlestick confirmation at the key level
  • Examples:
    • Long setups resembling bullish three-bar reversal
    • Short setups using shrinking candles near a confluence level
• 4) Enter, stop-loss, and take-profit rules
  • Long example
    • Entry: buy at the high of the 3rd candle
    • Stop-loss: low of the 2nd candle
    • Take-profit: 2x the stop-loss distance (risk:reward 2:1)
  • Short example
    • Entry: short
    • Stop-loss: above the high of the previous candle
    • Take-profit: 2x the stop-loss distance (risk:reward 2:1)

Key concepts emphasized

• Confluence levels: zones where multiple key levels meet (e.g., trendline + resistance).
• Candlestick patterns are treated as momentum/pressure evidence
  • Example: shrinking candles = fading pressure.

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Explicit recommendations / cautions

• Main recommendation: candlestick patterns alone may underperform, but improve when combined with:
  • Key levels
  • Price action confirmation
• A recurring theme is to wait for confirmation candles (especially with pin bars).
• Risk control is consistently implemented with stop-loss placement based on candle wicks/lows/highs.

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Disclosures / disclaimers

• No explicit “not financial advice” or regulatory disclaimer appears in the provided subtitles.

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Presenters / sources

• No other presenters or external sources are named.
• The strategy is attributed to a single speaker/creator (author of the Telegram guide).