When you first dive into forex trading online, one of the most common pieces of advice you’ll hear is to “learn how to read the candles.” But what does that really mean? In simple terms, it’s about understanding how price moves on your chart — not through fancy indicators, but through the story told by the candlesticks themselves. This method is called price action trading, and it’s one of the most powerful tools for traders who want to understand the market from the inside out.
In this beginner-friendly guide, we’ll walk you through the basics of reading candlesticks, recognising price action patterns, and using them to make better trading decisions.
What Are Candlesticks?
Candlestick charts are one of the most popular ways to visualise price movement in forex trading online. Each “candle” shows four important pieces of information about a specific time period (it could be one minute, one hour, or one day, depending on your chart setting):
Open: The price at the beginning of the period.
Close: The price at the end of the period.
High: The highest price reached during the period.
Low: The lowest price reached during the period.
The candle’s body (the thick part) shows the range between the open and close. If the body is green (or white), it means the price closed higher than it opened — a sign of bullish (buying) pressure. If it’s red (or black), it means the price closed lower — showing bearish (selling) pressure. The thin lines above and below the body are called wicks or shadows, showing how far the price moved within that time.
Simply put, each candlestick tells you who’s in control — buyers or sellers — and how strong that control is.
Why Price Action Matters
Many beginners start with indicators like moving averages or oscillators. These can be useful, but they often lag behind price. Price action, on the other hand, is real-time market behaviour. It shows you what’s happening right now, allowing you to make faster and often more accurate decisions.
When you learn to read price action, you don’t rely on others’ interpretations — you read the market for yourself. It’s like learning to understand the language of the market instead of using a translator.
Basic Candlestick Patterns Every Beginner Should Know
Let’s go through some of the most common single and multi-candle patterns you’ll see in forex trading online. These form the foundation of price action trading.
1. The Doji
A Doji forms when the open and close prices are almost the same. This creates a very thin body and long wicks. It signals indecision — buyers and sellers are evenly matched. A Doji appearing after a strong trend might mean a reversal is coming soon.
2. The Hammer
A Hammer has a small body near the top of the candle with a long lower wick. It usually appears after a downtrend and suggests that although sellers pushed prices down, buyers managed to pull them back up — a sign of potential bullish reversal.
3. The Shooting Star
The opposite of the Hammer, this pattern has a small body near the bottom and a long upper wick. It appears after an uptrend and hints that buyers tried to push prices higher but failed, meaning a bearish reversal could follow.
4. The Engulfing Pattern
An Engulfing pattern is made up of two candles. A bullish engulfing happens when a large green candle completely “engulfs” the previous red one, suggesting strong buying pressure. A bearish engulfing does the opposite — a large red candle engulfs a smaller green one, signalling sellers have taken control.
5. The Morning Star and Evening Star
These are three-candle reversal patterns. A Morning Star (bullish) appears after a downtrend and includes:
A long bearish candle,
A small indecisive one (like a Doji),
And a strong bullish candle confirming the reversal.
An Evening Star (bearish) is its opposite — seen after an uptrend — and indicates a possible shift to a downtrend.
Combining Price Action with Support and Resistance
Candlestick patterns become even more powerful when combined with support and resistance levels. These are zones where price tends to stop and reverse — support acts as a “floor,” and resistance acts as a “ceiling.”
For example, if you spot a Hammer pattern forming at a major support level, it strengthens the case for a bullish move. On the other hand, a Shooting Star appearing near resistance could be a warning that a price drop is coming.
This combination — price action plus support and resistance — is the backbone of many successful forex trading online strategies.
Avoiding Common Beginner Mistakes
While candlestick patterns are useful, no pattern is 100% reliable. Here are a few things to keep in mind:
Don’t trade a pattern in isolation. Always look at the bigger trend and nearby support/resistance.
Wait for confirmation. For example, if you see a Hammer, wait for the next candle to close bullish before entering.
Avoid tiny timeframes at first. Short timeframes can produce too much “noise.” Start with the 1-hour or 4-hour chart to get clearer patterns.
Keep emotions in check. It’s easy to get excited when you spot a pattern, but patience and discipline separate successful traders from beginners.
The Power of Practice
Like any skill, reading candlesticks and price action takes time. Start by practising on a demo account. Watch how different patterns behave in real market conditions. Over time, you’ll begin to recognise setups more naturally — and understand the story each candle tells.
The best part? You don’t need a dozen indicators or complicated formulas. Just your eyes, your chart, and the patience to observe.
Final Thoughts
Learning to read candlesticks is one of the most rewarding steps in mastering forex trading online. Once you understand how prices move and how traders react at certain levels, you gain an edge — one built on pure market understanding, not guesswork.
So, the next time you open your chart, don’t just see green and red bars — see the battle between buyers and sellers. Each candle tells a story. And once you can read that story, you’ll never look at the market the same way again.
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https://www.fpmarkets.com/en-ph/forex/