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Candlestick patterns (doji, hammer, engulfing)

A candlestick draws one session as a body between the open and close with wicks to the high and low; named shapes like the doji, hammer and engulfing pair describe how that session went.

A candlestick chart draws each trading session as a rectangle — the "body" — spanning the open and the close, with thin lines above and below reaching the session’s high and low. The shape of that drawing is a compact summary of the day: a long body means the price moved decisively from open to close, a short one means it finished near where it started, and a long wick means the price went somewhere during the day and came back.

A handful of shapes have conventional names. A doji has a body so small the open and close are effectively equal — a session of indecision, with no directional meaning of its own. A hammer has a long lower wick and a small body near the top: the stock was sold down hard and bought back before the close. An engulfing pair is two sessions, where the second body completely covers the first — bullish when an up day swallows the down day before it, bearish when a down day swallows an up day.

Names carry assumptions about context, and one matters enough to state: the hammer’s shape appearing after a RISE is called a hanging man and is read the opposite way. stocks-llm therefore requires a prior decline before it will call a candle a hammer, which is why that screen is far smaller than a shape-only scan would produce. Every pattern here is computed nightly from delayed daily-close price data and describes sessions that have already closed. The evidence that these shapes predict the next session is weak; they are a description of what happened, not a signal, and nothing here is advice.

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Related terms

  • Moving average (50-day & 200-day) — A moving average smooths a stock’s price by averaging its recent closing prices — the 50-day and 200-day are the most-watched trend lines.
  • Golden cross — A golden cross occurs when a stock’s 50-day moving average crosses above its 200-day moving average — a widely-watched long-term momentum shift.
  • Death cross — A death cross occurs when a stock’s 50-day moving average crosses below its 200-day moving average — the bearish counterpart of a golden cross.
  • RSI (Relative Strength Index) — The RSI is a 0–100 momentum oscillator that measures how fast a stock’s price has risen or fallen recently; readings below 30 are "oversold" and above 70 "overbought."
  • Overbought & oversold — "Overbought" and "oversold" describe a stock whose price has moved up or down unusually fast recently — most commonly measured with a 14-day RSI above 70 or below 30.

See more terms in the stocks-llm glossary.

Informational only — NOT financial advice. This is an educational definition, not a recommendation to buy or sell anything. Metrics on stocks-llm are delayed data and may be missing or stale. Always verify information independently and consult a qualified financial professional before making any investment decision.

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Informational only — NOT financial advice.

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