Candlestick Patterns Explained: Doji, Shooting Star, Hanging Man, Marubozu and Spinning Top

Candlestick patterns are the oldest and most visual way to read price action. Each candle packs the open, high, low and close of a period into a single shape, and certain shapes hint at indecision, strength or exhaustion. This guide covers five patterns every crypto trader should know: the Doji, Shooting Star, Hanging Man, Marubozu and Spinning Top, and shows how to get alerted when they form.

How a Candlestick Works

A candle has a body and wicks. The body spans the open and close prices and is usually green or white when the close is above the open, and red or black when it is below. The wicks, also called shadows, show the highest and lowest prices reached during the period. A long body means one side dominated. Long wicks mean price was pushed away from its extreme and rejected.

The Doji

A Doji forms when the open and close are almost identical, leaving a tiny body with wicks on one or both sides. It signals indecision: buyers and sellers fought to a draw. After a long trend, a Doji can hint that momentum is stalling. Variants include the dragonfly Doji with a long lower wick and the gravestone Doji with a long upper wick. A Doji alone is not a signal, so wait for the next candle to confirm the direction.

The Shooting Star

A Shooting Star has a small body near the low of the candle and a long upper wick, usually at least twice the body. It appears after an uptrend. Price pushed sharply higher, then sellers pulled it back down to close near the open. This rejection of higher prices is a bearish reversal warning. It is stronger at resistance and when the next candle closes below the Shooting Star's low.

The Hanging Man

The Hanging Man looks like a hammer, with a small body at the top and a long lower wick, but it appears after an uptrend. The long lower wick shows sellers managed to push price down hard during the period, even though buyers recovered most of it. It is a warning that buying pressure may be weakening. Because it is only a warning, wait for a bearish candle afterwards before acting.

The Marubozu

A Marubozu is a candle with a full body and little or no wicks. A bullish Marubozu opens at the low and closes at the high, showing buyers in complete control. A bearish Marubozu does the opposite. Marubozu candles often appear at the start of strong moves or on breakouts, and they are more meaningful when volume is high.

The Spinning Top

A Spinning Top has a small body with upper and lower wicks of similar length. Like the Doji, it reflects indecision, but with slightly more movement between open and close. A cluster of Spinning Tops in a trend often precedes a pause or a reversal, while a single one in a range means very little.

Pattern Summary

• Doji: indecision, possible pause or reversal.
• Shooting Star: bearish rejection after an uptrend.
• Hanging Man: warning of weakening buyers after an uptrend.
• Marubozu: strong conviction in the direction of the candle.
• Spinning Top: indecision with a slightly wider range.

How to Trade Candlestick Patterns

• Look at context first: a pattern at a key support or resistance level matters far more than one in the middle of a range.
• Wait for confirmation: let the next candle prove the pattern before entering.
• Check volume: higher volume makes a pattern more reliable.
• Use higher timeframes: patterns on the 4-hour and daily charts carry more weight than those on the 1-minute chart.
• Define your risk: place a stop beyond the pattern's high or low.

Limitations of Candlestick Patterns

• Patterns are probabilities, not guarantees, and many fail.
• They are subjective, and different traders may draw the line differently.
• On very low timeframes there is a lot of noise.
• They work best combined with trend, levels and indicators such as the RSI.

Setting Up Candlestick Pattern Alerts on TradingSignal

Scanning charts for patterns by eye is slow, and you will miss many of them. In the TradingSignal app, creating an alert based on candlestick patterns is very easy: pick a trading pair and choose one of the pattern alerts, such as Doji, Shooting Star, Hanging Man, Marubozu or Spinning Top.

• Pattern: the candlestick formation to watch for.
• Direction: bullish, bearish or both.
• Interval: the candle timeframe, from 1 minute to weekly.

Save the alert and TradingSignal notifies you by push notification or email when the pattern forms, so you can open the chart, check the context and decide for yourself.