Single-candle: doji, hammer, hanging man, shooting star, marubozu, spinning top

A stock falls hard for a week. On Friday it prints a candle with a tiny body and a long lower wick. Your textbook calls it a hammer - a bullish reversal.

Six months later, the same stock has risen hard for a week. It prints the identical candle: tiny body, long lower wick. Now the textbook calls it a hanging man - a bearish reversal.

Same shape. Opposite verdicts. How can that be? The answer is the single most important lesson in this whole part of the book, and it is worth stating before we name a single pattern: a single candle's shape does not carry a fixed meaning. It carries a reading of one session's fight - and what that fight signifies depends entirely on where, in the larger trend, it happened.

Traders gave the common candle shapes names for the same reason sailors named knots - so they could point at a recurring thing quickly. But a name is only shorthand. The thing underneath is always the same three-question reading you learned last module:

1. Which way did it close? Green (close above open) means buyers finished ahead; red means sellers did. That is the body.
2. Which wick is long? A long wick is a rejected move - the side that pushed price out there got shoved back. A long lower wick: sellers pushed down and failed. A long upper wick: buyers pushed up and failed.
3. Where did the close land in the range? Top third means buyers had the last word; bottom third means sellers did; middle means neither finished decisively ahead.

Every named single-candle shape is just a memorable label for one particular set of answers. If you can read the three questions, you never actually need the names - but the names are useful because everyone else uses them, and because they let a whole part of the market anchor to the same shape at once (which is part of why the shapes matter at all). The danger is only when the name replaces the reading in your head - when "hammer" starts to mean "buy" instead of "sellers pushed down and buyers reclaimed it, so ask where this happened."

Here is the small catalogue. For each, the name is second; the reading is first.

Doji - open and close are level, leaving a cross. Reading: both sides fought across a range and finished exactly even. Pure indecision. A doji is the market shrugging.

Hammer / hanging man - a small body up top, a long lower wick. Reading: sellers drove price down hard during the session, and buyers reclaimed almost all of it by the close, so buyers had the last word. That identical shape is a hammer when it forms at the bottom of a downtrend (buyers fighting back - potentially bullish) and a hanging man when it forms at the top of an uptrend (the first sign sellers are testing the highs - potentially bearish). Same candle, named by location.

Shooting star - a small body down low, a long upper wick. Reading: buyers pushed price up, and sellers rejected it back down by the close, so sellers had the last word. A shooting star at the top of an uptrend is a warning; the same shape at a bottom (an "inverted hammer") is read the other way.

Marubozu - a full body, no wicks at all. Reading: one side controlled the session end to end, open to close, with no rejection either way. A marubozu is the cleanest picture of one-sided pressure there is.

Spinning top - a small body centred between two roughly equal wicks. Reading: both sides pushed hard (a wide range) but neither finished ahead. A spinning top is a contested, indecisive session - cousin to the doji, but with a small body rather than none.

Read down that list and notice the pattern within the pattern: the shape fixes the reading of the session (who got rejected, who closed in control), but whether that reading is a bullish hint, a bearish hint, or nothing at all is decided by the trend it sits inside. The names encode both - which is why one shape can carry two names.

Every price in this module is an illustrative example, not a real quote. [illustrative]

Watch the hammer earn its meaning from location. illustrative

Below, a composite stock falls steadily for several sessions. At the low, it prints a candle with a small body and a long lower wick - sellers drove it down to ₹78 and buyers hauled it back to close near ₹88. Because it sits at the bottom of a real downtrend, this is a hammer: a hint that buyers are fighting back at a low.

Now the honest part. On the day of the hammer, you did not know it would work - the two green candles that followed are what confirmed it, and they came later. Imagine that identical hammer candle dropped into the middle of a flat, sideways range instead: there would be no downtrend for it to reverse, and the shape would mean almost nothing. Same candle, different location, different worth. That is the whole lesson made visible.

Build one yourself and watch the reading move as you slide the close from the low to the high - the shape's name changes, but the verdict always comes from the four prices, not the label.

A single candle shape cannot tell you what it means in isolation. It only gains a meaning once you place it in the context of the larger trend and the structure around it. A hammer at the bottom of a steep downtrend is buyers finally fighting back; the identical shape floating in a range is noise. Strip away the location and you have thrown away the more important half of the read.

A single shape cannot confirm a reversal on its own. It raises the odds a little and waits - you need the next candle to actually follow through before the hint becomes a turn. A single-candle pattern shifts the odds; it never guarantees the outcome, and every one of these shapes fails a real fraction of the time. The disciplined read defines in advance what would kill the idea: for a hammer, a close back below its low usually means the pattern has failed and the downtrend is resuming.

A single shape cannot survive being ripped out of a real trend. A "shooting star" in the middle of choppy sideways action is not a reversal signal because there is no uptrend to reverse. Pattern-hunting for shapes without asking about trend is the classic beginner trap.

And a single shape says nothing about the company. It is one session of crowd behaviour, drawn as geometry - not a statement about cash, debt or quality. It helps with reading when pressure shifted, never with deciding what is worth owning.

Single-candle shapes are the most abused idea in retail charting, precisely because they are easy to draw on a grid and hard to teach with context.

1. Cheat-sheet pattern-hunting. Influencers sell laminated grids of shapes and imply that spotting one prints money. They strip away context because context does not fit a 30-second clip - and context is the whole thing.

2. Ignoring the trend. Calling a big reversal off a shooting star in the dead centre of a range. A reversal pattern needs a trend to reverse; with no trend it is just a session.

3. Acting on the shape before confirmation. Buying the instant a hammer closes, with no next-candle follow-through and no level for it to react against. The hammer is a hint, not a trigger.

4. Letting the name replace the reading. Reading "hammer = buy" instead of "sellers pushed down and buyers reclaimed it - so where did this happen?" The name is a pointer to a reading, not a substitute for it.