Most Reliable Candlestick Patterns: A Perspective Rooted in Price Action

When it comes to trading, candlestick patterns often steal the spotlight. Many traders find themselves searching for the "most reliable candlestick patterns," hoping to discover that one magical configuration that will lead them to consistent profits. But if you've spent any time learning from me, you'll know there's a different way of looking at this.

My approach challenges traders to go beyond the surface—to dig deeper than simply recognizing a pattern, like a pin bar or an engulfing candle, and expect it to guarantee success. Instead, I believe that trading is truly a "game of price" where understanding the underlying dynamics of the market matters far more than any particular pattern. Let me break down what this means and how it shifts our understanding of candlestick patterns.

The Context Makes the Pattern Reliable

One of the key lessons I emphasize is that context is everything. A classic mistake is to over-rely on isolated technical signals—like a rejection candle—without fully appreciating the market forces at play. You need to understand why the market moved, not just how it looks on the chart.

This means that even a widely recognized pattern like a pin bar can be misleading if taken at face value.

Here's a prime example on the USDJPY with a huge Engulfing Candle:

And what do we know about Engulfing Candles? They are known for reversal signals. And with that, we should expect a rally after a candle like this.

But here's what happened:

The key is to connect it to the broader picture—to ask yourself questions like: What are the larger players doing? Is there a significant level nearby? What is the overall trend saying?

Check this out: 

"The Guy Who Started It" - Identifying Major Market Drivers

I often talk about an important concept I call "the big boys". Essentially, this means understanding who the major players are behind significant market moves. If you can identify what initiated a price movement—whether it's institutional buying or selling pressure—you can better judge the validity of a candlestick pattern.

For example, a shooting star pattern can signal a reversal, but it may not hold weight if it forms during a time when major market participants aren't bearish. I encourage traders to think beyond the candles and consider who could be behind them. Is this a real shift in sentiment or just noise in the market?

On the far right you can see a picture perfect shooting star, it's even coming off a a support & resistance zone. Yet, it fails to move any lower. 

This is a clear example of how the overall trend (Your Big Boy) plays a crucial role in the success of these candlestick patterns. 

Multiple Timeframe Analysis: Adding Layers of Reliability

A core part of my philosophy is that a candlestick pattern only becomes reliable when viewed through the lens of multiple timeframe analysis. A reversal pattern on a 15-minute chart might look tempting, but if it contradicts the overall direction on a daily timeframe, it's likely a trap. I often suggest zooming out to understand the bigger trend before relying on what you see in a short-term pattern.

By examining higher timeframes, you can gauge whether a pattern aligns with the general market direction, thereby increasing its reliability. If a bearish engulfing candle appears on a lower timeframe, but the daily trend is bullish, there's a higher chance that it's a short-term correction rather than a trend reversal.

Just have a look at the previous example. We have both a Shooting Star and a Hammer. And with what's said, which one do you think have a higher odds of working out?

Why Candlestick Patterns Aren't the Holy Grail

At the end of the day, my teachings remind traders that candlestick patterns are not a magic bullet. They are tools—sometimes useful, sometimes misleading. The real edge comes from a deep understanding of market dynamics: knowing who is likely driving the price, why they're doing it, and whether your perception matches the broader market flow.

Instead of spending all your energy on memorizing dozens of candlestick patterns, focus on understanding the market context. Are buyers and sellers showing conviction? Are big players stepping in, or are we witnessing retail traders chasing weak moves? These questions lead to more reliable trading decisions than any single pattern could provide.

Now without going into the details that's taught in the Mastering Price Action 2.0 Program, here's a 3-Step process for you to improve your candlestick pattern trading:

Step 1:
Identify where your underlying trend is (Big Boy):

Step2:
See if you have any support from a nearby Support & Resistance. (No Pun Intended*):

Step 3:
Use the Candlestick Pattern that forms there for the entry:

The Bottom Line: Context First, Pattern Second

So, when we talk about the "most reliable candlestick patterns," it’s important to recognize that no pattern is reliable in isolation. A rejection candle, an engulfing pattern, a hammer—they can all work, but only if they make sense within the broader story the market is telling. My perspective encourages traders to think less about patterns as a formula for success and more about them as part of a language of price action.

To succeed in trading, it's essential to develop this nuanced understanding of market dynamics. Candlestick patterns can be helpful, but they should be used as a confirmation tool rather than the sole reason to take a trade. Learn to read the market like a language, understand the story behind the candles, and you'll find yourself making more informed, confident trading decisions.

With Pip Love, 
Navin Prithyani