The candlesticks were used by rice traders 400 years in Japan. To understand the candle sticks you require the basic knowledge of demand and supply. There are different types of patterns formed in the chart according to the behavior of the people trading in the market. Depending on the type of news the traders either get afraid or upbeat making the market bullish or bearish. There are different types of candlestick patterns that inform the traders about the mood of the market. a) Engulfing pattern if formed after a significant fall signals a bullish trend to follow and vice versa if it forms after a rally. b) Piercing pattern if formed after a significant fall signals a bullish trend to follow and vice versa if it forms after a rally. c) Doji pattern if formed after a significant fall signals a bullish trend to follow and vice versa if it forms after a rally. It has no significance if it forms in a sideways market. Doji forming after a downtrend is also called a morning star and evening star if it forms after a rally. d) Hammer pattern if formed after a significant fall signals a bullish trend to follow and vice versa if it forms after a rally. This is also called inverted hammer or hanging man