Single Candlestick Patterns: Hammer, Doji, Spinning Top and How to Trade Them on Nifty

Single candlestick patterns like the hammer and the doji are usually the first thing a new trader picks up on a chart, and that makes sense. Each one comes from a single session’s price action, so you can spot it on any Nifty or stock chart in a second. The catch is that one candle is also very easy to misread. Here we go through how the main single candlestick patterns form (the hammer, doji, spinning top, marubozu, hanging man and shooting star), what each tells you about the tug-of-war between buyers and sellers, and how to turn one into a trade with a clear stop loss.

The definitions and trade rules below follow Zerodha Varsity’s chapters on spinning tops and dojis and the paper umbrella and shooting star. Varsity is one of the most widely used free technical analysis resources in India. Every price example here is illustrative, not a live trade call.

What a candle is made of: the four prices

Each candle is drawn from four prices for the period: open, high, low and close (OHLC). The real body covers the stretch between the open and the close. It shows green (or hollow) when the close is above the open, and red (or filled) when it closes below. The thin lines poking out above and below are the shadows, or wicks, and they mark the session’s high and low.

Reading one candle really boils down to two comparisons:

• Body size against the full range: a big body says one side ran the session. A tiny body says nobody won.
• Shadow length against the body: a long shadow says price travelled a long way in one direction and then got shoved back. That’s rejection.

Where the candle shows up matters just as much as its shape. The same candle can mean opposite things at the top of a rally and at the bottom of a fall, which is why a few of these patterns change names depending on where they appear.

Single candlestick patterns: hammer, doji and the others

1. Marubozu: one side in full control

A marubozu has a long body and little or no shadow. A bullish marubozu opens at or near the low and closes at or near the high, so buyers ran things from the first trade to the last. A bearish marubozu is the same picture flipped. Since it signals conviction rather than doubt, traders usually read a marubozu as a hint that the current move may carry on. Varsity suggests a bit of flexibility here: a very small shadow doesn’t rule the pattern out.

2. Spinning top: nobody’s sure

A spinning top has a small real body, with upper and lower shadows of roughly the same length. Colour doesn’t matter. What counts is that the open and close ended up close together even though price swung both ways during the day. Varsity describes the spinning top as a sign of indecision, with bulls and bears holding equal control.

In real trading, a spinning top after a rally can mean buyers are catching their breath before another push, or that they’re running out of steam and a correction is coming. After a fall, it can mean sellers are pausing, or that buyers are starting to show up. Since either outcome is possible, Varsity recommends going in cautiously, for instance with only half your planned position, and adding the rest only once the market moves your way.

3. Doji: the open and close match

Think of a doji as a spinning top with almost no body at all: the open and close are equal or very close to it. The shadows can be any length. The message is the same as a spinning top, indecision, and the two often turn up together in clusters ahead of a big move. The variants you’ll run into most:

• Long-legged doji: long shadows on both sides, a wide session that still ended undecided.
• Dragonfly doji: a long lower shadow with the open and close at the high. Sellers dragged price down, and buyers won all of it back.
• Gravestone doji: a long upper shadow with the open and close at the low, the rejection running the other way.

A doji doesn’t tell you which way the market will move. It tells you the market hasn’t decided yet, and that a move is probably coming.

4. Hammer: buyers push back at the bottom

The hammer belongs to the “paper umbrella” family: a small real body near the top of the range, a long lower shadow at least twice the length of the body, and little or no upper shadow. When that shape forms after a downtrend, it’s called a hammer.

The story behind it is simple. Sellers hammered the price down during the session, then buyers came in and lifted it back to close near the high. That refusal to accept lower prices is why traders treat the hammer as a bullish reversal signal.

How to trade it (per Varsity):

• A risk-taker buys near the close on the day the hammer forms, once the shape is confirmed before the close.
• A risk-averse trader waits for the next session and buys at its close only if that candle is green.
• The low of the hammer is the stop loss.

Illustrative example: after falling for several days, a stock prints a hammer with open ₹500, high ₹504, low ₹482 and close ₹502. The lower shadow (₹18) is far more than twice the body (₹2), so it qualifies. Going long near ₹502 with a stop just under ₹482 puts about ₹20 per share at risk. That number plugs straight into your position sizing.

5. Hanging man: the same shape, at the top

Put the exact same paper-umbrella shape at the end of an uptrend and it becomes a hanging man, which is read as bearish. The long lower shadow says sellers have turned up, even if buyers clawed it back by the close. The trade is a short, with the stop loss at the candle’s high.

Varsity’s author admits he trusts the hammer more than the hanging man. If sellers really had control, why did price bounce back to close near the high? It’s a good reminder that a pattern’s logic should make sense to you before you put money on it.

6. Shooting star: sellers push back at the top

A shooting star looks like a hammer turned upside down: a small real body near the bottom of the range and a long upper shadow at least twice the body’s length. It shows up after an uptrend. Price runs up to a fresh high, then selling drags it back to close near the session low. Varsity notes the pattern is a little more reliable when the body is red, and that a longer upper wick makes the signal more bearish. For a short trade, the stop loss sits at the shooting star’s high.

When the same shape appears after a downtrend, it’s called an inverted hammer. It’s a weaker bullish signal and needs firmer confirmation.

Quick reference table

Putting these patterns to work on Nifty charts

A pattern by itself is a place to start looking, not a reason to click buy. These filters tilt the odds in your favour:

1. Check what came before. A hammer in the middle of a sideways range means very little. It needs a clear fall ahead of it.
2. Look for a level. A hammer sitting on a well-tested support zone, or a shooting star at resistance, carries far more weight than one floating in no man’s land.
3. Watch volume. A reversal candle on above-average volume tells you real money was behind the rejection.
4. Wait for confirmation if you’re risk-averse. Letting the next candle confirm the direction weeds out a lot of false signals, though you pay for it with a worse entry.
5. Pair it with an indicator. A hammer with RSI oversold, or a shooting star with bearish RSI divergence, gives you a second piece of evidence. Our guide on how to read the RSI indicator explains how.
6. Stick mostly to daily charts. On very short intraday timeframes, single candles get much noisier.

The pattern decides where you enter. The stop loss decides whether you survive being wrong. Define both before you place the order.

Where traders usually go wrong

• Ignoring the shadow-to-body ratio. A lower shadow only a touch longer than the body isn’t a hammer.
• Trading every doji. Dojis are everywhere. One inside a choppy range tells you almost nothing.
• Skipping the stop loss. Each pattern above comes with an obvious invalidation level. If price breaks it, your idea was wrong. Our guide on stop loss in trading covers this.
• Betting big on one candle. Single-candle signals fail a lot. Keep the risk per trade small.
• Reading candles on illiquid stocks. Thinly traded shares can throw up strange shadows from one large order.

Moving from one candle to several

Single candles are the building blocks for multi-candle patterns such as engulfing patterns, the morning star and the evening star, which build a confirmation step into the pattern itself. Once you can pick out hammers, dojis and shooting stars without thinking, those bigger patterns get much easier to read. For the wider picture, take a look at our candlestick patterns for beginners guide and the pillar on technical analysis for Indian stocks.

The short version

The hammer, doji and the other single candlestick patterns all answer one question: who won the session, and by how much? Marubozus show conviction. Spinning tops and dojis show doubt. Hammers, hanging men and shooting stars show rejection. Combine them with trend context, support and resistance, volume and a proper stop loss, and they become a handy way to time entries. On their own, they’re just shapes on a screen.

This article is for education only and is not investment advice.