39 Different Types of Candlesticks Patterns

Candlestick patterns are crucial for traders to understand market dynamics. Originating in 17th-century Japan, these patterns offer a visual representation of supply and demand forces on stock or commodity prices. Recognizing these patterns helps traders make informed decisions in both bullish and bearish markets, as they encapsulate market sentiment effectively.

1. Bullish Engulfing

This pattern indicates a shift in control to buyers, suggesting a potential market bottom. It’s identified by a large green candle engulfing a smaller red one, particularly at a price chart’s bottom. Its ease of identification and early trend reversal indication are key advantages, although it’s susceptible to false signals.

Bullish Engulfing

A Bullish Engulfing pattern, especially effective at the end of a downtrend or near support levels, suggests a shift from bearish to bullish sentiment. Traders often seek additional confirmation through increased trading volume or supplementary technical indicators like the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD) to validate the pattern’s reliability. While the Bullish Engulfing pattern is prevalent in stock trading, its applicability extends to forex and commodities markets, offering traders early entry signals into potential upward movements. However, it’s crucial to acknowledge the risk of false signals, advocating for a cautious approach and corroborative analysis.

2. Bullish Spinning Top

Signifying a potential uptrend reversal, this pattern shows market indecision. It’s recognized by a candle with a long upper and lower wick, closing near its opening price. This pattern is easier for beginners to identify but may generate false signals.

Bullish Spinning Top

This pattern reflects market indecision, where neither buyers nor sellers could gain the upper hand, yet it appears in a bullish context. The presence of this pattern suggests a potential trend reversal from a downtrend to an uptrend. However, due to the indecision it represents, traders often wait for additional confirmation from subsequent candles or other technical indicators before making trading decisions.

3. Bearish Spinning Top

This pattern, indicating a potential downtrend reversal, mirrors the Bullish Spinning Top in structure but occurs at a chart’s top. It reflects market confusion and has similar pros and cons to its bullish counterpart.

Bearish Spinning Top

this pattern indicates that neither buyers nor sellers could dominate the trading session, leading to a close near the open price. While it appears in a bearish context, suggesting a potential reversal from an uptrend to a downtrend, its true indication lies in the market’s uncertainty at that point. Traders often seek additional confirmation through subsequent price action or other technical indicators to corroborate the bearish reversal signal suggested by a Bearish Spinning Top.

4. Bullish Harami

A small green candle following a larger red candle characterizes this pattern, usually at a chart’s bottom. It indicates a decrease in selling pressure and an impending bullish trend.

Bullish Harami

The Bullish Harami signifies a shift in market sentiment, where the selling pressure begins to wane and buyers start gaining momentum. However, traders usually look for further confirmation from subsequent price movements or other technical indicators to validate the bullish signal, as the pattern alone may not always reliably predict a market reversal.

5. Tweezer Bottom

Formed by two or more candles with identical lows, this pattern signals strong buyer presence and potential market bottoming. It’s a significant bullish reversal indicator.

Tweezer Bottom

This pattern suggests a strong support level, indicating that sellers are unable to push prices lower. The presence of the Tweezer Bottom signals that buyers are stepping in at this level, potentially leading to a reversal of the downward trend. For traders, it serves as an early indication of changing market dynamics, though it is advisable to seek additional confirmatory signals from other technical analysis tools.

6. Bearish Engulfing

This pattern, occurring at a chart’s top, signals a bearish trend reversal. A large red candle engulfing a smaller green one, alongside volume indicators, confirms this shift.

Bearish Engulfing

This pattern occurs when a large red candle completely engulfs the smaller green candle of the previous trading session. Typically forming at the top of an uptrend, it suggests that sellers have overtaken buyers, potentially leading to a downward price movement. The Bearish Engulfing pattern is valued for its ability to provide early warnings of a trend shift, although traders need to corroborate this signal with additional technical tools to minimize the risk of false signals.

7. Doji

A doji, with its opening and closing prices nearly identical, signifies market indecision. It’s simple to identify and can signal potential reversals but may lead to confusion and false signals.

Doji

the Doji typically presents as a candle with a small or non-existent body and varying lengths of wicks or shadows. This pattern indicates indecision among traders, suggesting a balance between buying and selling pressures. Dojis can be found in both bullish and bearish market environments and are often considered as potential signals for a trend reversal. However, due to their inherent ambiguity, traders usually look for subsequent price action or additional technical indicators for confirmation before making trading decisions.

8. Gravestone Doji

Typically a bearish reversal indicator, this pattern shows buyer momentum loss. Identified by a long upper wick and a small body, it signals bearish control.

Gravestone Doji

This pattern suggests that during the trading session, buyers were initially in control, pushing prices higher, but ultimately, sellers took over, driving prices back down to the opening level. The Gravestone Doji is often seen at the top of an uptrend and can signal a forthcoming downturn in the market, although traders usually seek additional confirmation before acting on this pattern.

9. Dragonfly Doji

Opposite to the Gravestone Doji, this bullish pattern, found at a chart’s bottom, suggests a shift to buyer dominance. It’s recognized by a long lower wick.

Dragonfly Doji

This pattern indicates that sellers initially drove the prices down, but by the end of the trading session, buyers managed to push the prices back up to the opening level. Typically appearing at the bottom of a downtrend, the Dragonfly Doji suggests a shift in market sentiment from bearish to bullish. However, traders generally look for subsequent confirmatory signals to reinforce the potential trend reversal indicated by this pattern.

10. Three Outside Up

A strong bullish reversal pattern, it’s formed by a sequence of three candles at a chart’s bottom. It suggests a bearish trend defeat and a potential market bottom.

Three Outside Up

This pattern suggests that after a period of bearish sentiment, buyers have gained control and are driving the market upward. The increasing strength of the bulls is confirmed by the third candle’s close above the second candle’s high. Traders often view the Three Outside Up pattern as a reliable indicator of a potential bullish trend, but it’s advisable to consider additional technical analysis for confirmation.

11. Three Inside Down

This bearish counterpart to the Three Outside Up occurs at a chart’s top. It indicates a bullish trend defeat and potential market top.

Three Inside Down

This pattern suggests that bearish forces are gaining strength, overcoming previous bullish momentum. The Three Inside Down pattern is seen as a reliable indicator for a potential downtrend, but traders often seek additional confirmation through other technical indicators or price patterns.

12. Long Legged Doji

Signaling market indecision, this pattern can appear in both bullish and bearish scenarios. It’s identified by long wicks on both sides and a small or nonexistent body.

Long Legged Doji

The “Long Legged Doji” is a notable candlestick pattern in technical analysis, characterized by a small or nonexistent body with long upper and lower shadows. This pattern signifies a state of indecision in the market, where the prices fluctuate significantly within the trading session but close at or near the opening price, indicating an even balance between buyers and sellers. The Long-Legged Doji can appear in both bullish and bearish markets, and its presence suggests uncertainty about future price direction. Traders often look for subsequent price action or additional technical signals to determine the potential impact of this pattern on market trends.

13. Hanging Man

Formed at a chart’s top after a bullish rally, this bearish reversal pattern is marked by a long lower wick. It suggests a slowdown in buyer momentum.

Hanging Man

Despite the initial upward movement during the trading session, significant selling pressure is evident. The Hanging Man pattern suggests that bullish momentum may be waning, and traders often look for additional confirmation in subsequent sessions to validate the potential for a downward trend.

14. Double Candlestick Patterns

These patterns, formed by two consecutive candlesticks, can indicate either bullish or bearish trends. Their ease of identification is a pro, but they’re prone to false signals.

The Double Candlestick patterns include Bullish and Bearish Engulfing, Tweezers Tops and Bottoms, and the Harami pattern, among others. Each Candlestick pattern offers insights into market sentiment by reflecting the interactions between buyers and sellers over two trading sessions. For instance, a Bullish Engulfing pattern indicates a shift towards bullish sentiment, while a Bearish Engulfing pattern suggests the opposite. These patterns are popular among traders for their ability to provide relatively clear and actionable market signals, though they often require confirmation from additional technical analysis or indicators.

15. Bullish Kicker

A strong bullish pattern, it shows a market sentiment shift with a bearish candle followed by a gap-up bullish candle. Its strength and volume support are notable.

Bullish Kicke

Bullish Kicker pattern signals a sudden and strong shift in market sentiment from bearish to bullish, often triggered by a significant event or news. It’s considered one of the most powerful bullish signals in candlestick charting, suggesting a clear change in the market direction. However, traders typically seek additional confirmation from other technical indicators to validate the strength of the trend change.

16. Piercing Line

A bullish reversal pattern, it occurs when a bullish candle opens below a preceding bearish candle’s low but closes above its midpoint. It’s strong and distinct but rare.

Piercing Line

Piercing Line Candlestick pattern indicates a shift in sentiment from bearish to bullish, with the second day’s price rise suggesting a potential trend reversal. However, traders often look for additional confirmation, such as higher trading volumes or supportive signals from other technical indicators, before considering it a reliable signal for a bullish turnaround.

17. Bearish Kicker

Marked by a bullish candle followed by a gap-down bearish candle, this pattern indicates a strong seller comeback. It’s robust and often supported by significant volume.

Bearish Kicker

This pattern signals a sudden and intense shift in market sentiment from bullish to bearish. It is considered a powerful indicator for predicting a downward trend, often triggered by significant market events or news. However, as with other candlestick patterns, traders usually look for additional confirmatory signals from other technical analysis tools to validate the strength and reliability of the trend change.

18. Dark Cloud Cover

A bearish reversal pattern, it forms when a bearish candle opens above a bullish candle’s high but closes below its midpoint. It’s easily identifiable but rare.

Dark Cloud Cover

This pattern suggests a shift in momentum from buyers to sellers, indicating potential bearish movement ahead. The Dark Cloud Cover is considered a strong signal when confirmed by subsequent bearish price action or corroborated by other technical indicators.

19. Bearish Harami

Opposite to Bullish Harami, it occurs at a chart’s top with a small red candle following a larger green one. It signals a bearish trend reversal but may require additional confirmation.

Bearish Harami

This pattern is typically identified at the end of an uptrend, suggesting that the bullish momentum is waning and bears may be gaining control. The contrast between the large bullish candle and the smaller bearish candle signifies a shift in market sentiment. However, traders often look for additional confirmation in subsequent sessions or other technical indicators before making trading decisions based on the Bearish Harami.

20. Tweezer Top

A strong bearish reversal pattern is formed by two or more candles with identical highs. It indicates seller dominance at a resistance level.

Tweezer Top

This pattern suggests that buying pressure is diminishing, and sellers are starting to take control, possibly leading to a trend reversal. While the Tweezer Top can be a useful indicator of changing market sentiment, traders often seek additional confirmation through other technical analysis tools to validate the pattern’s bearish signal.

21. Marubozu

This pattern, lacking wicks, indicates a strong buyer or seller presence. It’s easy to spot but risky for beginners to trade.

Marubozu

It comes in two forms: Bullish and Bearish. A Bullish Marubozu, where the candle opens at its low and closes at its high, indicates strong buying pressure throughout the session. Conversely, a Bearish Marubozu, opening at its high and closing at its low, signifies strong selling pressure. The absence of wicks implies that the market sentiment was overwhelmingly in favor of either buyers or sellers from the open to the close of the trading period.

22. Triple Candlestick Patterns

Formed by three consecutive candlesticks, these patterns signify either bullish or bearish trends. They’re easy to identify but can produce false signals.

Triple Candlestick Patterns

These patterns include the “Morning Star” and “Evening Star” (indicative of bullish and bearish reversals, respectively), as well as “Three White Soldiers” and “Three Black Crows” (suggesting strong bullish and bearish trends). Each pattern’s formation reflects the interactions among buyers and sellers over three trading sessions, offering more data points than single or double candlestick patterns. While these patterns can provide clear market signals, they are often validated with additional technical indicators for increased reliability.

23. Morning Star Doji

A bullish reversal pattern, is formed by a bearish candle, a doji, and a bullish candle. It indicates a shift from bearish to bullish trends.

Morning Star Doji

This pattern suggests that the bearish momentum is fading and a bullish trend may be beginning. The presence of the Doji in the middle is key, as it reflects the indecision and potential turning point in the market. Traders often look for additional confirmation following the Morning Star Doji to confirm the reversal.

24. Bullish Abandoned Baby

Rare but strong, this pattern is formed by a bearish candle, a gap-down doji, and a gap-up bullish candle, signaling a bullish reversal.

Bullish Abandoned Baby

It typically forms at the end of a downtrend and consists of three candles: a large bearish candle, followed by a small-bodied candle or a doji that gaps down from the first candle (signifying a continued decline), and finally, a bullish candle that gaps up from the second, indicating a shift in market sentiment. This pattern suggests that after a period of bearishness, buyers are starting to take control. Due to its rarity and significance, traders often consider the Bullish Abandoned Baby a strong signal for a potential upward trend reversal.

25. Morning Star

Similar to the Morning Star Doji but without a doji, this pattern is a bullish reversal indicator formed by three candles.

Morning Star

The pattern completes with a long bullish candle, signifying a shift towards bullish momentum. The Morning Star is indicative of a change from bearish to bullish market conditions, suggesting that the bears have exhausted their control and the bulls are taking charge. Traders typically seek additional confirmation through other technical indicators to validate the potential trend reversal indicated by this pattern.

26. Evening Star Doji

The bearish counterpart to the Morning Star Doji, it’s made up of a bullish candle, a doji, and a bearish candle, indicating a bearish reversal.

Evening Star Doji

The pattern is completed by a long bearish candle, showing a shift in momentum toward selling. This pattern suggests that after a period of bullish dominance, bearish sentiment is starting to take hold, potentially leading to a trend reversal. Traders often look for additional confirmation from subsequent candles or other technical indicators before acting on this pattern.

27. Evening Star

Similar to the Evening Star Doji but without a doji, this pattern suggests a bearish trend reversal and is formed by three candles.

Evening Star

The pattern concludes with a large bearish candle, indicating a shift towards bearish sentiment. The Evening Star is considered a reliable indicator of a potential downward trend, but traders usually seek additional confirmation through other technical analysis tools.

28. Three White Soldiers

A bullish reversal pattern, it consists of three consecutive bullish candles after a bearish rally, indicating strong buyer presence.

Three White Soldiers

It consists of three consecutive long-bodied bullish candles, each opening and closing higher than the previous one. These candles typically have short wicks, indicating strong buying pressure. The appearance of the Three White Soldiers after a downtrend is a significant signal for traders, suggesting a shift from bearish to bullish sentiment. However, it’s important to confirm this pattern with other technical indicators, as in some cases, it may represent a temporary pause in the downtrend rather than a complete reversal.

29. Three Black Crows

This pattern, consisting of three bearish candles after a bullish rally, signals a strong bearish trend.

Three Black Crows

This pattern reflects growing bearish sentiment and increasing selling pressure. The appearance of the Three Black Crows is considered a strong signal that the current uptrend is weakening and may be turning into a downtrend. However, traders often seek additional confirmation through other technical indicators to validate the potential reversal signal suggested by this pattern.

30. Shooting Star

A bearish reversal pattern, identified by a long upper wick and small body. It’s significant after a bullish trend but requires market context for accuracy.

Shooting Star

This pattern indicates that during the trading session, buyers initially pushed prices higher, but were eventually overcome by sellers who drove prices down to near the opening level. The Shooting Star Candlestick Pattern signals that bullish momentum may be fading, and a downtrend could be imminent. However, traders usually look for subsequent bearish confirmation to validate the reversal signal provided by this pattern.

31. Bearish Abandoned Baby

A rare bearish reversal pattern, it’s formed by a bullish candle, a gap-up doji, and a gap-down bearish candle.

Bearish Abandoned Baby

It consists of three candles: a large bullish candle, followed by a small-bodied candle or doji that gaps up from the first candle (indicating a continuation of the uptrend), and a third bearish candle that gaps down, opening below the second candle’s body. This pattern signifies a sudden shift in market sentiment from bullish to bearish, suggesting that a reversal of the uptrend is likely. However, due to its rarity, traders often seek additional confirmation from other technical indicators.

32. Rising Three

A bullish continuation pattern in an uptrend consists of three small bearish candles within the range of a strong bullish candle.

Rising three

The three smaller candles should stay within the range of the first bullish candle, and the final bullish candle should close above the end of the first candle, confirming the continuation of the uptrend. This pattern indicates that, despite a brief pause or consolidation, the bullish trend is likely to continue.

33. Falling Three

A bearish continuation pattern, mirroring the Rising Three, but in a downtrend. It includes three small bullish candles within a strong bearish candle’s range.

Falling Three

It consists of five candles: starting with a long bearish candle, followed by three smaller bullish or neutral candles contained within the range of the first candle, and concluded by another long bearish candle. The final bearish candle should close below the end of the first candle. This pattern suggests that, despite a short period of consolidation or minor bullish activity, the dominant bearish trend is likely to resume. It indicates ongoing selling pressure and is used by traders to anticipate further downward movement in the price.

34. Three Outside Down

A strong bearish reversal pattern, it’s marked by a bullish candle followed by a bearish candle engulfing it and a third candle closing below the second.

Three Outside Down

This pattern consists of three candles: the first is a large bullish candle, followed by a second candle that gaps higher but ultimately closes lower than the first candle. The third candle is a bearish candle that closes below the midpoint of the first candle. This formation suggests a shift in market sentiment from bullish to bearish, indicating potential weakness in the ongoing uptrend.

Traders often interpret the pattern as a signal to consider selling or adopting a more cautious approach, as it implies that the bears have gained control and a downtrend may be emerging. As with any technical analysis tool, it’s important to consider other indicators and factors before making trading decisions based solely on the “Three Outside Down” pattern.

35. Three Inside Up

A bullish reversal pattern, it consists of a bearish candle followed by a bullish or bearish candle, and a third strong bullish candle indicating a trend change.

Three Inside Up

It consists of three candles: a large bearish candle, followed by a smaller bullish candle that gaps down but closes higher, and finally, a bullish candle closing above the midpoint of the first. This pattern suggests a shift from a downtrend to an uptrend, prompting traders to consider buying opportunities. It’s crucial to confirm signals with other technical indicators for a more comprehensive analysis before making trading decisions based solely on this pattern.

36. Tri-Star

A rare pattern signaling market indecision. It can be bullish or bearish, depending on its formation at the chart’s bottom or top.

Tri Star

It consists of three consecutive doji candles, where each candle opens and closes at or near the same price, creating a pattern resembling three stars in a row. The first doji represents indecision, the second suggests market uncertainty, and the third indicates a possible reversal. Traders interpret the Tri-Star pattern as a sign of a market turning point, but it is crucial to confirm the reversal with additional technical analysis and indicators. Due to its infrequent occurrence, the Tri-Star pattern is considered a powerful but less reliable signal, and caution is advised when using it as the sole basis for trading decisions.

37. Single Candlestick Patterns

These patterns, formed by a single candle, can indicate bullish or bearish trends. They are easy to identify but may produce false signals.

Single Candlestick Patterns

The shooting star indicates a potential bearish reversal after an uptrend, and the engulfing patterns (bullish or bearish) signal reversals based on the relationship between two consecutive candles. Hanging man and morning star patterns imply bullish reversals, while the evening star suggests a bearish reversal. These single candlestick patterns offer insights into market dynamics, but traders often combine them with additional technical analysis for more accurate predictions and to reduce the risk of false signals.

38. Hammer

A bullish trend reversal indicator, it’s identified by a long lower wick and a small body, signaling buyer strength.

Hammer

This pattern suggests that despite the initial bearish pressure, buyers are gaining control, and it often precedes an upward price movement. Traders commonly interpret the Hammer as a signal to consider long positions or a shift in market sentiment toward a potential uptrend. However, like any technical analysis tool, it’s important to consider other factors and indicators to confirm the signal and make informed trading decisions.

39. Inverted Hammer

Similar to the Hammer but inverted, this pattern signals a potential bullish reversal after a downtrend.

Inverted Hammer

It has a small real body near the bottom, a long upper shadow, and little to no lower shadow. This formation suggests that despite initial selling pressure, buyers are gaining control, indicating a possible shift towards an uptrend. Traders often view the Inverted Hammer as a signal to consider long positions, but it should be confirmed with other technical analysis tools for more reliable insights.

How to Read Candlestick Patterns:

Candlestick patterns are a cornerstone of technical analysis in trading, offering insights into market sentiment and potential price movements.

1. Select Your Timeframe The first step in reading candlestick patterns is choosing an appropriate timeframe. Timeframes can significantly impact the interpretation of patterns and their relevance to your trading strategy. For beginners, it’s advisable to start with larger timeframes such as daily or hourly charts. These offer a clearer view of the market trend and are less cluttered with market noise compared to shorter timeframes.

2. Identify and Analyze the Candlestick Pattern Knowledge of various candlestick patterns is pivotal. Begin by familiarizing yourself with different patterns, understanding their names, and characteristics. Regularly observe price charts, scrutinizing each candle. When you spot a recognizable pattern, note its features and implications. This step is crucial in developing your ability to identify potential trading opportunities or warnings.

3. Take Other Confirmations as Well Candlestick patterns rarely work in isolation. Enhancing their predictive power involves combining them with other technical analysis tools. Incorporate indicators like Volume, RSI (Relative Strength Index), and MACD (Moving Average Convergence Divergence) to validate the signals suggested by candlestick patterns. This multi-tool approach can lead to more robust trading decisions.

Questions About Candlestick Patterns

  • Most Powerful Candlestick Pattern: The concept of a ‘most powerful’ pattern is subjective and varies among traders. It’s essential to experiment with different patterns to find what resonates with your trading style and goals.
  • Best Candlestick Pattern: Like power, the best candlestick pattern is subjective. Diverse trading styles and market conditions can influence which pattern works best for an individual trader.
  • Most Profitable Candlestick Pattern: No single pattern guarantees profitability. Success in trading using candlestick patterns depends on continuous experimentation and adaptation to the market’s ever-changing dynamics.
  • Strongest Candlestick Pattern: While many patterns are considered strong, determining the strongest requires personal experimentation and combining them with other technical tools. This approach helps tailor the patterns to your unique trading style.
  • Accuracy of Candlestick Patterns: No technical tool, including candlestick patterns, can boast 100% accuracy. However, combining these patterns with other technical indicators can enhance the reliability of your trading setup.
  • Reliability of Candlestick Patterns: Yes, candlestick patterns are reliable. They are among the most widely used tools for tracking price movements in stocks and commodities, offering valuable insights into market psychology and potential future movements.

Conclusion

Understanding candlestick patterns is crucial for traders as they offer a visual representation of supply and demand forces, originating in 17th-century Japan. These patterns encapsulate market sentiment effectively, aiding informed decisions in both bullish and bearish markets. Notable bullish patterns include the Bullish Engulfing, signaling a potential market bottom, and the Bullish Harami, indicating a decrease in selling pressure. Bearish patterns, such as the Bearish Engulfing, suggest a potential downtrend reversal. Single candlestick patterns, like the Hammer and Inverted Hammer, provide insights into potential reversals after downtrends. Reading these patterns involves careful consideration of market context and confirmation from additional technical tools. Combining patterns with technical analysis enhances accuracy, acknowledging that no single pattern is universally the most powerful or best. As traders advance, they learn to adapt strategies to different timeframes and market conditions, recognizing the dynamic nature of these patterns and their role in effective trading.