Candlestick Patterns

Candlestick patterns are unique compared to bar chart patterns because they provide entry and exit signals in as little as a single candlestick, whereas bar chart patterns often take weeks or months to develop.
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Many candlestick patterns require only one price bar for a trading signal but may also be used with multiple bars to indicate a directional bias. Patterns are generally characterized as bullish, bearish, or neutral and can be reversal or continuation patterns.

Candlestick patterns are often coupled with other forms of technical analysis for confirmation.

For example, if a hammer pattern forms at a significant support level, the hammer pattern confirmed the trend reversal at support.

The context of the surrounding price action is important for interpreting the significance of the candlestick pattern.

For example, bullish candlestick patterns forming in a pullback of a larger uptrend are more significant than bullish candlestick patterns forming in a downtrend.

Candlestick Patterns Summary Guide image

Bullish Patterns

Bullish patterns may be continuation patterns of the current price trend or reversal patterns suggesting a bullish directional change.

Bullish Abandoned Baby

Three candle reversal pattern. Infrequent pattern where a long black real body candle is followed by a gap down doji candle and the third candle gaps higher with a long white real body. The second doji candle is below the range of both the first and third candles, similar to an island bottom.

Bullish Abandoned Baby example image

Bullish Engulfing

Two candle reversal pattern. Small black real body candle followed by a large white real body candle that has a higher high and lower low than that of the first day.

Typically seen in a downtrend, the bullish engulfing candle shows price initially started the second session lower, and then buying pressure persisted through the first day’s range.

Bullish Engulfing example image

Bullish Harami

Two candle reversal pattern. Large black real body candle followed by a small white or black real body candle completely contained within the first candle’s real body.

The second candle indicates a reversal of the previous day’s selling.

Bullish Harami example image

Bullish Kicker

Two candle reversal pattern. White real body candle that follows a black candle. The second white real body candle opens above the previous session’s body and has no lower or upper wick.

The pattern shows a sharp trend reversal as the buying pressure of the second day demonstrates strength from the open of the candle to the close.

Bullish Kicker example image

Bullish Spinning Top

Single candle reversal or continuation pattern. Small white real body, has upper and lower wicks, similar to a doji, but the open and close are not the same.

Indicates some level of indecision but has a bullish bias.

Bullish Spinning Top example image

Bullish Three Line Strike

Four candle reversal or continuation pattern. Three white real body candles with three higher closes, similar to three white soldiers, followed by a long black real body candle that reverses the previous three day’s gains. Fourth candle opens above the third white candle and closes below the first white candle.

The black candle is viewed as a pullback buying opportunity at recent lows.

While the pattern is generally considered a bullish continuation pattern, the three line strike may begin a reversal lower.

Bullish Three Line Strike example image

Dragonfly Doji

Single candle reversal pattern. The open and close are the same with no upper wick but has a long lower wick.

Indicates that price attempted to decline during the trading period but could not sustain the lower movement, buyers took control, and price closed bullishly at the top of the day’s range.

Dragonfly Doji example image

Hammer

Single candle reversal pattern. Lower wick at least twice as long as the real body, with no or limited upper wick.

Signals buying pressure overwhelmed initial selling pressure.

Hammer example image

Inverted Hammer

Single candle reversal pattern. Long upper wick, small real body at the lower end of the candle, and no or limited lower wick.

Often a bottoming candle in a downtrend.

Inverted Hammer example image

Morning Doji Star

Two candle reversal pattern. Long black real body candle followed by a doji that is below the previous candle’s real body.

Similar to the morning star pattern but before the confirmation of the third candle.

Morning Doji Star example image

Morning Star

Three candle reversal pattern. Long black real body candle followed by a lower, small real body candle, followed by a large white real body candle. The second candle gaps down below the first candle’s body, and the third candle gaps up and rises well into the real body of the first candle.

Morning Star example image

Piercing Line

Two candle reversal pattern. Long black real body candle followed by a long white real body candle. The white real body candle opens below the first candle’s lower wick and continues at least through the middle of the first candle’s real body.

Shows a trend reversal as the lower low fails and buying pressure persists.

Piercing Line example image

Three Inside Up

Three candle reversal pattern. Long black real body candle followed by a small white real body candle within the first candle’s real body, followed by a white real body candle that closes above the first candle’s open.

Three Inside Up example image

Three Outside Up

Three candle reversal pattern. Black real body candle followed by a bullish engulfing candle, followed by a white real body candle that closes above the second candle’s range and confirms the bullish engulfing candle.

Three Outside Up example image

Three White Soldiers

Three candle reversal pattern. Three white candles in a row with three higher highs. All three candles close near the top of the day’s range or have no upper wick.

A trend reversal pattern in a downtrend that demonstrates persistent buying strength.

Three White Soldiers example image

Tweezer Bottom

Two candle reversal pattern. Two consecutive candles with the same low. The first candle often has a black real body, while the second candle may have either a black or white real body.

The matching lows of the tweezer bottom indicate a failure for price to decline and a trend reversal.

Tweezer Bottom example image

Neutral Patterns

Neutral patterns suggest indecision, a pause in the preceding trend, or nondirectional price action.

Doji

Single candle neutral pattern that signals indecision. The open and close of the candle are the same, with an upper and lower wick.

Considered an important candle for trend reversals.

Doji example image

Marubozu

Single candle neutral pattern. May have a white or black real body and no wick. The size and color of the real body indicates directional bias.

Marubozu example image

Spinning Top

Single candle neutral pattern. Small white or black real body with upper and lower wicks.

Similar to the doji, but open and close are not the same. Indicates indecision.

Spinning Top example image

Star

Single candle reversal pattern. Small real body candle that follows a large real body candle. The star’s small real body is either fully above or fully below the previous candle’s real body.

Star example image

Bearish Patterns

Bearish patterns may be continuation patterns of the current price trend or reversal patterns suggesting a bearish directional change.

Bearish Abandoned Baby

Three candle reversal pattern. Infrequent pattern where a long white real body candle is followed by a gap up doji candle and the third candle gaps lower with a long black real body. The second doji candle is above the range of both the first and third candles, similar to an island top.

Bearish Abandoned Baby example image

Bearish Engulfing

Two candle reversal pattern. Small white real body candle followed by a large black real body candle with a lower low and a higher high than that of the first day.

Typically seen in an uptrend, the bearish engulfing candle shows price initially started the second session higher and then selling pressure persisted through the first day’s range.

Bearish Engulfing example image

Bearish Harami

Two candle reversal pattern. Large white real body candle followed by a small white or black real body candle completely contained within the first candle’s real body.

The second candle indicates a reversal of the previous day’s buying.

Bearish Harami example image

Bearish Kicker

Two candle reversal pattern. Black real body candle that follows a white candle. The second black real body candle opens below the previous session’s body and has no lower or upper wick.

The pattern shows a sharp trend reversal as the selling pressure of the second day demonstrates weakness from the open of the candle to the close.

Bearish Kicker example image

Bearish Spinning Top

Single candle reversal or continuation pattern. Small black real body, has upper and lower wicks, similar to a doji, but the open and close are not the same.

Indicates some level of indecision but has a bearish bias.

Bearish Spinning Top example image

Bearish Three Line Strike

Four candle reversal or continuation pattern. Three black real body candles with three lower closes, similar to three black crows, followed by a long white real body candle that reverses the previous three day’s decline. Fourth candle opens below the third black candle and closes above the first black candle.

The white candle is viewed as a selling opportunity at recent highs.

While the pattern is generally considered a bearish continuation pattern, the three line strike may begin a reversal higher.

Bearish Three Line Strike example image

Dark Cloud Cover

Two candle reversal pattern. Long white real body candlestick followed by a black candlestick. The black candlestick’s open is above the close of the first long white candlestick. The second candle closes well into the real body of the first candle.

Signals momentum exhaustion in an uptrend.

Dark Cloud Cover example image

Evening Doji Star

Two candle reversal pattern. Long white real body candle followed by a doji that is above the previous candle’s real body.

Similar to the evening star pattern but before the confirmation of the third candle.

Evening Doji Star example image

Evening Star

Three candle reversal pattern. Long white real body candle followed by a higher, small real body candle, followed by a large black real body candle. The second candle gaps up above the body of the first candle, and the third candle gaps down and falls well into the real body of the first candle.

Evening Star example image

Gravestone Doji

Single candle reversal pattern. Long upper wick and no lower wick. Open and close are the same to form a doji.

Signals trend exhaustion in an uptrend as initial buying power completely fails and sellers take control, sending the close back to the open.

Gravestone Doji example image

Hanging Man

Single candle reversal pattern. Small real body with no or limited upper wick and a long lower wick.

May signal exhaustion in an uptrend because the hanging man’s small real body at the top of a trend indicates waning buying power.

Hanging Man example image

Shooting Star

Single candle reversal pattern. Small white or black real body with a long upper wick and no or limited lower wick.

Indicates initial buying was met with stronger selling, and the candle closed near the lows. Signal of buying exhaustion in an uptrend.

Shooting Star example image

Three Black Crows

Three candle reversal pattern. Three black candles in a row with three lower lows. All three candles close near the bottom of the day’s range or have no lower wick.

Trend reversal pattern in an uptrend that demonstrates persistent selling strength.

Three Black Crows example image

Tweezer Top

Two candle reversal pattern. Two consecutive candles with the same high.The first candle often has a white real body, while the second candle may have either a black or white real body.

Tweezer Top example image

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FAQs

What does a candlestick chart show?

Candlestick charts illustrate the entire range for a period by indicating the opening, closing, high, and low prices of a period. The space between the opening and closing prices of the period forms the candlestick’s body. Prices above and below the opening and closing range form the candle’s wick, or shadow.

How do you read candlestick charts?

Candlestick charts illustrate the entire range for a period by indicating the opening, closing, high, and low prices of a period. The space between the opening and closing prices of the period forms the candlestick’s body. Prices above and below the opening and closing range form the candle’s wick, or shadow. The size of the candlestick body relative to the candlestick wick is informative of the strength or weakness of price direction for the period.

Candlesticks are color-coded. In full-color charts, if the closing price is above the opening price, the candle’s body is green. If the closing price is below the opening price, the candle’s body is red. If the opening price is above the closing price, but the period’s price closes above the previous period’s close, the candle’s body is black.

Candlestick charts may provide trading signals through patterns based on one, two, three, or more candles. The context of the surrounding price action is important for interpreting the significance of the candlestick pattern.

Candlestick patterns may provide entry and exit signals in as little as a single candlestick. Many candlestick patterns require only one price bar for a trading signal but can also be used with multiple bars to indicate a directional bias.

Patterns are generally characterized as bullish, bearish, or neutral and can be reversal or continuation patterns. Candlestick patterns are often coupled with other forms of technical analysis for confirmation.

Which candlestick pattern is most reliable?

There is no “perfect” candlestick pattern that is more reliable than others. Candlesticks are used by investors to help identify changes in price action.

Candlestick patterns are unique compared to bar chart patterns because they provide entry and exit signals in as little as a single candlestick, whereas bar chart patterns often take weeks or months to develop. Many candlestick patterns require only one price bar for a trading signal but may also be used with multiple bars to indicate a directional bias.

Candlestick patterns are often coupled with other forms of technical analysis for confirmation. The context of the surrounding price action is important for interpreting the significance of the candlestick pattern.

The reliability of candlestick patterns is subjective and needs to be thoroughly backtested to provide historical performance results. Different traders utilize different strategies, so what works well for one investor may not work for another.

Which candlestick pattern is bullish?

There are numerous candlestick patterns associated with bullish price action. Many candlestick patterns require only one price bar for a trading signal but may also be used with multiple bars to indicate a directional bias.

Some well-known examples of bullish candlestick patterns include the hammer, the bullish spinning top, bullish engulfing, and the morning star. The context of the surrounding price action is important for interpreting the significance of the candlestick pattern.

Candlestick patterns are often coupled with other forms of technical analysis for confirmation.

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