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As a beginner, learning the ins and outs of trading can feel overwhelming with so much to grasp, but every successful trader has faced this challenge and emerged stronger.
One crucial skill every successful trader has is the ability to identify key candlestick patterns. These patterns are essential for understanding market movements and making informed decisions.
In this article, we’ll explore popular candlestick patterns categorized into Bullish, Bearish, and Reversal patterns. You’ll learn to identify these patterns, understand their features, see examples, and interpret their significance, giving you valuable insights to enhance your trading strategy.
Bullish Patterns | Bearish Patterns | Reversal Patterns |
---|---|---|
Bullish Engulfing | Bearish Engulfing | Doji |
Morning Star | Evening Star | Spinning Top |
Three White Soldiers | Three Black Crows | Tweezer Top |
Hammer | Hanging Man | Tweezer Bottom |
Piercing Line | Dark Cloud Cover | Bullish Harami |
Inverted Hammer | Shooting Star | Bearish Harami |
Bullish Candlestick Patterns
Bullish Engulfing
A Bullish Engulfing pattern occurs in a downtrend and is characterized by a large green (bullish) candlestick that completely engulfs the previous day’s small red (bearish) candlestick. This pattern suggests a potential reversal as buyers have overtaken sellers.
Key Features:
- Appears in a downtrend
- Large green candlestick engulfs the previous day’s small red candlestick
- Signals a shift from sellers to buyers
Example: Imagine a chart where a small red candlestick is followed by a larger green candlestick that opens lower and closes higher than the previous day’s high.
Interpretation: This pattern indicates that buying pressure has overwhelmed selling pressure, suggesting a possible reversal to an uptrend.
🕯️ Understanding the Bullish Engulfing Candlestick Pattern 📈
— Vaibhav Bhimjiyani (@VaibhavBhimjiy2) December 29, 2023
The Bullish Engulfing pattern is a powerful candlestick formation signaling a potential reversal from a downtrend to an uptrend.
Here's a detailed thread on its characteristics and how traders interpret it. 👇… pic.twitter.com/XrU4YgXPvv
$RNDR | Study: Bullish engulfing candlestick. pic.twitter.com/tJ0elYDJdp
— iWantCoinNews📈 (@iWantCoinNews) May 6, 2024
Morning Star
The Morning Star is a three-candlestick pattern that indicates a potential bottom in a downtrend. It consists of a long bearish candlestick, followed by a short or Doji candlestick that gaps lower, and a long bullish candlestick that closes well into the first candlestick’s body.
Key Features:
- Appears in a downtrend
- First candlestick is long and bearish
- Second candlestick is short or Doji, gaps lower
- Third candlestick is long and bullish
Example: On a chart, you see a long red candlestick followed by a small candlestick that gaps down, and then a long green candlestick that closes well above the midpoint of the first candlestick.
Interpretation: This pattern suggests that the downward momentum is weakening, and a reversal to an uptrend may be on the horizon.
Morning Star pattern pic.twitter.com/MXvoCmrdHz
— MARKET INSIGHTS! (@IManghaila) February 24, 2024
Morning Star Candlestick📊
— Mybookmojo (@mybookmojo) May 11, 2024
Learn & Practice📈#stocks #trading #stockmarket pic.twitter.com/qNbIyZByRc
Three White Soldiers
The Three White Soldiers pattern is made up of three consecutive long green (bullish) candlesticks with small or no shadows, each closing higher than the previous. This pattern appears after a downtrend and suggests a strong reversal signal.
Key Features:
- Appears after a downtrend
- Three consecutive long green candlesticks
- Small or no shadows
- Each candlestick closes higher than the previous
Example: On a chart, you observe three long green candlesticks in a row, each opening within the previous day’s body and closing at or near its high.
Interpretation: This pattern indicates strong buying pressure and a potential reversal from a downtrend to an uptrend.
Three white soldiers. It unfolds across three trading sessions and represents a strong price reversal from a bear market to a bull market. The pattern consists of three long candlesticks that trend upward like a staircase; each should open above the previous day's open, ideally… pic.twitter.com/8C1AIqyqOH
— DarvaX Trader 🔆 (@AmitabhJha3) November 22, 2023
2/9: So, what's the deal with Three White Soldiers?
— Antonio Santiago (@awsan) April 2, 2024
It's a pattern suggesting a reversal of a downtrend. 📈 It consists of three consecutive long-bodied candlesticks opening within the previous one's real body and closing higher. pic.twitter.com/x4b3LOXP3y
Hammer
A Hammer forms after a downtrend and has a small body with a long lower shadow and little or no upper shadow. This pattern indicates that the market may have reached a bottom as buyers managed to push prices back up after a period of selling.
Key Features:
- Appears after a downtrend
- Small body, long lower shadow
- Little or no upper shadow
Example: On a chart, you see a small-bodied candlestick with a long lower shadow, suggesting that prices were pushed down but then recovered to close near the opening price.
Interpretation: This pattern suggests a potential bottom and a reversal to an uptrend if followed by bullish confirmation.
How do you know $DYM has put in a bottom (at least a short-term one?
— rugova (@trader_rugova) July 12, 2024
open chart > Look for clues
clues:
1. Hammer candlestick with a large pin
2. Follow up volume (buying) on the next 3D candle.
3. Current 3D candle hasn't retraced >40% of prior candles'.
Enough to conclude. pic.twitter.com/7AHqu6sVte
Piercing Line
The Piercing Line pattern consists of a long red (bearish) candlestick followed by a long green (bullish) candlestick that opens lower but closes above the midpoint of the red candlestick. This pattern suggests a potential reversal in a downtrend.
Key Features:
- Appears in a downtrend
- First candlestick is long and bearish
- Second candlestick is long and bullish
- Second candlestick opens lower but closes above the midpoint of the first
Example: On a chart, a long red candlestick is followed by a green candlestick that opens below the previous low but closes above the midpoint of the red candlestick.
Interpretation: This pattern indicates that buying pressure is starting to dominate, suggesting a potential reversal to an uptrend.
$TSLA The most bullish scenario today would be a close of $253+ which would create a Bullish Piercing Line candle pattern. pic.twitter.com/xZdwX1tKvC
— Vol888 (@Vol8882) July 12, 2024
Inverted Hammer
The Inverted Hammer appears after a downtrend and has a small body with a long upper shadow and little or no lower shadow. It indicates that buyers tried to push prices higher but were resisted, though it suggests potential bullish reversal if followed by a bullish confirmation.
Key Features:
- Appears after a downtrend
- Small body, long upper shadow
- Little or no lower shadow
Example: On a chart, you observe a small-bodied candlestick with a long upper shadow, suggesting an attempt to push prices higher before closing near the opening price.
Interpretation: This pattern suggests a potential bottom and a reversal to an uptrend if followed by a bullish confirmation.
Inverted hammer pic.twitter.com/G0xnEj9mgb
— MARKET INSIGHTS! (@IManghaila) September 29, 2023
🚀 Big News, $FPEPE Fam! 🚀$FPEPE just closed the 3-day candle with a bullish inverted hammer! 📈🔥 This classic reversal pattern signals an uptrend, confirmed by strong buying pressure. With our RSI showing strength and MACD trending upwards, we're set for a major breakout!… pic.twitter.com/woB0OkVCUN
— Father Pepe (@BasedFatherPepe) June 27, 2024
Bearish Candlestick Patterns
Bearish Engulfing
A Bearish Engulfing pattern occurs in an uptrend and is characterized by a large red (bearish) candlestick that completely engulfs the previous day’s small green (bullish) candlestick. This pattern suggests a potential reversal as sellers have overtaken buyers.
Key Features:
- Appears in an uptrend
- Large red candlestick engulfs the previous day’s small green candlestick
- Signals a shift from buyers to sellers
Example: Imagine a chart where a small green candlestick is followed by a larger red candlestick that opens higher and closes lower than the previous day’s low.
Interpretation: This pattern indicates that selling pressure has overwhelmed buying pressure, suggesting a possible reversal to a downtrend.
Evening Star
The Evening Star is a three-candlestick pattern that indicates a potential top in an uptrend. The pattern consists of a long bullish candlestick, followed by a short or Doji candlestick that gaps higher, and a long bearish candlestick that closes well into the first candlestick’s body.
Key Features:
- Appears in an uptrend
- First candlestick is long and bullish
- Second candlestick is short or Doji, gaps higher
- Third candlestick is long and bearish
Example: On a chart, you see a long green candlestick followed by a small candlestick that gaps up, and then a long red candlestick that closes well below the midpoint of the first candlestick.
Interpretation: This pattern suggests that the upward momentum is weakening, and a reversal to a downtrend may be on the horizon.
The evening star is a three candlestick pattern that is the equivalent of the Bullish morning Star. It is formed of a short candle sandwiched between a long green candle and a large red candlestick.
— MARKET INSIGHTS! (@IManghaila) May 21, 2024
It indicates the reversal of an uptrend and is particularly strong pic.twitter.com/DHZ5qdyCEc
Three Black Crows
The Three Black Crows pattern is made up of three consecutive long black / red (bearish) candlesticks with small or no shadows, each closing lower than the previous. This pattern appears after an uptrend and suggests a strong reversal signal.
Key Features:
- Appears after an uptrend
- Three consecutive long red candlesticks
- Small or no shadows
- Each candlestick closes lower than the previous
Example: On a chart, you observe three long red candlesticks in a row, each opening within the previous day’s body and closing at or near its low.
Interpretation: This pattern indicates strong selling pressure and a potential reversal from an uptrend to a downtrend.
$FSLR 3 black crows flushing out the 50 pic.twitter.com/fh2Y2RWXAE
— Elite Swing Traders (@1ChartMaster) June 17, 2024
Hanging Man
A Hanging Man forms after an uptrend and has a small body with a long lower shadow and little or no upper shadow. This pattern indicates that the market may have reached a top as sellers managed to push prices down after a period of buying.
Key Features:
- Appears after an uptrend
- Small body, long lower shadow
- Little or no upper shadow
Example: On a chart, you see a small-bodied candlestick with a long lower shadow, suggesting that prices were pushed down but then recovered to close near the opening price.
Interpretation: This pattern suggests a potential top and a reversal to a downtrend if followed by bearish confirmation.
Morning Trade Recap #2
— TW – The Wealthy Trader (@RealJGBanks) June 7, 2022
1. $SPY – 414P $2.97 – $7.00 *135%*
I took puts at the top because we were major Resistance at 414 with a triple top.
We also had a “Hanging man” bearish reversal candlestick. $QQQ $SQQQ $SPX pic.twitter.com/LM9myknm8C
Dark Cloud Cover
The Dark Cloud Cover pattern consists of a long green (bullish) candlestick followed by a long red (bearish) candlestick that opens higher but closes below the midpoint of the green candlestick. This pattern suggests a potential reversal in an uptrend.
Key Features:
- Appears in an uptrend
- First candlestick is long and bullish
- Second candlestick is long and bearish
- Second candlestick opens higher but closes below the midpoint of the first
- Opposite is the Piercing Line.
Example: On a chart, a long green candlestick is followed by a red candlestick that opens above the previous high but closes below the midpoint of the green candlestick.
Interpretation: This pattern indicates that selling pressure is starting to dominate, suggesting a potential reversal to a downtrend.
"Dark Cloud Cover" overhead! A bearish pattern suggesting sellers are pushing back. Stay sharp! ☁️ #Crypto #TechnicalAnalysis pic.twitter.com/GxVdLTdjHx
— Learn Candlestick Patterns (@lcp_app) July 12, 2024
Shooting Star
The Shooting Star appears after an uptrend and has a small body with a long upper shadow and little or no lower shadow. It indicates that buyers tried to push prices higher but were resisted, suggesting potential bearish reversal if followed by a bearish confirmation.
Key Features:
- Appears after an uptrend
- Small body, long upper shadow
- Little or no lower shadow
Example: On a chart, you observe a small-bodied candlestick with a long upper shadow, suggesting an attempt to push prices higher before closing near the opening price.
Interpretation: This pattern suggests a potential top and a reversal to a downtrend if followed by a bearish confirmation.
"Shooting Star" alert! A bearish signal that might indicate a reversal at the top of an uptrend. Plan your exit strategy! ⭐ #Trading #StockMarket pic.twitter.com/ac29SU7uyD
— Learn Candlestick Patterns (@lcp_app) July 8, 2024
Reversal Candlestick Patterns
Doji
A Doji forms when the opening and closing prices are virtually equal, creating a very small body. The length of the shadows can vary. Dojis indicate indecision in the market and can signal a potential reversal when appearing after a strong trend.
Key Features:
- Opening and closing prices are virtually equal
- Very small body
- Length of shadows can vary
Example: On a chart, you see a candlestick with a small body and longer shadows, indicating indecision between buyers and sellers.
Interpretation: This pattern suggests indecision and a potential reversal if found at the end of a strong trend.
$PYPL – Doji Candle has formed today for Paypal.
— StockTrader_Max (@StockTrader_Max) May 29, 2024
Definition of a "Doji' candlestick: A doji tells traders that buyers and sellers were balanced at the end of the day, but this may have big implications. If sellers have been dominating and pushing the price down, a doji suggests… pic.twitter.com/0KP5zm3ate
Spinning Top
Spinning Tops have small bodies with upper and lower shadows longer than the body. The body color is relatively unimportant. These candlesticks suggest indecision and potential reversal if found at the end of a trend.
Key Features:
- Small body
- Long upper and lower shadows
- Body color is relatively unimportant
Example: On a chart, you observe a candlestick with a small body and longer shadows, indicating that neither buyers nor sellers could gain control.
Interpretation: This pattern suggests indecision and potential reversal if found at the end of a trend.
$WTI
— $Trader (@GDXTrader) July 14, 2024
Since our bullish reversal confirmation candle the week of June 10, last week presented our first bearish signal candle, coinciding with resistance. We observed a bearish spinning top at a key resistance level, which indicates indecision and potential bearish reversal.… pic.twitter.com/DHGsEEaM2U
Tweezer Top and Bottom
A Tweezer Top is a bearish reversal pattern that occurs during an uptrend and is characterized by two or more candlesticks with matching highs. This pattern indicates that the market is testing resistance levels and may reverse downwards.
Key Features:
- Appears in an uptrend
- Two or more candlesticks with matching highs
- Indicates resistance
Example: On a chart, you see two candlesticks with highs at the same level, suggesting that the market is struggling to break above this level.
Interpretation: This pattern suggests that the uptrend may be losing momentum and a reversal to a downtrend is possible.
$QQQ Weekly
— AllllSevens🎰 (@SevenParr) July 1, 2024
Finally, a notable dark pool has come in @ $481.28
Considering the outward rotation we've seen over the last few months
Plus, this tweezer top pattern
I cannot be bullish Q's this week https://t.co/fDXpkGur3h pic.twitter.com/ggfA6wjBiu
Tweezer Bottom
A Tweezer Bottom is a bullish reversal pattern that occurs during a downtrend and is characterized by two or more candlesticks with matching lows. This pattern indicates that the market is testing support levels and may reverse upwards.
Key Features:
- Appears in a downtrend
- Two or more candlesticks with matching lows
- Indicates support
Example: On a chart, you see two candlesticks with lows at the same level, suggesting that the market is struggling to break below this level.
Interpretation: This pattern suggests that the downtrend may be losing momentum and a reversal to an uptrend is possible.
Do i see a tweezer bottom candle pattern on the 4hr chart… $rakoff pic.twitter.com/8KjupW4KE5
— AltX🕳️(Co-signer)🧩 (@AltUteX) May 15, 2024
Bullish Harami
A Bullish Harami is a two-candlestick pattern that occurs in a downtrend. The first candlestick is a long red (bearish) body, followed by a small green (bullish) body that is contained within the first body. This pattern suggests a potential reversal.
Key Features:
- Appears in a downtrend
- First candlestick is long and bearish
- Second candlestick is small and bullish, contained within the first
Example: On a chart, you see a long red candlestick followed by a small green candlestick that is within the range of the previous candlestick’s body.
Interpretation: This pattern suggests a potential bottom and a reversal to an uptrend if followed by bullish confirmation.
Bearish Harami
A Bearish Harami is a two-candlestick pattern that occurs in an uptrend. The first candlestick is a long green (bullish) body, followed by a small red (bearish) body that is contained within the first body. This pattern suggests a potential reversal.
Key Features:
- Appears in an uptrend
- First candlestick is long and bullish
- Second candlestick is small and bearish, contained within the first
Example: On a chart, you see a long green candlestick followed by a small red candlestick that is within the range of the previous candlestick’s body.
Interpretation: This pattern suggests a potential top and a reversal to a downtrend if followed by bearish confirmation.
#Mag7
— Point-Blank-Trading (@PointBlank_Algo) July 14, 2024
How do #Mag7 compare going into next week?
We are using weekly charts#AAPL: Still bullish chart 🟢#META: Bearish engulfing candle on heavier volume🔴#AMZN: Bearish Harami candle on heavier volume 🔴#GOOG: Bearish Harami candle on heavier volume 🔴#MSFT: Bearish… pic.twitter.com/SCKpHsvFLh