Candlestick Patterns – Bullish, Bearish and Reversal

Tyler Stokes

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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

bullish engulfing pattern

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.

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.

Three White Soldiers

3 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.

Hammer

hammer candlestick

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.

Piercing Line

piercing line candlestick pattern

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.

Inverted Hammer

inverted hammer pattern

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.

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

evening star candlestick

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.

Three Black Crows

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.

Hanging Man

hanging man pattern

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.

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.

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.

Reversal Candlestick Patterns

Doji

doji candlestick pattern

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.

Spinning Top

spinning top candlestick pattern

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.

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.

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.

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.

About the author

Hi I'm Tyler Stokes. I started my day trading journey in 2024. As a pure beginner I decided to document everything on this website. I plan to share all the ups and downs of becoming a day trader on this website and through social media.