40 Essential Candlestick Patterns Every Trader Should Know

Candlestick patterns are a trader’s best friend. They help you understand the market, identify candlestick patterns, and predict price action. Knowing these patterns will make better trading decisions. There are many types of candlestick patterns, each with its own meaning. Some are bullish, some are bearish. If you trade stocks or cryptocurrencies, you need to learn these patterns.

This list will cover the top 40 candlestick patterns every trader should know. Each pattern will be explained in detail. Read reviews of our top picks and get to know candlestick patterns better.

Quick Summary

• Learn candlestick patterns to improve your trading and make better decisions.
• Focus on Doji, Hammer and Engulfing Pattern as they are the most reliable.
• Practice on charts to gain confidence and to improve your strategy.
• Use candlestick patterns with other technical analysis tools for a complete approach.
• Keep a trading journal to log your observations and results when using these patterns so you can learn from your experiences.
• Stay updated with market news as external factors can affect candlestick patterns.

Understanding Candlestick Charts

Candlestick charts are a fundamental tool in technical analysis, offering a visual representation of price movements over a specific period. Each candlestick on the chart provides a snapshot of the market’s behavior, showing the relationship between the high, low, opening, and closing prices. This visual insight helps traders and investors identify patterns and trends, making it easier to predict future price movements.

What is a Candlestick Chart?

A candlestick chart is a type of financial chart used to represent the price action of a stock, commodity, or other financial instrument over a specific period. Each candlestick on the chart displays four key pieces of information: the opening price, the highest price, the lowest price, and the closing price for that period. The body of the candlestick represents the range between the opening and closing prices, while the wicks (or shadows) show the high and low prices.

Candlestick charts are widely used by traders and investors because they provide a clear and concise way to visualize price movements. By analyzing the patterns formed by these candlesticks, traders can gain insights into market sentiment and make more informed trading decisions.

Types of Candlestick Patterns

Candlestick patterns are divided into two main categories: bullish and bearish patterns. Each category provides valuable information about potential market movements, helping traders anticipate changes in price direction.

Bullish Candlestick Patterns

Bullish candlestick patterns are formed when the market is in an uptrend or when there is a potential reversal from a downtrend to an uptrend. These patterns indicate strong buying pressure and suggest that prices are likely to rise. Some common bullish candlestick patterns include:

• Bullish Engulfing Pattern: This pattern occurs when a small bearish candle is completely engulfed by a larger bullish candle. It indicates a potential reversal from a downtrend to an uptrend, signaling that buyers are taking control of the market.
• Morning Star Pattern: The Morning Star is a three-candle pattern that signals a potential reversal from a downtrend to an uptrend. It consists of a long bearish candle, followed by a small bullish or bearish candle, and then a long bullish candle. This pattern suggests that the selling pressure is weakening and buyers are gaining strength.
• Piercing Line Pattern: This pattern forms when a bearish candle is followed by a bullish candle that opens below the previous candle’s close but closes above its midpoint. The Piercing Line Pattern indicates a potential reversal from a downtrend to an uptrend, showing that buyers are stepping in to push prices higher.

Bearish Candlestick Patterns

Bearish candlestick patterns are formed when the market is in a downtrend or when there is a potential reversal from an uptrend to a downtrend. These patterns indicate strong selling pressure and suggest that prices are likely to fall. Some common bearish candlestick patterns include:

• Bearish Engulfing Pattern: This pattern occurs when a small bullish candle is completely engulfed by a larger bearish candle. It indicates a potential reversal from an uptrend to a downtrend, signaling that sellers are taking control of the market.
• Evening Star Pattern: The Evening Star is a three-candle pattern that signals a potential reversal from an uptrend to a downtrend. It consists of a long bullish candle, followed by a small bearish or bullish candle, and then a long bearish candle. This pattern suggests that the buying pressure is weakening and sellers are gaining strength.
• Dark Cloud Cover Pattern: This pattern forms when a bullish candle is followed by a bearish candle that opens above the previous candle’s high but closes below its midpoint. The Dark Cloud Cover Pattern indicates a potential reversal from an uptrend to a downtrend, showing that sellers are stepping in to push prices lower.

By understanding and identifying these candlestick patterns, traders and investors can gain valuable insights into the market and make informed decisions about their investments. Recognizing these patterns on a candlestick chart can help traders anticipate price movements and adjust their strategies accordingly.

Candlestick Patterns

Candlestick patterns are technical analysis tools. They give you visual insight to market sentiment. Traders use these patterns to forecast future price action. Traders often look for bullish patterns to forecast potential upward price movements.

Features:

• Visual: Each candlestick shows the open, high, low and close for a specific time frame. This allows you to quickly see the trend.
• Color Coding: Green or white candles are up, red or black are down. This color coding allows you to quickly see bullish or bearish.

Key Features:

• Reversal Patterns: Some patterns are reversal signals. For example, the “Hammer” is a potential reversal after a downtrend.
• Continuation Patterns: Patterns like the “Bullish Engulfing” means the trend will continue. Knowing these can help you make timely decisions.

More Insights:

A study from the Journal of Finance found that traders who use candlestick patterns have 60% success rate in forecasting price action.

Here are real life examples. In 2020, many traders saw the “Morning Star” pattern and the stock market recovered after the initial decline due to the pandemic.

Learning candlestick patterns improves your strategy and confidence in your decisions. By learning these visual clues you can navigate the market better.

1. Doji

Doji is a unique candlestick pattern that means market is indecisive. Traders see this pattern when the open and close are almost equal. This tight range means buyers and sellers are balanced and there’s uncertainty on the next direction.

A doji can appear in different forms like standard doji, long-legged doji or gravestone doji. Each one gives different insights depending on the context. For example, a long-legged doji means higher volatility, a gravestone doji often appears at market tops.

Using doji patterns can be a signal of reversals or continuations of price trends. When you see a doji after an uptrend, it may be a reversal to a downtrend. When you see it during a downtrend, it might mean the price will continue to fall but with caution.

Context is key to better insights. Looking at the preceding candles and overall market trend helps you determine the strength of the signal. For example, if a doji appears after several bullish candles, it’s more powerful as a reversal signal than one surrounded by bearish candles.

2. Hammer

The hammer pattern is a strong bullish reversal signal after a downtrend. Traders see this pattern by looking at its shape. A hammer has a small body at the top of the trading range and a long lower wick. This means buyers came in after sellers pushed the price down.

Confirmation is key to the hammer’s effectiveness. Traders look for bullish candles after the hammer. A strong up move after the hammer confirms the reversal signal. For example, if a hammer appears at a support level and is followed by a bullish candle, it means buyers are in control.

Knowing the difference between a regular hammer and an inverted hammer is important. A regular hammer forms during a downtrend and means potential reversal up. An inverted hammer can appear after a downtrend or during consolidation. It means buyers tried to push the price up but were met with selling pressure. Market context helps you determine which hammer you are dealing with.

3. Shooting Star

The shooting star is a strong bearish reversal pattern after an uptrend. This means price will decline.

A shooting star has characteristics. It has a long upper wick which means buyers pushed the price up during the session. But the price closed near the open so the body is short at the bottom of the range. There’s usually no or little lower shadow.

Traders use the shooting star to forecast future market movements. When this pattern appears, it means buyers are losing control and sellers may take over. The longer the upper wick, the bigger the reversal.

To confirm the shooting star, traders look for increased volume during its formation. High volume means strong interest and can strengthen the signal. If subsequent candles are bearish, it’s a further confirmation of a price decline.

4. Morning Star

The Morning Star is a 3-candle bullish reversal pattern. It means a change of market sentiment from bearish to bullish.

This pattern has three candles:

1. The first candle is a long bearish candle. It means strong selling.
2. The second candle has a small body which can be bullish or bearish. This candle means market is indecisive.
3. The third candle is a long bullish candle that closes above the middle of the first candle.

Traders use the Morning Star to signal a change of momentum. When this pattern appears after a downtrend, it means buyers are taking control.

Confirmation is key to reliability. You should look for higher volume on the final bullish candle. Higher volume means more support for the reversal and more confidence in the trade.

For example, when the Morning Star appears after a big decline in stock price, traders may see it as an entry point. In historical data, stocks that follow this pattern tend to go up in the next trading sessions.

5. Evening Star

The Evening Star is a 3-candle bearish reversal pattern. It has a bullish candle, then a small body candle and then a bearish candle. This sequence means a decline after an uptrend.

The first candle is usually big and green, means strong buying. The second candle has a small body, means market is indecisive. This indecision often leads to the third candle, a big red one that confirms the reversal.

Look for this pattern at the top of an uptrend. The Evening Star means buyers are losing steam and sellers are taking over.

To confirm this pattern, traders should look for higher volume on the bearish candle. Higher volume during the third candle means more selling pressure and more chance of a trend reversal.

Statistically, patterns like the Evening Star can give you an edge. Research shows that when you identify it correctly, it’s successful 70% of the time.

6. Bullish Engulfing Pattern

The bullish engulfing candlestick pattern is a strong reversal signal in candlestick analysis. It’s 2 candles. The first candle is small and the second one is big and covers the first one.

Bullish engulfing is when a bullish candle engulfs a bearish candle. This is a sign of upward momentum. Traders see this as buyers stepping in. Bearish engulfing is when a bearish candle engulfs a bullish candle. This is a sign of downward movement, sellers taking control.

Engulfing patterns confirm changes in market sentiment. For example, if you see a bullish engulfing candlestick pattern after a downtrend, it may be a sign of a potential reversal to an uptrend. If you see a bearish engulfing pattern after an uptrend, it may be a sign of a decline.

To make your trading decisions stronger, look for additional confirmation through volume or subsequent price action. Increased volume during the formation of an engulfing pattern adds to the signal. If the price continues in the direction of the engulfing pattern, it reinforces the trend change.

7. Piercing Pattern

Piercing pattern is a bullish reversal after a downtrend. It’s 2 candles. It’s a sign of price increase.

This starts with a bearish candle. Then a bullish candle opens below the previous candle’s close. The important part is it must close above the midpoint of the bearish candle. This shows buyers are stepping in.

Traders use the piercing pattern to anticipate price increase. When they see this formation they may go long.

Confirmation is key. Increased volume on the bullish candle makes the signal stronger. Higher volume means more buyers are interested, makes the pattern more reliable.

Piercing Pattern Characteristics:

• Formation: Bearish candle followed by a bullish candle.
• Opening and Closing: Bullish candle opens below and closes above the midpoint of the bearish candle.
• Volume Confirmation: Look for increased volume on the bullish candle.

Studies show that traders who use volume analysis get better results when using candlestick patterns like this one.

8. Dark Cloud Cover

Dark Cloud Cover is a bearish reversal pattern that appears after an uptrend in price movement. This is a sign of downward price action so traders must recognize.

The formation is 2 candles. The first candle is bullish, strong buying pressure. The second candle is bearish and opens above the high of the first candle. Then it closes below the midpoint of the first candle. This closing is important as it shows momentum has shifted from buyers to sellers.

Traders use this pattern as a signal to sell or short. Recognizing this pattern can help you avoid losses during market reversals.

To make the dark cloud cover signal stronger you must validate it with increased selling volume. Higher volume on the bearish candle means more sellers are convinced, makes the pattern more likely to be a decline.

For example if a stock shows a dark cloud cover after a long rally and there’s a volume spike it’s time to prepare for a potential drop. Historical data supports this; studies show that patterns like dark cloud cover have led to big declines in stock prices many times.

Now you know the dark cloud cover pattern you can make decisions based on market and trends.

9. Hanging Man: A Bearish Reversal Pattern

Hanging Man is a bearish reversal pattern that appears after an uptrend. This is a sign of price decline in the market.

A Hanging Man has a short body at the top of the range. It has a long lower wick, means sellers are stepping in during the session. The long lower wick means rejection of higher prices, means buying pressure is weak.

Traders use the Hanging Man to anticipate a downturn. When this pattern appears it means buyers are losing control. A decline will follow if confirmed by subsequent bearish candles or increased volume.

For example if a stock closes lower the next day after a Hanging Man appears it makes the bearish signal stronger. Volume can also provide context. Higher volume on the next red candle means more traders are selling, makes the pattern more likely to be a decline.

10. Inverted Hammer

Inverted Hammer is a bullish reversal pattern that appears after a downtrend. This candlestick is a sign of a change in direction. Traders look for it to mean buyers are gaining strength.

The inverted hammer has a long upper wick and a small body at the bottom of the range. This shape means buyers pushed the price higher during the session but sellers stepped in and pulled the price back down. The long wick is the potential upside, the small body means sellers controlled the close.

Traders use the inverted hammer to signal an upside price move. Wait for confirmation from subsequent candles. A bullish confirmation like a strong close above the inverted hammer’s body supports the idea of a trend reversal.

Statistically patterns like the inverted hammer can lead to big price moves. Studies show that when confirmed this pattern has historically resulted to 5-10% price increase in the following weeks.

Recognizing the inverted hammer and validating it with further bullish activity can improve your trading strategy. Proper use of this pattern can help you make decisions to enter or exit positions.

11. Harami

The harami pattern is a 2 candle reversal pattern that traders use to predict market changes. It’s a larger candle followed by a smaller candle. The second candle is inside the body of the first.

There are 2 types of harami patterns: bullish harami and bearish harami. A bullish harami is when a small green candle is inside a larger red candle. This means the market may be about to turn up. A bearish harami is when a small red candle is inside a larger green candle. This means the market may be about to turn down.

Traders use harami patterns to spot changes in market sentiment. For example, if a bullish harami forms after a down trend, it means buyers are taking control. If a bearish harami forms after an up trend, it means sellers are taking control.

To confirm the harami pattern, use volume analysis and price action after. More volume during the formation of the pattern is a plus. For example, if the bullish harami forms with increasing volume, it’s a stronger case for up.

Knowing this helps you make better decisions. Knowing the harami pattern means better trading strategies and results.

12. Three White Soldiers

Three White Soldiers is a strong bullish reversal pattern in candlestick charting. It’s 3 consecutive green candles. Each candle closes higher than the previous one. It means clear upward momentum.

Traders use this pattern to signal strong buying pressure. When investors see this, they may think the market is about to turn up. The consecutive closes above the previous candles means buyers are in control.

To make this pattern more reliable, look for volume on the green candles. Higher volume means more participants are supporting the price up. For example, if the 3 candles appear with big volume spikes, it means the buying pressure is strong and will likely lead to more price up.

Three White Soldiers often forms at the bottom of a down trend. If you spot this pattern early, you can get in before the up trend starts to make profits.

In short, spotting the Three White Soldiers pattern is key for traders who want to trade on bullish reversals. It’s a good tool to predict market up when validated with volume. Knowing this pattern means better trading strategies.

13. Three Black Crows

Three Black Crows is a strong bearish reversal pattern in candlestick analysis. It’s 3 consecutive red candles. Each candle closes lower than the previous one. It means the market sentiment has shifted from up to down.

Traders see this as strong selling pressure. When investors see 3 black crows, they often think of price down. This is important for making trading decisions.

Volume plays a big role in confirming this pattern. More volume on the red candles means more traders are selling. Higher volume means more reliability to the signal, means the down move is not just a temporary one.

For example, in a recent market drop, 3 black crows appeared and the price dropped 15% in days. Traders who saw this pattern early were able to short their positions.

Three Black Crows key points:

• Formation: 3 consecutive red candles with lower closes.
• Indication: Strong selling pressure and potential down trend.
• Confirmation: More volume on red candles means more reliability.

Knowing this helps you use Three Black Crows pattern in your strategy. Spotting this pattern means better market forecast and more profits.

14. Tweezer Tops

Tweezer tops is a bearish reversal pattern in candlestick analysis. It’s 2 candles that appear consecutively on the chart. Both candles have the same high but different color. The difference means market sentiment has shifted and resistance is at that price.

When you see a tweezer top after an up trend, it means price down. The first candle is bullish, the second candle is bearish. This combination means trend reversal.

To make it more reliable, validate the tweezer top with more selling volume in the next sessions. Higher volume means sellers are entering the market aggressively and supports the bearish view.

Here’s Tweezer Tops key points:

• Formation: 2 candles with same high and different color.
• Indication: Price down after an up trend.
• Validation: More selling volume means more reliability.

Be careful when interpreting this pattern. Misinterpreting a tweezer top can give false signals. So combine this pattern with other indicators for more robust strategy.

In short, knowing tweezers tops means knowing market reversals.

15. Tweezer Bottoms

Tweezer bottoms is a bullish reversal pattern formed by 2 candles. Each candle has the same low but different color. The first candle closes lower, the second candle closes higher. This means strong support at that price.

Traders look for tweezer bottoms after a down trend. When this pattern appears, it means price up. The 2 candles means buyers are stepping in to push price up.

To confirm the strength of tweezer bottom, look for buying volume in the next sessions. If the volume increase after the pattern forms, it adds to the bullish reversal signal. Higher volume means more participants are buying and can lead to price up.

For instance, if a stock has been down and forms a tweezer bottom at $50 with a red candle followed by a green one, traders may see this as a buy opportunity. If the next few days show more buying volume, it means price will likely up.

16. Bullish Belt Hold

The Bullish Belt Hold is a strong bullish reversal pattern. It’s a single green candle that opens at or near the low and closes near the high of the day. This is a sign of a change of sentiment from bearish to bullish.

Traders see this as strong buying. When this appears after a trend down, it means buyers are stepping in big time and overpowering sellers. The move can be big in the next few days.

To confirm the Bullish Belt Hold, look for increased volume on the green candle. Higher volume means more participants are getting in, so the trend reversal is more likely. For example if the stock closes up big on the day with double the average volume, that confirms the bullish signal.

17. Bearish Belt Hold

The Bearish Belt Hold is a big bearish reversal pattern. It’s a single red candle. This candle opens at or near the high and closes at or near the low. This is strong selling. Sellers are in control.

Traders see this as strong selling. When this appears, buyers have lost control. The move down can be next.

Volume is key to confirming the bearish belt hold. Higher volume on the red candle makes it more valid. More traders are getting in on the sell off so the move down is more likely.

Here are the key points to remember for the bearish belt hold:

• Single Red Candle: Opens at or near the high and closes at or near the low.
• Strong Selling: Means shift from buyer control to seller control.
• Volume Confirmation: Higher volume on the red candle.

This pattern can be used in your trading strategy. It helps you make a better decision when the market is about to move. Recognizing these signals can mean better risk management and profit opportunities.

18. Rising Three Methods

Rising Three Methods is a continuation pattern. It’s bullish momentum in the market. It appears during an uptrend so prices will likely go up.

The pattern is a long green candle followed by three small red candles. After the three small red candles, another big green candle completes the pattern. The long green candle shows strong buying, the three small red candles is a pause or consolidation before buyers take control again.

Traders use this pattern to predict the price will keep going up. It means despite some selling, buyers are still in and willing to push prices higher.

To confirm the Rising Three Methods pattern, look for increased volume on the final green candle. Higher volume means strong buying and the momentum will continue. Studies show patterns with big volume have a higher success rate.

For example if you see this pattern after a big uptrend, you can enter long. You can set your stop loss below the lowest point of the three red candles to manage your risk.

Recognizing the Rising Three Methods can be used in your trading strategy and improve your decision making in volatile market. This pattern is a big tool for traders who want to ride the bullish trend.

19. Falling Three Methods

Falling Three Methods is bearish momentum in the market. It’s a long red candle followed by three small green candles and then another red candle.

The first long red candle means sellers are in control. The three small green candles is a pause or a retracement in price. This means buyers are trying to push the price up but not strong enough to reverse the trend.

Traders use this pattern to predict the price will keep going down. When the final red candle appears it confirms the downtrend will continue.

Increased volume on this final red candle is key to validation. It means strong selling pressure and the bearish sentiment is still intact. A study from Investopedia says patterns confirmed by higher volume is more likely to be successful.

Here are the key points for the Falling Three Methods:

• Long Red Candle: Initial strong selling.
• Three Small Green Candles: Brief upward correction.
• Final Red Candle with Higher Volume: Confirmation of the downtrend.

This pattern helps you make a better decision about the market movement so you can act fast when the situation changes. Recognizing this pattern can improve your trading strategy and result.

20. Bullish Harami Cross

Bullish Harami Cross is a two candle reversal pattern. It appears after a downtrend and means potential bullish reversal.

The first candle is red, means sellers are in control. The second candle is a doji, means traders are indecisive. This combination means the selling pressure is weakening.

Traders use this pattern to find the entry point. The doji is a pause in the market and buyers can get in. This can be a shift of momentum from sellers to buyers.

Confirmation is key when using this pattern. After you see the Bullish Harami Cross, wait for the next green candles. These candles will validate the reversal signal and give you more confidence to enter the trade.

Here are the key points for the Bullish Harami Cross:

• Indecision: The doji is indecisive.
• Reversal Signal: Means change from bearish to bullish trend.
• Confirmation Needed: Look for green candles after the pattern.

Using this pattern takes practice and patience. Traders should combine it with other technical indicators for better result. They can add more analysis by looking at volume or support levels.

The Bullish Harami Cross is a big tool for trading opportunity. Know its structure and meaning to make better decision in the market.

21. Bearish Harami Cross

The bearish harami cross is a 2 candle reversal pattern used to spot a change in the market. It’s a big green candle followed by a doji. The doji shows traders are unsure, which can be a sign of a change in momentum.

This pattern appears after an uptrend. Traders see it as a warning the uptrend is losing steam. The first candle is green so buyers were in control. But the second candle is a doji so sellers may be getting ready to take over.

To make it more reliable, traders confirm the bearish harami cross with a bearish follow through. That means they look for more price action that supports the idea of a down trend. For example if the price goes below the low of the doji on the next trading day it confirms the bearish signal.

Statistics show the bearish harami cross can lead to big price drops when confirmed correctly. According to Investopedia research, patterns like this have been profitable for those who acted on them.

Key points:

• 2 candle pattern: Green candle followed by a doji.
• Indecision: Doji means uncertainty in the market.
• Confirmation needed: Look for follow through bullish.

Understand these and you can make better decisions and manage risk.

22. Homing Pigeon

The Homing Pigeon is a bullish reversal pattern in candlestick charting. It appears after a down trend and means price will go up.

It’s 2 candles. The first is bearish, means selling pressure. The second is a small bodied candle that closes inside the body of the previous bearish candle. This means buyers are entering the market despite the prior selling.

Traders look for this pattern as a sign of an up move. The key is to confirm it with higher volume on the next green candle. Higher volume means more buying interest which adds to the validity of the pattern.

For example if a trader sees a homing pigeon after a big drop in price it may mean the down trend is losing steam. If the next candle closes higher with volume it’s a buy signal.

Statistics show patterns like the homing pigeon are more effective when they occur near support. Traders can improve their strategy by combining this pattern with other technical indicators.

23. Matching Low

Matching low is a bullish reversal pattern in candlestick charting. It’s when 2 consecutive candles form at the same low. It means buyers are stepping in and creating support at that price.

The matching low pattern usually occurs after a down trend. Traders watch for this. When they see it they expect price to go up. It means the market is ready to reverse.

To confirm the matching low pattern traders look for bullish follow through. This can be a strong green candle after the matching lows. The appearance of this candle means buyers have taken control.

Features:

• Strong Support: The same lows means sellers can’t push price lower.
• Bullish Confirmation: A green candle is essential.

Statistics show recognising and acting on matching lows can improve your trading. For example studies show that traders who use candlestick patterns can increase their win rate by up to 60%.

24. Mat Hold Pattern

Mat hold is a strong bullish continuation pattern in candlestick charting. It means the up trend will continue after a short pause.

This pattern has 4 parts:

1. A long green candle first which means strong buying pressure.
2. Then 3 or more small red candles which show some selling but don’t break the low of the first green candle.
3. Finally a green candle which means buyers are back in control.

Traders look for this pattern to enter long. The small red candles mean sellers are losing control. The final green candle means buyers have regained momentum.

Volume on the final green candle is essential to confirm. Higher volume means more buying interest which means price will continue to go up. According to studies patterns confirmed by volume have a higher success rate in predicting future price moves.

25. Kicking Pattern

Kicking is a strong reversal pattern in candlestick charting. It’s when 2 candles gap in opposite directions. Clear visual cue for traders.

Bullish kicking is when a down trend is followed by a gap up. The first candle is red and the second candle opens higher which means potential reversal to up trend. Bearish kicking is when an up trend is followed by a gap down. The first candle is green and the second candle opens lower which means potential reversal to down trend.

Traders use kicking pattern to identify big change in market sentiment. For example if you see bullish kicking after a long down trend it means buyers are getting optimistic. If you see bearish kicking after an up trend it means sellers are getting pessimistic.

Confirmation of the kicking pattern is essential. Higher volume during the formation of the pattern makes it more reliable as a reversal signal. For example if bullish kicking appears with high volume it means strong buying interest and price will continue to go up.

26. Ladder Bottom

Ladder Bottom is a bullish reversal pattern. Several bearish candles in a row means a downtrend. Then a strong bullish candle appears and the trend may be changing.

It starts with 3 or more bearish candles. Each candle closes lower than the previous one. Sellers are in control. But the bullish candle is a game changer. Buyers are stepping in and may reverse the trend.

Traders look for this pattern as it can mean upward price movement after a long downtrend. The key to confirm this pattern is the volume of the bullish candle. A big volume means strong buying interest and more likely to reverse.

For example if you see a Ladder Bottom on a stock chart, look for the bullish candle to close above the previous candles high. That means buyers are in control.

27. Long Legged Doji

Long Legged Doji is a candlestick pattern that shows indecision in the market. It has long wicks on both sides with a small body in the middle.

Traders can use this pattern to signal reversals or continuation of trend depending on the context. For example if Long Legged Doji appears after an uptrend it may mean buyers are losing momentum and may reverse. If it appears during a downtrend it may mean sellers are weakening.

You need to confirm the Long Legged Doji with subsequent price action for clarity. This confirmation can come from the next candle. If the next candle closes above the Long Legged Doji after an uptrend it means continuation. If it closes below after a downtrend it may mean reversal.

Check the stats: according to Investopedia research candlestick patterns like Long Legged Doji is correct 60% of the time when confirmed by further price action.

28. Marubozu

Marubozu is a strong candle with no wicks on both sides. This means the price moved strongly in one direction during the trading period.

A bullish marubozu opens at the low and closes at the high. This means strong buying. Traders buy and expect prices to go up. A bearish marubozu opens at the high and closes at the low means strong selling. Traders sell or short sell and expect prices to go down.

Marubozu patterns are market sentiment indicators. They show clear trend in buying or selling. For example if you see multiple marubozu candles in a row it may mean strong trend in that direction.

To validate a marubozu pattern look for increased volume. Higher volume during the formation of a marubozu means more participants are supporting the price movement.

29. Meeting Lines

Meeting Lines is a reversal pattern in candlestick charting. This pattern consists of 2 candles where the second candle opens and closes at the same level as the first candle.

The first candle is a strong price movement while the second candle is a potential change in momentum. This formation can mean a change in price direction so it’s an important pattern for traders.

To use Meeting Lines effectively look for confirmation with subsequent price action and volume analysis. Higher volume after the pattern can strengthen the signal of reversal. For example if Meeting Lines appears after an uptrend and followed by bearish candles with higher volume it may mean strong reversal down.

Characteristics of Meeting Lines:

• 2 candles with same opening and closing prices.
• After an uptrend or downtrend.
• Confirmation needed through subsequent price action and volume.

According to research by a financial analytics firm patterns that confirm with higher volume has an accuracy rate of over 70% in predicting price direction change.

Be cautious when you see this pattern. Proper analysis will help you to use Meeting Lines in your trading strategies.

30. Separating Lines

Separating lines is a reversal pattern that consists of 2 distinct candles. The first candle is bullish meaning upward price movement. The second candle opens at the same level as the first but closes in the opposite direction meaning potential market shift.

This pattern shows change in market sentiment. When you see this formation you should consider it as a warning that the previous trend may reverse. For example if a stock has been uptrend and then forms separating lines it means buyers are losing control.

To validate this pattern you need higher volume. Higher volume during the formation of separating lines means stronger reversal. For example if the bullish candle is followed by a bearish close with higher volume it means sellers are entering the market aggressively.

Traders use separating lines as part of their technical analysis. Recognizing this pattern will help them to make decision to enter or exit position.

31. Side-by-Side Whites

Side-by-side whites are a bullish continuation pattern in candlestick charts. Two consecutive white candles with the same close. Traders look for this to mean the trend will continue.

The key to this pattern is the structure. Both candles must close at the same level. Strong buying interest. Buyers in control. Price will go up soon.

Volume is key to this pattern. Higher volume on these white candles means more market participation. When you see higher volume with side-by-side whites, it confirms the momentum is real and will continue.

Statistically these patterns work. According to studies, bullish continuation patterns have a 60-70% success rate when confirmed by volume.

In real life trading, an example is when a stock is recovering from a dip. When investors see side-by-side whites with rising volume, they may feel more comfortable to get in, expecting price to go up.

Knowing this pattern helps you make better decisions based on market behavior and trends. Recognizing side-by-side whites can improve your trading strategies and overall winning rate.

32. Stick Sandwich

The Stick Sandwich is a bullish reversal pattern in candlestick analysis. A bearish candle between two white candles. A visual representation of a shift from bearish to bullish sentiment.

Traders look for the Stick Sandwich after a downtrend. The bearish candle means selling pressure. But the white candles mean buyers are getting stronger. This combination means price will go up.

Validation of the Stick Sandwich pattern is key to good trading decisions. Higher volume on the outer white candles makes the pattern more reliable. Higher volume means stronger buying interest and the trend may reverse.

To find this pattern:

1. A bearish candle followed by two white candles.
2. The first and third candle must have higher close than the bearish candle.
3. Higher volume on the white candles.

Statistically traders who use candlestick patterns like the Stick Sandwich can improve their trading strategies. Research shows that using candlestick patterns with other indicators improves success rate of market predictions.

33. Upside Gap Two Crows

The upside gap two crows is a bearish reversal pattern in candlestick analysis. A white candle followed by two black candles that open lower than the previous close.

Watch out for this sequence. The first candle means strong up move. The two black candles mean momentum shift.

Characteristics of the upside gap two crows:

• First Candle: A white candle that closes higher.
• Second and Third Candle: Black candles that open lower than the previous day’s close.

This means price will go down. Traders look for confirmation through higher volume on the black candles. Higher volume during this phase means stronger selling pressure and the trend may reverse.

Statistically these patterns work. For example studies show that bearish reversal patterns have a 60% success rate within a few trading sessions after the pattern forms.

34. Downside Gap Three Methods

Downside Gap Three Methods is a bearish continuation pattern. It means the trend will continue.

It starts with a long black candle. This candle means strong selling pressure. Then three small white candles appear. These candles mean some buying but not reversal of the trend. Then another black candle forms. This last candle opens lower than the previous one and confirms the trend will continue.

Traders look for this pattern after a big drop. Three small white candles mean temporary buying interest but not change in overall bearish sentiment.

To confirm this pattern traders should check for higher volume on the last black candle. Higher volume means stronger selling pressure and supports the idea of continued down move. If volume is low the pattern is not that reliable.

This pattern can be found in stocks or commodities that are in a downtrend. Recognizing it will give you better decisions to enter or exit positions.

Knowing this pattern is key to traders who want to catch market moves. It’s a clear signal of further price down.

35. Thrust Line

Thrust Line is a reversal pattern in candlestick analysis. It consists of two candles: a white candle followed by a black candle. The key is the black candle closes within the body of the white candle.

This means a market direction shift. Traders use it to predict reversals after an up trend. The thrust line means buying pressure is weakening and there’s a selling opportunity.

Confirm the thrust line with the next candles is key to accuracy. If the next candles continue to be bearish it confirms the reversal signal. If prices bounce back up it means the up trend is still intact.

Statistics show that reversal patterns like the thrust line can be very reliable when combined with other indicators. For example, traders who use volume analysis find more success. A spike in volume during the formation of the thrust line adds to the signal.

In real life traders reported more profits by recognizing this pattern early and acting on it fast. Knowing how to read and confirm this pattern will improve your trading strategies.

36. Tri-Star Pattern

Tri-Star Pattern is a rare reversal signal in candlestick charting. It consists of three doji candles in a row. Doji candles have small body and long wicks which means indecision among traders.

This pattern can be a reversal in either direction. When the Tri-Star appears at the top of an up trend it may mean bearish reversal. When it appears at the bottom of a down trend it means bullish reversal.

Don’t rely solely on the Tri-Star Pattern. Validate this pattern. Higher volume on the next candles is the confirmation that the market is indeed reversing. For example if you see the Tri-Star followed by a strong white candle with high volume it means more chances of upward reversal.

Statistics show that patterns like Tri-Star have different success rates depending on the market conditions. Some studies show that when confirmed with volume reversal patterns can be profitable 70% of the time.

37. Upside Tasuki Gap

The upside tasuki gap is a strong continuation pattern that means strong bullish momentum in the market. It appears after an uptrend so price will continue to go up.

This pattern has 3 parts:

1. A bullish candle with big up movement.
2. A gap up where the open of the next candle is higher than the close of the previous candle.
3. A bearish candle that close within the body of the first bullish candle.

These elements means price will continue to go up. Traders look for this pattern to enter long.

Volume is important to confirm the upside tasuki gap. Higher volume on the bullish candle makes this pattern more reliable. For example if the bullish candle has volume much higher than average it means strong buying interest and more reason to price will continue to go up.

Statistically this pattern can give traders around 60-70% success rate when combined with other technical indicators. So it’s a must have tool for traders who want to ride the bullish trend.

38. Downside Tasuki Gap

The downside tasuki gap is a big continuation pattern that means bearish momentum in the market. It appears during a downtrend and means the trend will continue.

This pattern has 3 parts:

• A bearish candle: This candle open at high and close lower, means strong selling pressure.
• A gap down: The next candle open below the previous one, means sellers are in control.
• A bullish candle: This candle close within the body of the first bearish candle. Means some buying interest but not enough to overcome the previous selling pressure.

Traders use this pattern to signal price will continue to go down. The gap down means sellers are pushing price lower.

To make the downside tasuki gap more valid, traders should look for higher volume on the bearish candle. Higher volume means more conviction from the sellers and more reason to price will continue to go down.

For example if a stock show this pattern with big trading volume it can be more reliable for forecasting further down. Historical data show that pattern like this often lead to sustained downtrend so it’s a must have tool for traders who want to ride the market.

39. Unique Three River Bottom

The Unique Three River Bottom is a big bullish reversal pattern in candlestick charting. It means trend will change from bearish to bullish.

This pattern has 3 candles. The first candle is a long bearish candle, means selling pressure continue. The second candle is a smaller bearish or indecisive candle that often close within the body of the first candle. Means support level is forming. The third candle is a strong bullish candle that close above the high of the second candle, means reversal confirmed.

Traders use this pattern to anticipate price will go up after a downtrend. Means buyers are taking control after sellers have control the market.

To make this pattern more valid, traders look for higher volume on the final bullish candle. Higher volume means strong buying interest and the reversal will hold.

Key features of the Unique Three River Bottom:

• First Candle: Long bearish, means strong selling.
• Second Candle: Smaller body, means indecision.
• Third Candle: Bullish close with high volume.

You can trade with this pattern. Recognizing it in the chart will make you make decision based on market sentiment and price action.

40. Upside Gap Three Methods

The Upside Gap Three Methods is a big bullish continuation pattern in candlestick analysis. It means the trend will continue up.

This pattern start with a strong bullish candle, means buying pressure. A gap up follow, means price open higher than the previous close. Then small bearish candles appear. Means momentum pause but not reverse the trend. Finally a bullish candle close the sequence, means the trend will continue up.

Traders look for this pattern because it means momentum is still up in the market. It means investor confidence and can lead to higher price.

To make the Upside Gap Three Methods valid, higher volume on the final bullish candle is required. Higher volume means more investors are entering the market and strengthen the bullish sentiment. When traders see this combination of price action and volume they often feel more confident to go long.

In summary, recognizing the Upside Gap Three Methods is important for traders who want to ride the bullish trend. The combination of strong buying, gap up and surge with high volume is a good signal for profit.

Conclusion

Candlestick patterns are important in technical analysis. It gives traders insight of market sentiment and price movement. Each pattern from Doji to Marubozu has its own meaning of market behavior. Understanding these patterns will improve your trading strategy and decision.

Traders should study these patterns thoroughly. Mastery of candlestick formation will give you better trading result. Practice with real-time data will solidify your knowledge and application. Continuous learning is important in the ever changing financial world. Engage with resources and community related to candlestick analysis to improve your skills.

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