35 Powerful Candlestick Patterns PDF Explained in Detail

Candlestick patterns are a powerful tool for traders, and understanding them can make a huge difference in your trading success.

The Hammer pattern is a reversal pattern that indicates a potential buying opportunity, typically forming after a downtrend.

A Hammer pattern is characterized by a small body at the top and a long lower shadow, usually above the midpoint of the previous day's range.

The Spinning Top pattern is a neutral pattern that indicates indecision in the market, often occurring at key levels of support or resistance.

A Spinning Top pattern has a small body, with the open and close prices close to each other, and wicks on both sides of the body.

The Bullish Engulfing pattern is a reversal pattern that indicates a potential buying opportunity, typically forming after a downtrend.

This pattern is characterized by a small bearish candle followed by a large bullish candle that engulfs the previous bearish candle.

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Bullish Candle Patterns can be a powerful tool for traders, indicating a potential upward momentum or trend in the market. They serve as a visual signal on a price chart, like a green light for traders, suggesting that the asset's price is likely to go up.

Traders use these patterns to time their entry into the market to capitalize on the anticipated price increase. Bullish Candle Patterns are often used in conjunction with other technical indicators to confirm trends and make informed trading decisions.

Some notable examples of Bullish Candle Patterns include the Bullish Engulfing, Bullish Piercing Pattern, Bullish Counterattack, Tweezer Bottom, and Mat Hold. These patterns can be identified by their unique characteristics, such as a larger bullish candle engulfs the previous bearish candle, or two consecutive bearish candles with similar lows.

Here are some key Bullish Candle Patterns to look out for:

Understanding the anatomy of a candlestick is crucial to reading the market's story. The body and wicks (also known as shadows or tails) make up a candlestick's two main parts.

The body represents the range between the opening and closing prices, and its color indicates the direction of the price movement. The color of the body tells you if the price moved up or down.

Long bodies suggest strong buying or selling pressure, while long wicks indicate significant volatility and a struggle between bulls and bears. A candle with a small body and long wicks signals indecision in the market.

Here's a quick summary of the key points to keep in mind:

The Marubozu is a powerful bullish or bearish candlestick pattern that can signal a strong trend reversal or continuation. It's characterized by a long body with no upper or lower wicks, indicating a one-sided market with no hesitation or pullback.

A Bullish Marubozu, for example, is a strong bullish continuation or reversal pattern that represents absolute buying control and powerful upward momentum. It can be found at the start of an uptrend as a reversal signal or during an uptrend as a continuation signal.

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On the other hand, a Bearish Marubozu is the direct opposite of its bullish counterpart and signifies absolute bearish dominance, reflecting extreme negative sentiment and intense downward momentum. It can appear at the top of an uptrend as a reversal or during a downtrend as a continuation.

It's worth noting that the Marubozu pattern can be a strong signal, but it's not foolproof, and traders should always consider other technical and fundamental factors before making a trade.

Bearish candle patterns are a crucial aspect of technical analysis, and understanding them can help you make informed trading decisions. They signal a potential downward momentum or trend in the market, serving as a warning sign for traders.

The Bearish Engulfing pattern is a two-candle pattern where a small bullish candle is followed by a larger bearish candle that engulfs the previous one, indicating a potential trend reversal to the downside. This pattern is a strong bearish reversal signal.

The Hanging Man pattern is a single candlestick pattern that forms at the top of an uptrend, signaling a potential bearish reversal. It resembles a small body at the top, a long lower wick, and almost no upper wick, revealing a crack in the bulls' armor.

The Gravestone Doji is a strong bearish reversal pattern that signifies a powerful rejection of higher prices and indicates that sellers have taken control of the market. It forms at the top of an uptrend, frequently at a key resistance level, with little to no lower wick.

The Dark Cloud Cover pattern is a multiple candlestick pattern formed after the uptrend, indicating a bearish reversal. It consists of two candles, the first being a bullish candle and the second being a bearish candle that opens the gap up but closes more than 50% of the real body of the previous candle.

The Three Black Crows pattern is a multiple candlestick pattern that forms after an uptrend, indicating a bearish reversal. It consists of three long bearish bodies that do not have long shadows and open within the real body of the previous candle in the pattern.

The Bearish Marubozu is a strong bearish continuation or reversal pattern that represents total selling pressure and intense downward momentum. It appears as a long red or black candle with a full body but no upper or lower wicks, signaling absolute bearish dominance.

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Here are some common bearish candle patterns to watch out for:

These bearish candle patterns can help you identify potential downward momentum in the market, allowing you to make informed trading decisions and adjust your strategy accordingly.

Double candle patterns offer a more detailed and reliable narrative about market sentiment than single-candle patterns. By analyzing the interaction between two trading periods, these patterns provide a stronger confirmation of a potential shift in momentum.

Double candle patterns can be used to identify potential trend reversals, with some patterns indicating a reversal to the upside and others indicating a reversal to the downside. For example, the Bullish Engulfing pattern consists of a small bearish candle followed by a larger bullish candle that engulfs the previous one, suggesting a potential trend reversal to the upside.

Here are some common double candle patterns:

These patterns can be used to gain a better understanding of market sentiment and make more informed trading decisions.

Candlestick patterns are categorized into three main groups based on the number of candles required to form the pattern, which helps determine the strength and reliability of the signal.

These groups include Continuation Patterns, Bullish Reversal Patterns, and Bearish Reversal Patterns.

Continuation patterns are used to confirm the direction of the trend, while Bullish Reversal Patterns and Bearish Reversal Patterns are used to signal a potential reversal in the trend.

There are 35 Types of Candlestick Patterns, categorized into these three groups.

Here's a breakdown of the three main groups:

The Dragonfly Doji is a potent bullish reversal pattern that indicates the market has rejected lower prices and a strong buying force has emerged. This pattern is often found at the bottom of a downtrend, typically at a key support level.

A Dragonfly Doji has no real body, meaning the open, high, and close prices are all identical or extremely close to one another. Below this price level, a long lower wick extends, while there is no upper wick.

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The story of this candle is one of dramatic reversal within a single session. Sellers immediately take command, driving the price significantly lower, but their move is aggressively rejected by buyers who enter the market with overwhelming force. This complete retracement signifies a powerful rejection of lower prices.

The failure of the bears to hold any of their gains is a clear sign of their exhaustion and the rising strength of the bulls. This pattern is a clear indication that the downtrend is coming to an end and a new uptrend is emerging.

Here are some key characteristics of the Dragonfly Doji:

Double candles are a type of pattern that consists of two consecutive candles. They offer a more detailed narrative about market sentiment than single-candle patterns.

These patterns are often more reliable and provide a stronger confirmation of a potential shift in momentum. By analyzing the interaction between two trading periods, double candles reveal a clearer picture of the struggle between buyers and sellers.

Some common types of double candles include the Bullish Engulfing, Bullish Piercing Pattern, and Bearish Counterattack. These patterns can be identified by the size, color, and position of the two candles.

Here are some key characteristics of double candles:

Double candles can be a powerful tool for traders and investors, providing a clearer picture of market sentiment and potential shifts in momentum.

The Outside Up pattern is a powerful reversal indicator that signals a potential shift from a downtrend to an uptrend. It's a three-candle pattern that consists of a short bearish candle, a large bullish candle, and a relationship between the first and second candlestick chart similar to the Bullish Engulfing pattern.

The first candlestick is a short bearish candle, indicating a weak selling pressure. The second candlestick is a large bullish candle that engulfs the first candlestick, showing a strong buying force. This pattern is often found after a downtrend, indicating a potential reversal.

The Outside Up pattern is a strong bullish reversal pattern, indicating that the market has rejected lower prices and that a strong buying force has emerged. It's a sign of exhaustion among the bears and a rising strength among the bulls.

Here are some key characteristics of the Outside Up pattern:

Tasuki Gap is a type of double candle pattern that can be a strong indicator of a market trend.

It consists of three candles, with the first two being long-bodied candles in the same direction, either bullish or bearish.

In an ongoing uptrend, the first candle is a long-bodied bullish candlestick, and the second candle is also a bullish candlestick formed after a gap up.

The third candle is a bearish candle that closes in the gap formed between the first two bullish candles.

This pattern is a bearish continuation signal, indicating that the uptrend may be reversing.

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In an ongoing downtrend, the first candle is a long-bodied bearish candlestick, and the second candle is also a bearish candlestick formed after a gap down.

The third candle is a bullish candle that closes in the gap formed between the first two bearish candles.

This pattern is a bullish continuation signal, indicating that the downtrend may be reversing.

The Tasuki Gap pattern is a reliable indicator of a market trend reversal, but it's essential to use it in conjunction with other technical analysis tools.

Triple Candle Patterns are a type of bearish formation that can signal a strong potential downward movement in the market.

A Three Black Crows pattern consists of three consecutive long bearish candles, each closing lower than the previous one.

This pattern is a clear indication that sellers are in control and prices are likely to continue falling.

Three Inside Down is a bearish reversal pattern that consists of a bullish candle, a smaller bearish candle that is completely within the range of the previous candle, and a larger bearish candle.

The smaller bearish candle is engulfed by the larger bearish candle, confirming the reversal and indicating a potential downward movement.

Three Outside Down is a three-candle pattern that starts with a bullish candle, followed by a larger bearish candle that completely engulfs the previous bullish candle, and then another bearish candle.

This pattern is a strong indication that buyers have lost control and prices are likely to continue falling.

Here's a quick summary of the three patterns:

Neutral candlestick patterns are like a yellow light, suggesting caution and indicating that the market is uncertain or indecisive about its direction.

These patterns don't strongly indicate either a bullish or bearish trend, so traders look at them to assess the market's stability or potential upcoming change in trend.

A Doji is a single candlestick pattern with a small body, indicating market indecision and a potential trend reversal.

Spinning Tops and High Waves are also neutral patterns, characterized by small bodies and long upper and lower wicks, or high market volatility and uncertainty, respectively.

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Here are some key neutral candlestick patterns to know:

The Tweezer Top is a two-candle pattern occurring after an uptrend, characterized by two consecutive bullish candles with similar highs, suggesting potential resistance and a bearish reversal.

Neutral candlestick patterns are a crucial part of technical analysis, and they can be a bit tricky to understand.

A neutral candlestick pattern doesn't strongly indicate either a bullish or bearish trend, it's more like a yellow light suggesting caution and uncertainty.

Doji, Spinning Top, and High Wave are all single candlestick patterns that indicate market indecision and potential trend reversal.

Here are some key characteristics of these patterns:

The Tweezer Top is a two-candle pattern that occurs after an uptrend, characterized by two consecutive bullish candles with similar highs, suggesting potential resistance and a bearish reversal.

The Seven Inside Up is a multiple candlestick pattern that forms after a downtrend, indicating a bullish reversal. It's a strong signal that the market is about to turn around.

This pattern consists of three candlesticks. The first one is a long bearish candle, which is followed by a small bullish candle that fits entirely within the range of the previous candle.

The third candlestick is a long bullish candle, confirming the bullish reversal. The relationship between the first and second candlesticks should be similar to the bullish Harami pattern.

Traders can take a long position after the completion of this candlestick pattern, as it suggests a potential upward movement in the market.

Reversal Candle Patterns can be a powerful tool for traders to anticipate a potential trend reversal. A Bullish Reversal candlestick pattern indicates that the ongoing downtrend is going to reverse to an uptrend.

One such pattern is the Piercing Pattern, which is formed after a downtrend and consists of two candles: a bearish candle followed by a bullish candle that opens the gap down but closes more than 50% of the real body of the previous candle.

The Bullish Engulfing pattern is another reversal pattern, where the second candlestick engulfs the first candlestick, indicating a potential bullish reversal. Traders can enter a long position if next day, a bullish candle is formed and can place a stop-loss at the low of the second candle.

Here are some common reversal patterns:

These patterns can help traders anticipate a potential trend reversal and make informed decisions about their trades.

The Tweezer Top is a bearish reversal candlestick pattern that forms at the end of an uptrend. It consists of two candlesticks with almost the same height.

The first candlestick is bullish, indicating a continuation of the ongoing uptrend. The second candlestick is bearish, showing that the bulls are losing momentum.

The high of the second day's bearish candle's high indicates a resistance level, where the bulls are not willing to buy at higher prices. This is a sign that the uptrend may get reversed.

The strength of the resistance is indicated by the top-most candles with almost the same high. This signals that the uptrend may get reversed to form a downtrend.

The On-Neck Pattern is a bearish reversal pattern that forms after a downtrend. It's a two-candle pattern where a long-bodied bearish candle is followed by a smaller-bodied bullish candle that gaps down on the open but closes near the prior candle's close.

The pattern gets its name from the fact that the two closing prices are the same or almost the same across the two candles, forming a horizontal neckline.

The On-Neck Pattern occurs after a downtrend, indicating that the bears are losing control and the bulls are starting to take over. This pattern is a sign that the downtrend may be reversing to an uptrend.

To identify the On-Neck Pattern, look for a long-bodied bearish candle followed by a smaller-bodied bullish candle that gaps down on the open but closes near the prior candle's close.

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The Counterattack candlestick pattern is a two-bar reversal pattern that appears during a downtrend in the market. It's a bullish reversal pattern that predicts the upcoming reversal of the current downtrend.

The bullish counterattack pattern is a specific type of counterattack pattern, where the first candle is a long black candle with a real body, and the second candle is a long white candle with a real body that closes near the close of the first candle.

To identify a bullish counterattack pattern, look for a strong downtrend in the market, followed by a long black candle with a real body, and then a long white candle with a real body that closes near the close of the first candle.

Here are the conditions for a bullish counterattack pattern:

The bearish counterattack candlestick pattern is a bearish reversal pattern that appears during an uptrend in the market. It predicts that the current uptrend will make and a new downtrend will take over the market.

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Understanding the psychology behind reversal candle patterns is crucial to making informed trading decisions. Ms. Jyoti Budhia will help you grasp this concept in her webinar.

Candlestick patterns are formed based on the psychology of market participants. This webinar aims to shed light on the underlying psychology that drives these patterns.

The psychology behind candlestick patterns is rooted in the way traders and investors perceive market conditions. It's about understanding their emotions and actions.

Market psychology plays a significant role in the formation of reversal candle patterns. These patterns often indicate a shift in market sentiment.

You can use StockEdge to filter out stocks using various candlestick scans, such as the Bullish Engulfing pattern.

StockEdge allows you to scan for specific candlestick patterns, like the Bullish Engulfing pattern, which can help you identify stocks with potential.

By using StockEdge, you can quickly and easily find stocks that match your criteria, saving you time and effort.

StockEdge offers a range of candlestick scans that can help you filter out stocks, including scans for the Bearish Engulfing pattern.

You can use these scans to identify stocks that have formed specific patterns, such as the Hammer or the Shooting Star.

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