Candlestick Patterns

Candlestick chart patterns are a form of technical analysis and charting used in the stock market, forex market and other markets.

This section discusses the most popular of the scores of candlestick chart patterns.

Simple Patterns

Long empty candlesticks are an uptrend or bullish pattern. They show strong buying pressure. The period opened near its low and closed near its high. This indicates that prices advanced significantly from open to close and buyers were aggressive.
Long filled candlesticks are a downtrend or bearish pattern. They show strong selling pressure. The period opened near its high and closed near its low. This indicates that prices declined significantly from the open and sellers were aggressive.
The hammer is a reversal pattern. The hammer appears after a price decline. It signals an uptrend revival.
The hanging man is a reversal pattern. It looks the same as the hammer but appears after a price growth. It signals a downtrend revival.
This pattern is known as doji. It is a neutral pattern. It indicates that the open and close are equal. Neither buyers nor sellers were able to gain control and a turning point could be developing.
The dragonfly doji is formed when the open and close prices are equal to the high of the period. It indicates that an uptrend (bullish trend) is more likely but it is a weak signal. When the pattern appears at the market bottom it is considered a reversal signal.
The gravestone doji is formed when the open and close prices are equal to the low of the period. It indicates than a downtrend (bearish trend) is more likely but it is a weak signal. When the pattern appears at the market top it is considered a reversal signal.
The inverted hammer is a reversal pattern that appears after a price decline. It signals an uptrend revival.
The shooting star is a reversal pattern. It looks the same as the inverted hammer but appears after a price growth. It signals a downtrend revival.
Long candlesticks with no wicks or shadows are know as marubozu. The name means close-cropped or close-cut in Japanese. Empty marubozu candlesticks show that buyers controlled the price from the first trade to the last trade. It is considered an uptrend or bullish pattern.
Filled marubozu candlesticks show that sellers controlled the price from the first trade to the last trade. It is considered a downtrend or bearish pattern.

Complex Patterns

The bullish harami is formed when a small empty candlestick follows a large filled candlestick and it is found between the high and low of the first candlestick. This indicates that the previous downtrend is coming to an end.
The bullish harami cross is formed when a doji follows a large filled candlestick and it is found between the high and low of the first candlestick. This indicates that the previous downtrend is about to reverse.
The bearish harami is formed when a small filled candlestick follows a large empty candlestick and it is found between the high and low of the first candlestick. This indicates that the previous uptrend is coming to an end.
The bearish harami cross is formed when a doji follows a large empty candlestick and it is found between the high and low of the first candlestick. This indicates that the previous uptrend is about to reverse.
The bullish engulfing pattern is formed when a small filled candlestick is followed by a large empty candlestick that completely "engulfs" the small filled one. When it appears at the market bottom it is considered a strong reversal signal.
The bearish engulfing pattern is formed when a small empty candlestick is followed by a large filled candlestick that completely "engulfs" the small empty one. When it appears at the market top it is considered a strong reversal signal.
The morning star is formed from three candlesticks. The first one is a large filled candlestick. The second one is a small empty or filled candlestick that closes below the first candlestick. The last one is a large empty candlestick that opens above the previous candlestick and closes near the center of the first candlestick's body. When it appears at the market bottom it is considered a strong reversal signal.
The evening star is formed from three candlesticks. The first one is a large empty candlestick. The second one is a small empty or filled candlestick that closes above the first candlestick. The last one is a large filled candlestick that opens below the previous candlestick and closes near the center of the first candlestick's body. When it appears at the market top it is considered a strong reversal signal.
The piercing pattern is formed when a large filled candlestick is followed by a large empty candlestick that opens lower than the low of the previous candlestick but closes above the middle of the first candlestick. When it appears at the market bottom it is considered a reversal signal.
The dark cloud cover is formed when a large empty candlestick is followed by a large filled candlestick that opens higher than the high of the previous candlestick but closes below the middle of the first candlestick. When it appears at market top it is considered a reversal signal.
The three white soldiers pattern is formed from three large empty candlesticks. Each should open within the previous body and close near to or at the high of the previous one. When it appears at the market bottom it is considered a reversal signal.
The three black crows pattern is formed from three large filled candlesticks. Each should open within the previous body and close near to or at the low of the previous one. When it appears at the market top it is considered a reversal signal.