Candlestick Patterns
Master price action with detailed psychology, formation criteria, and trading signals for each pattern.
Single Candle Patterns
Doji
The market's pause button - when buyers and sellers reach a perfect standoff. This single candle tells you when momentum is dying and a reversal might be brewing. Essential for timing exits and spotting turning points.
Best Used For:
Build reversal strategies at key levels, identify when trends are losing steam, time entries after strong moves. Perfect for mean reversion strategies and as a warning signal in momentum systems.
Trading Signals:
- ✓At trend extremes = Strong reversal signal
- ✓Multiple dojis = Extended consolidation
- ✓Long-legged doji = Maximum indecision
Long-legged Doji
The ultimate battle candle - massive price swings in both directions ending exactly where it started. This shows extreme volatility and indecision, often marking major turning points. When you see these at important levels, big moves often follow.
Best Used For:
Create volatility breakout strategies, identify major reversals at support/resistance, build range-bound strategies when these appear repeatedly. Excellent for options strategies due to implied volatility spike.
Trading Signals:
- ✓At major levels = High probability reversal
- ✓After strong trends = Exhaustion signal
- ✓Volume spike increases reliability
Dragonfly Doji
The bounce signal - sellers push price down hard but buyers completely take over, driving it back to the opening price. Like a spring being compressed then released. This pattern catches falling knives that turn into rockets.
Best Used For:
Build bottom-fishing strategies, create support bounce systems, develop reversal strategies after panic selling. Combine with oversold indicators for powerful buy signals. Great for catching V-shaped recoveries.
Trading Signals:
- ✓After decline = Strong buy signal
- ✓At support levels = Bounce expected
- ✓Gap up next day = Very bullish
Gravestone Doji
The rejection candle - bulls push price higher but get completely overwhelmed, with price crashing back to where it opened. Like hitting a brick wall at full speed. Perfect for catching tops and failed breakouts.
Best Used For:
Create short-selling strategies at resistance, build failed breakout systems, develop top-picking strategies after parabolic moves. Excellent when combined with overbought indicators for timing shorts.
Trading Signals:
- ✓After rally = Strong sell signal
- ✓At resistance = Rejection confirmed
- ✓Gap down next day = Very bearish
Hammer
The bottom finder - price gets hammered down during the session but buyers step in forcefully, pushing it back near the highs. Like a bouncing ball hitting the floor. One of the most reliable reversal patterns when it appears after panic selling.
Best Used For:
Build bottom-picking strategies, create oversold bounce systems, develop contrarian entry strategies. Combine with support levels and RSI for high-probability long entries. Essential pattern for swing trading.
Trading Signals:
- ✓After downtrend = Buy signal
- ✓Green hammer stronger than red
- ✓Volume increase = Strong confirmation
Inverted Hammer
The early warning - buyers attempt to push higher but can't hold it yet. While not as strong as a regular hammer, it shows buying interest is building. Often precedes strong rallies when confirmed.
Best Used For:
Create early entry systems for reversals, build confirmation-based strategies, develop multi-signal reversal systems. Works best when combined with other bullish signals for higher probability trades.
Trading Signals:
- ✓After decline = Potential reversal
- ✓Next candle gap up = Confirmation
- ✓Volume important for validation
Hanging Man
The warning shot - looks like a hammer but appears at the top, signaling trouble ahead. Bulls test lower and recover, but it's often the last gasp before a decline. Smart money uses this to start reducing positions.
Best Used For:
Build top detection systems, create profit-taking strategies, develop short entry setups with confirmation. Excellent for scaling out of longs or initiating hedges. Combine with divergences for powerful sell signals.
Trading Signals:
- ✓After uptrend = Warning signal
- ✓Red hanging man = Stronger
- ✓Next candle close lower = Confirmation
Shooting Star
The top spotter - price shoots higher like a rocket but crashes back down, leaving a long upper wick. It's like watching fireworks that fizzle out. One of the best patterns for catching market tops and failed breakouts.
Best Used For:
Create short-selling systems, build failed breakout strategies, develop profit-taking algorithms. Perfect for fading euphoric moves and catching distribution patterns. Combine with resistance for high-probability shorts.
Trading Signals:
- ✓After uptrend = Sell signal
- ✓Red shooting star = Stronger
- ✓Gap down next day = Strong confirmation
Spinning Top
The pause that refreshes - small body with shadows showing the market is taking a breather. Like a rest stop on a highway. Not exciting alone, but clusters of these often precede big moves.
Best Used For:
Identify consolidation zones for breakout strategies, build range-trading systems, develop continuation patterns after brief pauses. Use multiple spinning tops to identify coiling patterns before explosive moves.
Trading Signals:
- ✓In strong trend = Brief pause
- ✓Multiple spinning tops = Consolidation period
- ✓Break of pattern = Trend continuation
High Wave
The volatility explosion - massive price swings in both directions with no clear winner. Like a boxing match where both fighters are landing huge punches. These mark important battlegrounds where major decisions get made.
Best Used For:
Build volatility trading strategies, create straddle entry systems, develop reversal strategies at key levels. Perfect for options traders looking for volatility expansion. Often marks the climax of a move.
Trading Signals:
- ✓At extremes = Potential reversal
- ✓High volume = Significant indecision
- ✓Cluster = Major turning point
Bullish Marubozu
Pure buying power - a big green candle with no wicks, showing buyers controlled every tick from open to close. Like a freight train with no brakes. This is what momentum looks like in its purest form.
Best Used For:
Build momentum breakout strategies, create trend-following systems, develop continuation patterns. Essential for identifying strong trends early. Combine with volume for explosive move detection.
Trading Signals:
- ✓Trend continuation = Very bullish
- ✓Breakout confirmation
- ✓Gap up opening = Extremely strong
Bearish Marubozu
Pure selling pressure - a big red candle with no wicks, showing sellers dominated from start to finish. Like an avalanche that keeps gaining speed. This pattern shows when fear takes over completely.
Best Used For:
Create short-selling systems, build breakdown strategies, develop panic detection algorithms. Perfect for riding downtrends and identifying distribution days. Key pattern for bear market strategies.
Trading Signals:
- ✓Trend continuation = Very bearish
- ✓Breakdown confirmation
- ✓Gap down opening = Extremely strong
Two Candle Patterns
Bullish Engulfing
The takeover pattern - a massive green candle that completely swallows the previous red one. It's like watching the tide turn in real-time. One of the most reliable reversal patterns that says 'the buyers are back in charge'.
Best Used For:
Build powerful reversal strategies after selloffs, create bottom-detection systems, develop swing trading entries. Combine with oversold conditions for explosive rebounds. Foundation pattern for many successful trading strategies.
Trading Signals:
- ✓After downtrend = Strong buy signal
- ✓Volume increase = Confirmation
- ✓Larger engulfing = Stronger signal
Bearish Engulfing
The distribution pattern - a huge red candle that devours the previous green one. Like watching a wave crash over a sandcastle. This pattern catches tops and marks where smart money starts heading for the exits.
Best Used For:
Create short-selling strategies at tops, build profit-taking systems, develop hedging strategies after rallies. Perfect for catching the start of corrections. Combine with overbought indicators for high-probability shorts.
Trading Signals:
- ✓After uptrend = Strong sell signal
- ✓High volume = Stronger signal
- ✓At resistance = Very reliable
Bullish Harami
The calm after the storm - after a big red candle, a small green one appears inside it, like a baby in a cradle. Shows selling pressure is exhausted and buyers are tiptoeing back in. Often the first sign a downtrend is ending.
Best Used For:
Build early reversal detection systems, create contrarian entry strategies, develop multi-timeframe confirmation patterns. Works best as part of a larger reversal strategy rather than standalone. Great for position building.
Trading Signals:
- ✓After decline = Potential reversal
- ✓Doji as second candle = Stronger
- ✓Volume decrease normal
Bearish Harami
The momentum killer - after a big green candle, a small red one forms inside it. Like a car running out of gas. This subtle pattern often marks where rallies stall before reversing. Smart traders watch for these at resistance.
Best Used For:
Create top detection systems, build scaling-out strategies, develop early warning systems for trend changes. Excellent for timing exits from longs or initiating small short positions before confirmation.
Trading Signals:
- ✓After rally = Warning signal
- ✓Doji as second candle = Stronger
- ✓Next candle direction important
Piercing Line
The comeback pattern - price gaps down on fear but buyers step in hard, pushing it back above the midpoint of yesterday's selloff. Like a boxer getting knocked down but fighting back to their feet. Shows real buying conviction.
Best Used For:
Build gap-and-go strategies, create oversold reversal systems, develop mean reversion algorithms. Excellent for catching panic selling that reverses. The deeper the penetration into the previous candle, the stronger the signal.
Trading Signals:
- ✓After downtrend = Buy signal
- ✓Above 60% penetration = Stronger
- ✓Volume increase helpful
Dark Cloud Cover
The euphoria killer - price gaps up on greed but sellers slam it back down below the midpoint of yesterday's rally. Like rain on a parade. This pattern catches FOMO buyers and marks where rallies fail.
Best Used For:
Create failed breakout strategies, build short entry systems, develop profit-taking algorithms after gaps. Perfect for fading morning enthusiasm that fails. The deeper it penetrates the previous candle, the more bearish.
Trading Signals:
- ✓After uptrend = Sell signal
- ✓Below 40% penetration = Stronger
- ✓At resistance = Very reliable
Tweezer Top
The double rejection - price hits the exact same high twice (or more) and can't break through. Like a ceiling you keep bumping your head on. This pattern shows where sellers are defending a level and often precedes sharp reversals.
Best Used For:
Build resistance trading strategies, create double-top detection systems, develop precise short entry methods. Combine with horizontal levels for laser-accurate entries. Great for tight stop-loss placement.
Trading Signals:
- ✓At resistance = Reversal signal
- ✓Multiple touches = Stronger
- ✓Volume decline = Weakness
Tweezer Bottom
The double bounce - price hits the exact same low twice (or more) and bounces. Like a trampoline effect at support. This pattern shows where buyers are stepping in consistently and often launches strong rallies.
Best Used For:
Create support bounce strategies, build double-bottom systems, develop accumulation pattern recognition. Perfect for identifying where smart money is building positions. Combine with volume for institutional buying detection.
Trading Signals:
- ✓At support = Reversal signal
- ✓Volume increase = Confirmation
- ✓Break higher = Strong buy
Three Candle Patterns
Morning Star
The sunrise pattern - three candles that signal darkness is ending. First comes selling, then uncertainty, finally aggressive buying. Like watching the market wake up and change its mind completely. One of the most reliable bottom signals.
Best Used For:
Build major reversal strategies, create bottom-fishing systems, develop high-conviction long entries. This pattern is so reliable it's worth waiting for. Combine with oversold indicators for career-defining trades.
Trading Signals:
- ✓After downtrend = Major buy signal
- ✓Gaps increase reliability
- ✓Third candle closes above first midpoint
Evening Star
The sunset pattern - three candles that signal the party is over. First euphoria, then hesitation, finally panic selling. Like watching a bubble pop in slow motion. One of the best patterns for catching major tops.
Best Used For:
Create top-picking strategies, build short-selling systems, develop profit protection algorithms. This pattern has saved countless traders from holding through crashes. Essential for risk management systems.
Trading Signals:
- ✓After uptrend = Major sell signal
- ✓Gaps increase strength
- ✓Third candle closes below first midpoint
Morning Doji Star
The perfect reversal - like Morning Star but with a doji in the middle showing complete indecision. This is the pattern that appears at major market bottoms. When you see this, the selling is exhausted and buyers are about to take control.
Best Used For:
Build ultra-high conviction reversal strategies, create major bottom detection systems, develop portfolio rebalancing triggers. This rare pattern often marks generational buying opportunities. Worth building alerts specifically for this.
Trading Signals:
- ✓After decline = Extremely bullish
- ✓Gap separation = Maximum strength
- ✓Volume surge on third candle
Evening Doji Star
The perfect top - Evening Star with a doji showing complete uncertainty at the peak. This pattern appears at major market tops before significant declines. When you see this after a rally, it's time to protect capital.
Best Used For:
Create crash protection systems, build portfolio hedging strategies, develop major top detection algorithms. This rare pattern has appeared before many historic market corrections. Critical for risk management.
Trading Signals:
- ✓After rally = Extremely bearish
- ✓Gap separation = Maximum strength
- ✓Volume surge on third candle
Three White Soldiers
The march higher - three strong green candles stepping up like soldiers in formation. This shows sustained, organized buying that often starts major uptrends. When you see this pattern, institutions are accumulating.
Best Used For:
Build trend-following strategies, create momentum systems, develop breakout confirmation patterns. This pattern identifies when a new uptrend is establishing itself. Perfect for pyramiding into winning positions.
Trading Signals:
- ✓Strong upward momentum
- ✓Breaking resistance levels
- ✓Each candle should have good size
Three Black Crows
The cascade down - three strong red candles stepping lower like dominoes falling. This pattern shows sustained, methodical selling that often starts major downtrends. When you see this, distribution is happening.
Best Used For:
Create short-selling strategies, build downtrend identification systems, develop bear market algorithms. This pattern catches the beginning of serious declines. Essential for capital preservation in corrections.
Trading Signals:
- ✓Strong downward momentum
- ✓Breaking support levels
- ✓Each candle should be substantial
Three Inside Up
The confirmed reversal - starts with a harami showing selling is done, then a third candle confirms the reversal is real. Like getting three green lights in a row. This pattern removes the guesswork from reversals.
Best Used For:
Build high-confidence reversal strategies, create confirmation-based entry systems, develop risk-controlled bottom fishing. Perfect for traders who want extra confirmation before entering. Reduces false signals significantly.
Trading Signals:
- ✓Three-step confirmation process
- ✓Breaking above first candle = Strong buy
- ✓Volume increase preferred
Three Inside Down
The confirmed top - starts with a bearish harami showing buying is exhausted, then a third candle confirms the reversal down. Like three red flags in a row. This pattern takes the guesswork out of shorting.
Best Used For:
Create high-confidence short strategies, build confirmed top detection systems, develop risk-managed profit-taking algorithms. Ideal for conservative traders who need confirmation. Filters out many false breakdowns.
Trading Signals:
- ✓Three-step confirmation process
- ✓Breaking below first candle = Strong sell
- ✓Volume increase helpful
Three Outside Up
The power reversal - starts with a bullish engulfing showing buyers have taken control, then confirms with continued buying. Like a one-two punch followed by an uppercut. This pattern shows real conviction behind the reversal.
Best Used For:
Build aggressive reversal strategies, create momentum ignition systems, develop swing trading entries with confirmation. Combines the power of engulfing with follow-through. Great for catching V-shaped recoveries.
Trading Signals:
- ✓Engulfing followed by continuation
- ✓New high on third candle = Very bullish
- ✓Volume confirmation important
Three Outside Down
The breakdown pattern - starts with a bearish engulfing showing sellers have seized control, then confirms with continued selling. Like watching a dam break. This pattern confirms that a top is in and decline is underway.
Best Used For:
Create breakdown trading strategies, build confirmed short systems, develop trend reversal algorithms. Combines engulfing power with follow-through confirmation. Excellent for riding the start of corrections.
Trading Signals:
- ✓Engulfing followed by continuation
- ✓New low on third candle = Very bearish
- ✓Volume surge increases reliability
Complex Multi-Candle Patterns
Abandoned Baby
The island reversal - a doji sits alone with gaps on both sides, like a baby abandoned on an island. Extremely rare but devastatingly effective. When this appears, the trend doesn't just pause - it completely reverses. This is the pattern that marks historic turning points.
Best Used For:
Build major reversal detection systems, create high-conviction contrarian strategies, develop portfolio rebalancing triggers. So rare and powerful it's worth building specific alerts. This pattern has marked some of the most important reversals in market history.
Trading Signals:
- ✓Island doji formation = Major reversal
- ✓Gaps must not be filled
- ✓Very rare pattern - highly reliable
Three Line Strike
The trap pattern - three candles march confidently in one direction, then a massive fourth candle erases all the progress. Like a rubber band snapping back. This pattern catches traders leaning the wrong way and often starts explosive moves in the opposite direction.
Best Used For:
Create reversal strategies after false breakouts, build mean reversion systems, develop contrarian algorithms. This pattern has one of the highest statistical success rates. Perfect for catching overextended moves that snap back violently.
Trading Signals:
- ✓Fourth candle engulfs all three = Strong reversal
- ✓Bullish strike after three down = Buy
- ✓Bearish strike after three up = Sell
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