BASIC CANDLESTICK FORMATIONS

Indication That Price May Be Heading Down:

Bearish Engulfing Pin Bar Evening Star Shooting Star

Indication That Price May Be Heading Up:

Bullish Engulfing Pin Bar Morning Star Shooting Star

SINGLE CANDLESTICK PATTERNS
HAMMER
Hammer is a candle that you will see at the
end of a downtrend. It usually has a long wick
that shows that sellers were active during
that time, but finishes with a body closing
at the top- pushing up. Buyers came in and
took control before the session ended and
that usually is the start of an uptrend.

INVERTED HAMMER
Inverted Hammer is one you may see at the
end of a downtrend. This candlestick has a
large wick up high and a small body down low.
This means buyers tried to come in but the
sellers pushed it back down. Most people
may believe that price will continue to head
down, but that may not be the case.
Buyers actually show no fear and they try to
continue and push price up on the following
candlestick. People also think inverted hammer
is the opposite of a regular, whereas inverted
hammer should be a selling candlestick. Both
patterns are indicators price may be pushing up.

HANGING MAN
The Hanging Man is the opposite of a Hammer
and has the same formation. Although it has
the same features as the hammer, it has the
same affect as the inverted hammer. You will
usually see this at the end of an uptrend.
Even though buyers pushed price back up to
have the body close near the top, sellers show
no fear and continue to try and push price
down on the following candlestick.
 DOJI

Doji Dragonfly Doji Gravestone Doji Long Legged Doji

A Doji represents indescision in the market.

It is made up of a candlestick that is majorly all wicks.
Meaning there is an equal amount of buyers and sellers
in the market. Typically you will see this at the end
of a trend, as this signals that the market is starting to
become an equal playing field. When you see a doji, pay
close attention to the following candlesticks after, as they
may push in a new direction or continue in the same
direction; as the doji could have been a slight pause.

Doji’s
 MARUBOZU
Bullish Marubozu Bearish Marubozu

Close High High Open

Open Low Low Close

A Marubozu is a single candlestick pattern that you may see that

gives confirmation to the current momentum. Meaning, if price is
heading up, and you see a reversal candle - most times a marubozu
candle follows after to confirm that price is about to head down. They
have big bodies and barely have any wicks, which shows that momentum
is clearly heading in whatever direction the marubozu is heading.

SHOOTING STAR

Whenever you see a shooting star on a chart, it is usually

an indication that the market is about to head down.
It consists of one candle that has a long wick.
(shows buyers tried to push price up).
In the end, it formed a body at the bottom
(showing that sellers are about to control price).
DUAL CANDLESTICK PATTERNS
BEARISH ENGULFING

This pair is a bearish confirmation pattern.

The first candle should be a bullish candle heading up and the
following candle should be an overbearing sellers candle.
The second candle should engulf the first candle.
Price usually continues to head down afterwards.

BULLISH ENGULFING

This pair is a bullish confirmation pattern.

The first candle should be a bearish candle heading down and the
following candle should be an overbearing buyers candle.
The second candle should engulf the first candle.
Price usually continues to head up afterwards.
 DOUBLE TOP

A double top is a dual candlestick pattern that resembles a M and can

be a sellers confirmation. It represents however many candlesticks hits
the top, then price comes back down to retrace, before coming back to
that same area. Once price rejects that area for the second time, it
usually reverses and pushes all the way down.

For major market patterns, they can show on your chart on timeframes
as low as the 1H, but try and consider it to be more serious and a
strong confluence if seen on a 2H, 4H, or daily.

DOUBLE BOTTOM

A double bottom is a dual candlestick pattern that resembles a W and can

be a buyers confirmation. It represents however many candlesticks that hit
a bottom, then price comes back up to retrace, before coming back down
to that same area. Once price rejects that area for the second
time, it usually reverses and pushes all the way up.
 TWEEZER TOP

You will typically see this dual candlestick pattern at the end of an uptrend.
It is two two of the same candles with different color bodies. At the end of an
uptrend, you will see a simple blue candle, and rightb after you should see
the same sized candle but in red. Since price closes at the top of a blue
candle, the following candle has to open at the same spot, and price just
comes back down to the low of the first candle. This creates a tweezer
top and price usually reverses down after seeing this pattern.

TWEEZER BOTTOM

You will typically see this dual candlestick pattern at the end of a downtrend.
It is two of the same candles with different color bodies. At the end of a
downtrend, you will see a simple red candle, and right after you should see
the same sized candle but in blue. Since price closes at the bottom of a red
candle, the following candle has to open at the same spot, and price just
comes back up to the high of the first candle. This creates a tweezer
bottom and price usually reverses up after this pattern.
TRIPLE CANDLESTICK PATTERNS
MORNING STAR

A morning star is a bullish reversal candlestick pattern.

At the end of a downtrend, you will see a bearish candle heading
down, a doji in the middle, and a bullish candle heading up.
This is a full on reversal and price usually jolts up right after.

EVENING STAR

An evening star is a bearish reversal candlestick pattern.

At the end of an uptrend, you will see a bullish candle heading
up, a doji in the middle, and a bearish candle heading down.
This is a full on reversal and price usually jolts up right after.
 HEAD & SHOULDERS

This three candlestick pattern is similar to the double top & bottom where it is
not so much three solid candles - more so an area of candles. It is typically a
bearish reversal confirmation.This pattern is comprised of two shoulders and a
head. In an uptrend, the first shoulder should push up, then price should
pull down. The second move should be higher that the first shoulder which
creates the head; then price pushes back down. The third shoulder should be
similar to the first shoulder - which is lower than the head. After seeing the third
shoulder, get ready to SELL because price is going to push all the way down.

2Hr & 4Hr Timeframes

INVERTED HEAD & SHOULDERS

This three candlestick pattern is similar to the double top & bottom where it is
not so much three solid candles - more so an area of candles. It is typically a
bullish reversal confirmation. This pattern is compromised of two shoulders
and a head. It is an exact opposite of a regular head and shoulders. In a
downtrend, the first shoulder should push down, then price should push up.
The second move should be lower than the first shoulder which creates
the head; then price pushes back up. The third shoulder should be similar
to the first shoulder - which is still higher than the head. After seeing the third
shoulder, get ready to BUY because price is going to push all the way up.
 ASCENDING TRIANGLE

This is when price is steadily bouncing off an uptrend, but not creating any
higher highs as it is not getting past a certain area of resistance. Price is making
higher lows but not higher highs. This is a clear signal that price is not going to
break that resistance, and as soon as price can break through the trendline, sell it.

DESCENDING TRIANGLE

This is when price is steadily bouncing off a downtrend, but not creating any
lower lows as it is not getting past a certain area of support. Price is making
lower highs but not lower lows. This is a clear signal that price is not going to
break that support, and as soon as price can break through the trendline, buy it.
 SYMMETRICAL TRIANGLE

This is when price is steadily bouncing off an uptrend and downtrend.

Price is making higher lows but also making lower highs simultaneously.
Seems counterintuitive but in this case, anything can happen. There is no
clear cut signal here. As soon as price can break through the trendline in
either direction, follow it. In the picture, price broke up - so as soon as price
closed above the triangle (closer to the end of the triangle), you would enter!
The longer it stayed in the triangle, the more price was compressed within
those areas. It would soon break out in either direction swiftly. You do not
need to worry too much about a fakeout due to price being in a compact
environment for a while, it most likely will continue in that direction.

You will most likely see these formations before a

major news announcement. Price will relax and
consolidate in a triangle formation, before a major
news announcement breaks it out of that triangle.