Table of Contents

32 Candlestick Pattern Types:

Bullish Candlestick Patterns
1. Hammer
2. Piercing Pattern
3. Bullish Engulfing
4. Morning Star
5. Three White Soldiers
6. White Marubozu
7. Three Inside Up
8. Bullish Harami
9. Tweezer Bottom
10. Inverted Hammer
11. Three Outside Up
12. On-Neck Pattern
13. Bullish Counterattack

Bearish Candlestick Patterns

14. Hanging Man
15. Dark Cloud Cover
16. Bearish Engulfing
17. Evening Star
18. Three Black Crows
19. Black Marubozu
20. Three Inside Down
21. Bearish Harami
22. Shooting Star
23. Tweezer Top
24. Three Outside Down
25. Bearish Counterattack

Continuation Candlestick Patterns

26. Doji
27. Spinning Top
28. Falling Three Methods
29. Rising Three Methods
30. Upside Tasuki Gap
31. Downside Tasuki Gap
32. Mat Hold Pattern
 How to Read Candlestick Charts

Candlestick charts originated in Japan over 100 years before the West

developed bar and Point-and-Figure charts. In the 18th century, a

Japanese rice merchant named Homma discovered that while supply and

demand influenced rice prices, market fluctuations were also strongly

driven by trader emotions.

A daily candlestick chart shows the security’s open, high, low, and close

prices for the day. The wide rectangular part of the candlestick is called

the real body. It represents the difference between the open and close

prices.

If the real body is filled (usually black or red), it indicates that the closing

price was lower than the opening price, forming a bearish candle. This

means that after the market opened, sellers (bears) dominated, pushing

the price down, and ultimately closing at a level lower than the opening

price.

If the real body is hollow (usually white or green), it indicates that the

closing price was higher than the opening price, forming a bullish candle.

This reflects that after the market opened, buyers (bulls) took control,

pushing the price up, and ultimately closing at a level higher than the

opening price.

The thin vertical lines above and below the real body are called wicks or

shadows. They represent the highest and lowest prices reached during
the trading session, extending beyond the range of the open and close

prices.

The upper shadow represents the highest price reached during the

trading session, while the lower shadow represents the lowest price

reached during the trading session.

highest price highest price

closing price opening price

opening price closing price

lowest price lowest price

Before we start learning about different candlestick patterns, there are

some specific assumptions related to candlestick charts to keep in mind.

• Strength is represented by bullish or green candles, while weakness is

represented by bearish or red candles. Ensure it is a green candle day

when buying and a red candle day when selling.

• Textbook patterns define certain criteria, but it should be noted that

patterns may vary slightly depending on different market conditions.

• Attention should be paid to the preceding trend. If you are looking for

a bullish reversal pattern, the preceding trend should be bearish; if you

are looking for a bearish reversal pattern, the preceding trend should

be bullish.
1. Hammer

The Hammer is a single candlestick pattern that typically appears at the

end of a downtrend, signaling a bullish reversal. This candlestick has a

small real body at the top, while the lower shadow should be more than

twice the length of the real body. This pattern has little or no upper

shadow.

The psychology behind this candlestick formation is: after the open,

sellers push the price down.

However, buyers then enter the market, pushing the price up, and

ultimately the closing price is higher than the opening price.

Hammer Candlestick Pattern

entity

long lower shadow

This leads to the formation of a bullish pattern, indicating that buyers

have returned to the market and the downtrend may be ending. If a

bullish candle forms the next day, traders can enter a long position and

set a stop-loss at the low of the Hammer candle. Below is an example of

the Hammer candlestick pattern:

2. Piercing Pattern

The Piercing Pattern is a multiple candlestick pattern that forms after a

downtrend, signaling a bullish reversal.

It consists of two candles. The first candle is a bearish candle, indicating

the continuation of the downtrend.

The second candle is a bullish candle that opens lower but closes above

the 50% level of the previous candle’s real body. This indicates that bulls

have returned to the market, and a bullish reversal is imminent

Piercing Pattern
If a bullish candle forms the next day, traders can establish a long

position and set a stop-loss at the low of the second candle. Below is an

example of the Piercing candlestick pattern:

Piercing pattern
3. Bullish Engulfing

The Bullish Engulfing is a multiple candlestick pattern that forms after a

downtrend, indicating a bullish reversal.

It consists of two candles, with the second candle engulfing the first. The

first candle is a bearish candle, indicating the continuation of the

downtrend.

The second candle is a long bullish candle that completely engulfs the

first candle, indicating that bulls are back in the market.

Bullish Engulfing Pattern

Second candle engulfs the first candle

If a bullish candle forms the next day, traders can enter a long position
and set a stop-loss at the low of the second candle. Below is an example

of the Bullish Engulfing candlestick pattern:

Bullish Engulfing Pattern

4. Morning Star

The Morning Star is a multi-candlestick pattern that signals a potential

bullish reversal following a downtrend.

It consists of three candles: the first is a bearish candle, the second is a

doji, and the third is a bullish candle.

The first candle confirms the continuation of the downtrend; the second,

a doji, indicates market indecision; and the third bullish candle suggests

buyers are regaining control, indicating an impending reversal.

The second candle should ideally gap below the real bodies of both the

first and third

candles.
If a bullish candle forms the next day, traders can establish a long

position and set a stop-loss at the low of the second candle. Below is an

example of the Morning Star candlestick chart pattern:

Morning Star Pattern

5. Three White Soldiers

The Three White Soldiers is a multiple candlestick pattern that forms

after a downtrend, signaling a bullish reversal.

These candlesticks consist of three long bullish candles that do not have

long shadows and open within the real body of the previous candle in

the pattern.
6. White Marubozu

The White Marubozu is a single candlestick pattern that forms after a

downtrend, indicating a potential bullish reversal. This candle has a long

bullish body with no upper or lower shadows, suggesting that bulls are

exerting buying pressure and the market may turn bullish.

Long white candlestick pattern

Sellers should be cautious and close their positions when this candle

forms.
7. Three Inside Up

The Three Inside Up is a multiple candlestick pattern formed after a

downtrend, indicating a bullish reversal. It consists of three candlesticks:

the first is a long bearish candle, the second is a small bullish candle that

should be within the range of the first candlestick. The third candlestick

should be a long bullish candle, confirming the bullish reversal.

Three Inside Up

The relationship between the first and second candlesticks should

resemble the Bullish Harami candlestick pattern. Traders can take a long

position after the completion of this candlestick pattern.

8. Bullish Harami

The Bullish Harami is a multiple candlestick pattern formed after a

downtrend, indicating a bullish reversal. It consists of two candlesticks:

the first is a tall bearish candle, and the second is a small bullish candle

that should be within the range of the first candlestick. The first bearish

candle shows the continuation of the bearish trend, while the second

bullish candle indicates that bulls are back in the market.

Bullish Harami Candlestick Patterns

Traders can take a long position after the completion of this candlestick

pattern.
9. Tweezer Bottom

The Tweezer Bottom candlestick pattern is a bullish reversal pattern

formed at the end of a downtrend. It consists of two candlesticks: the

first is bearish, and the second is bullish. The lows of both candlesticks

are almost identical or identical.

Tweezer Bottom Candlestick Pattern

When the Tweezer Bottom pattern forms, the preceding trend is a

downtrend. A large bearish candle forms, looking like a continuation of

the downtrend. On the second day, the low of the second, bullish candle

indicates a support level. The bottom candlesticks having almost the

same low shows the strength of the support and also signals that the

downtrend might reverse into an uptrend. Thus, bulls start acting,

pushing the price up. This bullish reversal is confirmed on the next day

when a bullish candle forms.

10. Inverted Hammer

The Inverted Hammer forms at the end of a downtrend and gives a

bullish reversal signal. In this candlestick, the real body is located at the

bottom, and there is a long upper shadow. It is the inverted form of the

Hammer candlestick pattern. This pattern forms when the opening and

closing prices are close, and the upper shadow should be more than

twice the length of the real body.

Inverted Hammer Candlestick Pattern

11. Three Outside Up

The Three Outside Up is a multiple candlestick pattern formed after a

downtrend, indicating a bullish reversal. It consists of three candlesticks:

the first is a short bearish candle, the second is a larger bullish candle

that should cover the first candlestick. The third candlestick should be a

long bullish candle, confirming the bullish reversal.

Three Outside Up

The relationship between the first and second candlesticks should

resemble the Bullish Engulfing candlestick pattern. Traders can take a

long position after the completion of this candlestick pattern.

12. On-Neck Pattern

The On-Neck pattern occurs after a downtrend when a long-bodied

bearish candle is followed by a smaller-bodied bullish candle that gaps

down on the open but then closes near the close of the previous

candlestick. The pattern is called On-Neck because the closing prices of

the two candlesticks are the same or almost the same, forming a

horizontal neckline.

On-Neck Pattern
13. Bullish Counterattack

The Bullish Counterattack pattern is a bullish reversal pattern that

predicts the impending reversal of the current downtrend in the market.

This candlestick pattern is a two-candle formation that appears during a

market downtrend. To be a Bullish Counterattack pattern, the formation

must meet the following conditions:

1. There must be a strong downtrend in the market for the Bullish

Counterattack pattern to form.

2. The first candlestick must be a long black candle with a real body.

3. The second candlestick must also be long (ideally the same size as

the first candlestick) but should be a white candle with a real body.

The second candlestick must close near the close of the first

candlestick.
Bullish Counterattack Candlestick Pattern
14. Hanging Man

The Hanging Man is a single candlestick pattern that typically appears at

the end of an uptrend, signaling a bearish reversal. This candle has a

small real body at the top, and the lower shadow should be at least

twice the length of the real body. The Hanging Man candlestick pattern

usually has no or a very short upper shadow.

The psychology behind this candle formation is: after the price opens,

sellers push the price down. Then, buyers suddenly enter the market and

push the price up, but fail to succeed, and the price ultimately closes

below the opening price.

Hanging Man Candlestick Pattern

This leads to the formation of a bearish pattern, indicating that sellers

have returned to the market and the uptrend may be ending. If a bearish

candle appears the next day, traders can choose to establish a short

position and set a stop-loss at the high of the Hanging Man. Below is an

example of the Hanging Man candlestick pattern:

15. Dark Cloud Cover

The Dark Cloud Cover is a multiple candlestick pattern that typically

appears after an uptrend, signaling a bearish reversal. The pattern

consists of two candles. The first candle is a bullish candle, indicating the

continuation of the uptrend. The second candle is a bearish candle

whose opening price is higher than the closing price of the previous

candle (gap up), but its closing price is below the 50% level of the

previous candle’s real body. This indicates that bears have returned to

the market, and a bearish reversal is imminent.

If a bearish candle appears the next day, traders can choose to establish
a short position and set a stop-loss at the high of the second candle.

Below is an example of the Dark Cloud Cover candlestick pattern:

16. Bearish Engulfing

The Bearish Engulfing is a multiple candlestick pattern that typically

appears after an uptrend, signaling a bearish reversal. The pattern

consists of two candles, with the second candle completely engulfing the

first. The first candle is a bullish candle, indicating the continuation of the

uptrend. The second candle is a long bearish candle that completely

engulfs the first candle, indicating that bears have returned to the

market.

Bearish Engulfing Pattern

If a bearish candle appears the next day, traders can choose to establish

a short position and set a stop-loss at the high of the second candle.
17. Evening Star

The Evening Star is a multiple candlestick pattern that typically appears

after an uptrend, signaling a bearish reversal. The pattern consists of

three candles: the first is a bullish candle, the second is a Doji, and the

third is a bearish candle. The first candle indicates the continuation of

the uptrend, the second Doji indicates market indecision, and the third

bearish candle indicates that bears have returned to the market and a

reversal is imminent. The real body of the second candle should be

completely outside the real bodies of the first and third candles.

Evening Star Pattern

If a bearish candle appears the next day, traders can choose to establish

a short position and set a stop-loss at the high of the second candle.

Below is an example of the Evening Star candlestick pattern:

18. Three Black Crows

The Three Black Crows is a multiple candlestick pattern that typically

appears after an uptrend, signaling a bearish reversal. The pattern

consists of three long bearish candles that do not have long shadows and

open within the real body of the previous candle.

Three Black Crows Candlestick Pattern

19. Black Marubozu

The Black Marubozu is a single candlestick pattern that typically appears

after an uptrend, signaling a bearish reversal. This candlestick has a long

bearish body with no upper or lower shadows, indicating that bears are

exerting selling pressure and the market may turn bearish. Buyers should

be cautious and close their long positions when this candle forms.
20. Three Inside Down

The Three Inside Down is a multiple candlestick pattern formed after an

uptrend, indicating a bearish reversal. It consists of three candlesticks:

the first is a long bullish candle, the second is a small bearish candle that

should be within the range of the first candlestick. The third candlestick

should be a long bearish candle, confirming the bearish reversal.

Traders can establish a short position after the completion of this

candlestick pattern.
21. Bearish Harami

The Bearish Harami is a multiple candlestick pattern that typically

appears after an uptrend, signaling a bearish reversal. The pattern

consists of two candles: the first candle is a long bullish candle, and the

second is a small bearish candle whose body should be within the range

of the first candle. The first bullish candle indicates the continuation of

the uptrend, while the second candle suggests that bears have returned

to the market.

Bearish Harami Candlestick Pattern

Traders can establish a short position after the completion of this

candlestick pattern.
22. Shooting Star

The Shooting Star typically appears at the end of an uptrend, signaling a

bearish reversal. In this candlestick pattern, the real body is located at

the bottom of the candle, and there is a long upper shadow. It is the

opposite of the Hanging Man candlestick pattern.

Shooting Star Candlestick Pattern

This pattern forms when the opening and closing prices are close, and

the upper shadow’s length should be more than twice the length of the

real body.
23. Tweezer Top

The Tweezer Top is a bearish reversal candlestick pattern that typically

appears at the end of an uptrend. The pattern consists of two candles:

the first is a bullish candle, and the second is a bearish candle. The highs

of both candles are almost or exactly the same.

When the Tweezer Top pattern forms, the preceding trend is an uptrend.

The appearance of the first bullish candle seems like a continuation of

the current uptrend. The high of the second day’s bearish candle

indicates a resistance level. Bulls seem to be trying to push the price

higher, but now they are unwilling to buy at higher prices.

Tweezer Top Candlestick Pattern

The highest candles having almost the same high indicates the strength
of the resistance and also suggests that the uptrend might reverse into a

downtrend. This bearish reversal is confirmed when a bearish candle

forms on the next day.

24. Three Outside Down

The Three Outside Down is a multiple candlestick pattern that typically

appears after an uptrend, signaling a bearish reversal. The pattern

consists of three candles: the first is a short bullish candle, the second is

a larger bearish candle that should completely cover the first candle. The

third candle should be a long bearish candle to confirm the bearish

reversal.

Three Outside Down Candlestick Pattern

The relationship between the first and second candles should be a

Bearish Engulfing candlestick pattern. Traders can establish a short

position after the completion of this candlestick pattern.

25. Bearish Counterattack

The Bearish Counterattack line is a bearish reversal pattern that appears

during a market uptrend. It predicts that the current uptrend will end,

and a new downtrend will dominate the market.

Bearish Counterattack Candlestick Pattern

26. Doji

The Doji pattern is a candlestick pattern that indicates market indecision,

formed when the opening and closing prices are almost equal. Its

formation suggests that both bulls and bears are fighting for control of

the price, but neither side is able to gain full control.

Doji Candlestick Pattern

This candlestick pattern looks like a cross, with a very small real body and

long shadows.
27. Spinning Top

The Spinning Top candlestick pattern is the same as the Doji, indicating

indecision in the market. The only difference between the Spinning Top

and the Doji is their formation; the Spinning Top has a larger real body

than the Doji.

Spinning Top Candlestick Pattern

28. Falling Three Methods

The “Falling Three Methods” is a bearish, five-candle continuation

pattern that signals an interruption, but not a reversal, of the current

downtrend. This candlestick pattern consists of two long bearish candles

in the direction of the trend (i.e., at the beginning and end of the

downtrend), with three shorter counter-trend candles in the middle.

Falling Three Methods Candlestick Pattern

This candlestick pattern is important because it shows traders that the

bulls still do not have enough strength to reverse the trend.

29. Rising Three Methods

The “Rising Three Methods” is a bullish, five-candle continuation pattern

that signals an interruption, but not a reversal, of the current uptrend.

This candlestick pattern consists of two long bullish candles in the

direction of the trend (i.e., at the beginning and end of the uptrend),

with three shorter counter-trend candles in the middle.

Rising Three Methods Candlestick Pattern

This candlestick pattern is important because it shows traders that the

bears still do not have enough strength to reverse the trend.

30. Upside Tasuki Gap

The Upside Tasuki Gap is a bullish continuation candlestick pattern that

appears in an ongoing uptrend. This candlestick pattern consists of three

candles: the first candle is a long-bodied bullish candle, the second

candle is also a bullish candle formed after gapping up. The third candle

is a bearish candle whose closing price falls within the gap between the

first two bullish candles.

Upside Tasuki Gap Candlestick Pattern

31. Downside Tasuki Gap

The Downside Tasuki Gap is a bearish continuation candlestick pattern

that appears in an ongoing downtrend. This candlestick pattern consists

of three candles: the first candle is a long-bodied bearish candle, the

second candle is also a bearish candle formed after gapping down. The

third candle is a bullish candle whose closing price falls within the gap

between the first two bearish candles.

Downside Tasuki Gap Candlestick Pattern

32. Mat Hold Pattern

The Mat Hold pattern is a candlestick pattern that indicates the

continuation of the prior trend. The Mat Hold pattern can be bearish or

bullish. A bullish Mat Hold pattern starts with a large bullish candle,

followed by a gap up and three smaller candles that move downwards.

These candles must remain above the low of the first candle. The fifth

candle is a large bullish candle that moves upwards again. This pattern

appears within an overall uptrend.