Candlestick and Chart Patterns Explained

Candlestick Patterns

Hammer:

Explanation: Bullish reversal after a downtrend. Suggests buying pressure is returning.

Strategy: If formed, look for long entries above the high of the hammer.

Shooting Star:

Explanation: Bearish reversal after an uptrend. Shows selling pressure at higher prices.

Strategy: If formed, consider short entries below the low of the shooting star.

Doji:

Explanation: Indecision in the market. Potential reversal or pause.

Strategy: Wait for confirmation in next candles to decide entry direction.

Bullish Engulfing:

Explanation: Strong bullish reversal pattern. Buyers take control.

Strategy: Enter long above the high, stop loss below the pattern.

Bearish Engulfing:

Explanation: Strong bearish reversal pattern. Sellers dominate.

Strategy: Enter short below the low, stop loss above the pattern.

Morning Star:

Explanation: Bullish reversal pattern in a downtrend.

Strategy: Buy after confirmation candle closes above the morning star.

Evening Star:

Explanation: Bearish reversal in an uptrend.

Strategy: Sell after confirmation candle closes below the evening star.
Inverted Hammer:

Explanation: Potential bullish reversal at the bottom of a downtrend.

Strategy: Look for confirmation before entering long.

Hanging Man:

Explanation: Potential bearish reversal at the top of an uptrend.

Strategy: Sell if confirmation candle breaks below hanging man.

Three White Soldiers:

Explanation: Strong bullish trend continuation.

Strategy: Entry on breakout above the pattern for long positions.

Three Black Crows:

Explanation: Strong bearish trend continuation.

Strategy: Entry on breakout below the pattern for shorts.

Bullish Harami:

Explanation: Bullish reversal sign. Small green inside large red candle.

Strategy: Buy above the pattern's high with stop below low.

Bearish Harami:

Explanation: Bearish reversal sign. Small red inside large green candle.

Strategy: Sell below the pattern's low.

Spinning Top:

Explanation: Indecision. Possible reversal or pause.

Strategy: Wait for the next candle confirmation.

Piercing Line:

Explanation: Bullish reversal from downtrend.

Strategy: Enter long after confirmation candle above the high.

Explanation: Bearish reversal from uptrend.

Strategy: Sell after confirmation below low.

Doji Star:

Explanation: Indecision before possible trend reversal.

Strategy: Wait for clear confirmation.

Upside Gap Two Crows:

Explanation: Bearish reversal pattern.

Strategy: Short after breakdown confirmation.

Rising Three Methods:

Explanation: Bullish continuation pattern.

Strategy: Buy on breakout above high.

Falling Three Methods:

Explanation: Bearish continuation pattern.

Strategy: Sell on breakdown below low.

Head and Shoulders Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Inverse Head and Shoulders Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Double Top Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Double Bottom Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Triple Top Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.
Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Triple Bottom Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Ascending Triangle Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Descending Triangle Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Symmetrical Triangle Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Bullish Rectangle Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.
Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Bearish Rectangle Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Bullish Flag Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Bearish Flag Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Bullish Pennant Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Bearish Pennant Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.
Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Rising Wedge Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Falling Wedge Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Cup and Handle Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Bump and Run Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Channel Up Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.
Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.

Channel Down Pattern:

Explanation: Indicates trend reversal or continuation depending on breakout

direction.

Strategy: Enter trade after breakout confirmation; stop loss below/above

pattern.