Candlestick Patterns
Master classic Japanese candlestick reversal and continuation patterns used by traders worldwide.
Overview
Candlestick charts originated in 18th-century Japan and remain one of the most intuitive ways to visualize market sentiment. Each candle encodes the open, high, low, and close of a session, and specific formations can signal reversals or continuations. Understanding these visual cues helps traders time entries and exits across every asset class — from crypto to equities and forex.
Topics Covered
Doji & Spinning Tops
Doji and spinning top candles signal indecision between buyers and sellers. A doji has nearly identical open and close prices, while a spinning top has a small body with long wicks on both sides. These patterns are most significant at the end of extended trends where they can foreshadow reversals.
Hammer & Hanging Man
The hammer and hanging man are single-candle patterns with small real bodies and long lower shadows (at least 2× the body). A hammer appears at the bottom of a downtrend (bullish), while a hanging man appears at the top of an uptrend (bearish). The long wick indicates that sellers pushed price down but buyers recaptured ground.
Engulfing Patterns
A bullish engulfing pattern occurs when a large green candle completely engulfs the prior red candle near the bottom of a trend. A bearish engulfing is the opposite — a large red candle swallows the prior green candle at the top. Engulfing patterns are among the most reliable two-candle reversal signals.
Morning & Evening Star
The morning star is a three-candle bullish reversal: a large bearish candle, a small body candle (the star) that gaps down, and a large bullish candle that closes well into the first candle's body. The evening star is the bearish mirror. These are among the strongest candlestick reversal patterns.
Three White Soldiers / Black Crows
Three white soldiers are three consecutive large bullish candles with progressively higher closes, each opening within the prior candle's body. Three black crows are the bearish equivalent. These patterns signal strong momentum shifts and conviction from buyers (soldiers) or sellers (crows).
Harami Patterns
A harami (Japanese for 'pregnant') is a two-candle pattern where a small candle is completely contained within the prior candle's body. A bullish harami appears in downtrends; a bearish harami in uptrends. Haramis signal fading momentum but require confirmation before trading.
Shooting Star
The shooting star is a bearish reversal candle with a small body near the low and a long upper shadow (at least 2× the body). It appears at the top of uptrends and signals that buyers pushed price higher but sellers took control. It is the inverted version of the hammer.
Tweezer Tops & Bottoms
Tweezers are two-candle patterns where both candles test the same high (tweezer top) or low (tweezer bottom). The first candle extends the trend and the second candle reverses. The matching highs/lows create a visual 'tweezers' shape indicating a rejection level.
Marubozu
A marubozu is a candle with no wicks (or very small wicks) — the open and close are at the extreme ends. A bullish marubozu opens at low, closes at high. A bearish marubozu opens at high, closes at low. Marubozus represent maximum conviction and can signal the start of a strong momentum move.
Pin Bar Setups
Pin bars are single-candle reversal patterns with a long tail (shadow) on one side and a small body on the opposite side. The tail shows a sharp rejection of a price level. Pin bars are the most widely used price action signal among naked chart traders and work on all markets and timeframes.
Inside Bars
An inside bar is a candle completely contained within the range (high to low) of the previous candle. It represents a contraction of volatility and indecision. Inside bars are used as breakout setups — traders wait for price to break above or below the inside bar's range (or the 'mother bar' range) to enter.
Continuation Triangles
While not strictly a candlestick pattern, continuation triangles (ascending, descending, symmetrical) are multi-candle patterns where price contracts between converging trendlines. Breakouts from triangles tend to continue the prior trend. Triangles are measured-move patterns — the target equals the height of the triangle projected from the breakout point.