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.
2:1 lower shadow to body ratio, Small real body near the high, Colour of body is secondary to location, Inverted hammer / shooting star variations
Hammer at key support with volume spike, Hanging man at resistance after extended uptrend, Next candle confirmation (close above hammer high / below hanging man low)
For hammer: trail stop below the hammer's low. For hanging man: stop above the hanging man's high. Target the prior swing high/low.
4H, Daily, Weekly for highest reliability
A hammer with a bullish (green/white) body is slightly more reliable than a bearish one. Volume confirmation is critical.
The three-line strike is a four-candle pattern where three consecutive candles move in one direction, followed by a single large candle that engulfs all three. Despite appearing as a reversal, statistical analysis shows the bullish three-line strike actually has a high probability of continuing the prior uptrend, making it a continuation signal. The bearish variant behaves similarly as a continuation of the downtrend.
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.
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.
The abandoned baby is a rare three-candle reversal pattern considered one of the most reliable candlestick signals. It forms when a doji gaps away from the preceding candle and the following candle gaps in the opposite direction, leaving the doji isolated with gaps on both sides. The pattern indicates a dramatic shift in market sentiment where momentum completely reverses between sessions.