35 Powerful Candlestick Patterns PDF Guide (2024)

Candlestick patterns form powerful visual representations of price actions in a forex trading during a specific timeframe. They are formed by the price action of an forex, such as a stock, currency, crypto, or index. Candlestick patterns are created by a series of up and down, or bullish and bearish, price movements that occur over a specific time frame. These formations are named after their shape or the behavior they represent. Candlestick patterns can provide valuable insights into forex market sentiment and crypto trend direction, as they indicate the balance of power between buyers and sellers. As such, it is crucial to have a deep knowledge of these patterns to become a successful trader. In this Guide, I will discuss the 35 best candlestick patterns with many examples.

35 Candlesticks Pattern FAQ

What are Candlestick Patterns ?

Candlestick charts are a type of chart used to represent the movement of an asset, such as a stock or currency, over a specific period of time. Other chart types include bar and line charts. Each candlestick provides information about the open, high, low, and close prices for the period it represents. The body of the candlestick represents the price range between the open and close prices, while the “wicks” or “shadows” at the top and bottom of the body represent the highest and lowest prices reached during the period respectively.
Bullish candlestick patterns VS Bearish candlestick patterns
Candlestick charts are commonly used by investors to identify patterns and make trading decisions based on price movements. Consequently, most traders use candlesticks to analyze price activity over time.

how to read them ?

Reading candlestick charts involves analyzing the various components of each candlestick to gain insight into the price movements of an asset over a specific period of time. Here are the steps to read candlestick charts:
  • Understand the basic anatomy of a candlestick chart
Candlesticks consist of a rectangular body and two thin lines called wicks or shadows. The top of the candlestick’s body denotes its closing price, while the bottom of the same candlestick’s body denotes its opening price. The wicks or shadows above and below the body represent the highest and lowest prices during the period represented by the candlestick.
  • Determine the time frame

Candlestick charts can be set to show different time periods, such as hourly, daily, or weekly periods. The longer the time frame, the more significance the chart has.

  • Look for patterns

Candlestick charts are valuable tools for identifying patterns such as trends, reversals, or indecision. By carefully analyzing the patterns formed by the candlesticks, traders can gain insights into the underlying market sentiment and anticipate potential price movements. Pay close attention to the size of the body, the length of the wicks or shadows, and the number of candles in a pattern to effectively interpret these formations.

  • Consider the color of the candlestick

A green or white candlestick generally indicates that the closing price is higher than the opening price, while a red candle signifies that the closing price is lower than the opening price.

By understanding these fundamentals of candlestick charts, traders can make more informed trading decisions based on market trends and movements. Before delving into the intricacies of the 35 candlestick patterns, let’s explore their profound significance among traders.

What are 35 powerful candlestick patterns?

Now, let’s delve into each type of candlestick pattern, examining the 35 formations in detail.

Bullish formations

Here is a brief explanation of some of the most common bullish reversal candlestick patterns:

One-candle designs

Hammer:

It is a reversal pattern that forms when the market price opens lower, trades higher, then closes near the opening price. It resembles a hammer with a good lower shadow and a short real body. The long lower shadow indicates strong buying pressure, while the short real body suggests that sellers were unable to hold the price down. The Hammer pattern is considered to be a bullish signal, as it suggests that the bulls are gaining control of the market.

Inverted Hammer:

Occurs when the price falls significantly lower after opening. But then recovers to close higher. It has a long upper wick, a small real body, and a tiny lower wick. The long upper wick indicates strong selling pressure, while the small real body suggests that buyers were able to push the price back up. The Inverted Hammer pattern is considered to be a bearish reversal signal, as it suggests that the bears are losing control of the market.

White Marubozu:

It is a long green candle with no visible wicks. It suggests a strong bullish sentiment, as the price has moved up throughout the session with little to no resistance from sellers. The White Marubozu is a very strong bullish signal, and it often indicates that a new uptrend is about to begin.

Two-candle designs

Bullish Harami:

It is a two-candle pattern where the first candle has a long real body (either red or black), and the second candle is a small green candle that is completely included within the range of the first candlestick. The Bullish Harami is a continuation pattern, meaning that it is more likely to occur in an existing uptrend. It suggests that the uptrend is still strong and that there is likely to be more buying pressure to come.

Tweezer Bottom:

Forms when two candles bottom out at nearly the same price level, creating a support level. The Tweezer Bottom is also a continuation pattern, meaning that it is more likely to occur in an existing downtrend. It suggests that the downtrend is losing momentum and that there may be a reversal to the upside.

Bullish Engulfing:

It is a two-candle pattern that occurs at the bottom of a downtrend. It starts with a small red candle, then is followed by a larger green candle that engulfs the entire body of the previous red candle. The Bullish Engulfing is a reversal pattern, meaning that it suggests a change in the direction of the trend. It indicates that there is strong buying pressure and that the downtrend is likely to end.

Piercing Pattern:

It is a two-candle bullish reversal pattern. It forms when a long red candle is followed by a long green candle that opens below the low of the first candle. But closes above its halfway point. The pattern suggests that buying pressure is overtaking selling pressure. The Piercing Pattern is more reliable when it occurs at support levels.

On-Neck Pattern:

It is a two-candle bullish reversal pattern that starts with a long red candle, followed by a small green candle that opens at the low of the previous day’s candle. The On-Neck Pattern suggests that there is strong buying pressure at the current price level and that the downtrend is likely to end.

Bullish Counterattack:

It is a 2-candle pattern that occurs when a red candle’s real body is completely engulfed by the green candle’s real body. It suggests a strong bullish sentiment, as buyers have completely overpowered sellers. The Bullish Counterattack is a reversal pattern, meaning that it suggests a change in the direction of the trend.

Three-candle designs

The Morning Star:

It is a three-candle bullish reversal pattern that forms after a downtrend. It starts with a long red candle, followed by a gap down and a small candle where the price doesn’t move much. The third candlestick is a long green candlestick that closes above the midpoint of the first candlestick. The Morning Star pattern suggests that the downtrend is losing momentum and that there may be a reversal to the upside.

Three White Soldiers:

It is a three-candle bullish reversal pattern that forms at the bottom of a downtrend. It consists of three long green candles that close higher than the previous day’s close. The Three White Soldiers pattern suggests that the downtrend is ending and that a new uptrend is about to begin.

Three Inside Up:

It is a three-candle bullish reversal pattern that forms at the bottom of a downtrend. It starts with a long red candle, followed by a small green candle that is completely engulfed by the third long green candle. The Three Inside Up pattern suggests that the buying pressure is increasing and that the downtrend is likely to end.

Three Outside Up:

It is a three-candle bullish reversal pattern that forms at the bottom of a downtrend. It starts with a short red candle, followed by a long green candle that engulfs the previous red candle entirely. The third candle is another long green candle that closes higher than the second candle. The Three Outside Up pattern suggests that the buying pressure is overwhelming the selling pressure and that the downtrend is likely to end.

one-candle shapes

Hanging Man:

Is a bearish reversal pattern that forms when the price is in an uptrend, and the candle has a small real body, a long lower shadow, and little or no upper shadow. The long lower shadow indicates strong selling pressure, while the small real body suggests that buyers were able to push the price back up towards the opening price. The Hanging Man pattern is considered to be a bearish signal, as it suggests that the bears are gaining control of the market.

Bearish formations

Here is a straightforward explanation of some of the most familiar bearish reversal counterparty of candlestick patterns discussed in the previous section:

one-candle shapes

Hanging Man:

Is a bearish reversal pattern that forms when the price is in an uptrend, and the candle has a small real body, a long lower shadow, and little or no upper shadow. The long lower shadow indicates strong selling pressure, while the small real body suggests that buyers were able to push the price back up towards the opening price. The Hanging Man pattern is considered to be a bearish signal, as it suggests that the bears are gaining control of the market.

Shooting Star:

Occurs when the price rallies higher after opening, but then sells off to close near the low of the day. It has a long upper wick, a small real body, and a lower wick. The long upper wick indicates strong selling pressure, while the small real body suggests that buyers were not able to hold the price up at the higher levels. The Shooting Star pattern is considered to be a bearish signal, as it suggests that the bulls are losing control of the market.

Black Marubozu:

Is a long red candle with no visible wicks. It suggests a strong bearish sentiment, as the price has moved down throughout the session with little to no resistance from buyers. The Black Marubozu is a very strong bearish signal, and it often indicates that a new downtrend is about to begin.

Two-candle shapes

Bearish Harami:

Is a two-candle pattern where the first candle has a long real body (either red or black), and the second candle is a small red candle that is completely contained within the range of the first candlestick. The Bearish Harami is a continuation pattern, meaning that it is more likely to occur in an existing downtrend. It suggests that the downtrend is still strong and that there is likely to be more selling pressure to come.

Tweezer Top:

Forms when two candles top out at nearly the same price level, creating a resistance level. The Tweezer Top is also a continuation pattern, meaning that it is more likely to occur in an existing uptrend. It suggests that the uptrend is losing momentum and that there may be a reversal to the downside.

Bearish Engulfing:

Is a two-candle pattern that occurs at the top of an uptrend. It starts with a small green candle, then is followed by a larger red candle that engulfs the entire body of the previous green candle. The Bearish Engulfing is a reversal pattern, meaning that it suggests a change in the direction of the trend. It indicates that there is strong selling pressure and that the uptrend is likely to end.

Dark Cloud Cover:

Is a two-candle bearish reversal pattern. It starts with a long green candle, then is followed by a long red candle that opens above the previous day’s high but closes below the midpoint of the previous day’s green candle. The Dark Cloud Cover pattern suggests that the uptrend is losing momentum and that there may be a reversal to the downside.

Bearish Counterattack:

Is a 2-candle pattern that occurs when a green candle’s real body is completely engulfed by a red candle’s real body. It suggests a strong bearish sentiment, as sellers have completely overpowered buyers. The Bearish Counterattack is a reversal pattern, meaning that it suggests a change in the direction of the trend.

Three-candle shapes

The Evening Star:

It is a three-candle bearish reversal pattern that forms after an uptrend. It starts with a long green candle, followed by a gap up and a small candle where the price doesn’t move much. The third candlestick is a long red candlestick that closes below the midpoint of the first candlestick. The Evening Star pattern suggests that the uptrend is losing momentum and that there may be a reversal to the downside.

Three Black Crows:

It is a three-candle bearish reversal pattern that forms at the top of an uptrend. It consists of three long red candles that close lower than the previous day’s close. The Three Black Crows pattern suggests that the uptrend is ending and that a new downtrend is about to begin.

Three Inside Down:

It is a three-candle bearish reversal pattern that forms at the top of an uptrend. It starts with a long green candle, followed by a small red candle that is completely engulfed by the third long red candle. The Three Inside Down pattern suggests that the selling pressure is increasing and that the uptrend is likely to end.

Three Outside Down:

It is a three-candle bearish reversal pattern that forms at the top of an uptrend. It starts with a short green candle, followed by a long red candle that engulfs the previous green candle entirely. The third candle is another long red candle that closes lower than the second candle. The Three Outside Down pattern suggests that the selling pressure is overwhelming the buying pressure and that the uptrend is likely to end.

Continuation formations:

Now that we have discussed bullish and bearish formations, let us explain briefly some of the continuation candlestick patterns:

one-candle figures

Doji:

This candlestick pattern occurs when the opening and closing prices are very close or the same, indicating indecision in the market. It may signal a continuation of the current trend or a reversal.

Spinning Top and Bottom:

These candlestick patterns are characterized by a small real body and long upper and lower shadows. They also indicate indecision in the market and may signal a continuation of the current trend or a reversal.

Two-candle figures

Upside Tasuki Gap:

It is a bullish pattern that consists of two candles, typically within an uptrend. The first candle is a long green candle, and the second candle opens higher with a gap and closes within the real body of the first candle. This pattern suggests a continuation of the uptrend as buying pressure remains strong.

Downside Tasuki Gap:

It is a bearish continuation pattern that have two candles, typically within a downtrend. The first candle is a long red candle, and the second candle opens lower with a gap and closes within the real body of the first candle. This pattern suggests a continuation of the downtrend as selling pressure prevails.

Downside Tasuki Gap:

It is a bearish continuation pattern that have two candles, typically within a downtrend. The first candle is a long red candle, and the second candle opens lower with a gap and closes within the real body of the first candle. This pattern suggests a continuation of the downtrend as selling pressure prevails.

Rising Window:

It is a bullish continuation gap that forms when the low of one candlestick is higher than the high of the previous candlestick. This pattern suggests the continuation of the uptrend move as the price continues to make higher lows.

Falling Window:

It is a bearish gap that forms when the high of one candle is lower than the low of the previous candle . It denotes a continuation of the prevailing downtrend as the price continues to make lower highs.

Three-candle figures

High Wave:

It is a candlestick pattern that occurs when the opening and closing prices are similar but the price movement fluctuates significantly during the period. It indicates uncertainty in the market, and whether it is a continuation or reversal pattern depends on the direction of the trend. For instance, if it occurs during an uptrend, it might signal a potential continuation of the uptrend, while if it occurs during a downtrend, it might indicate a possible reversal.

Mat-Hold:

It is a bullish  pattern that occurs when a long green candle is followed by smaller red candles that do not exceed the real body of the green candle. The pattern indicates that the uptrend may continue, suggesting that the bulls are still in control, despite the temporary pullbacks. This pattern is a four-candle formation.

Falling Three Methods:

It is a bearish continuation pattern that occurs during a downtrend. It consists of a long red candle followed by multiple small green candles that stay within the range of the red candle, then ends with another long red candle. This pattern suggests that the bears are maintaining control, and the downtrend is likely to continue.

Rising Three Methods:

It is a bullish continuation pattern that occurs during an uptrend. It consists of a long bullish candle followed by multiple small red candles that stay within the range of the green candle, then ends with another long green candle. This pattern indicates that the bulls are maintaining control, and the uptrend is likely to continue.

Which one is most reliable for scalping ?

Scalping involves making a high volume of trades over a short period, so the best candlestick pattern strategy for scalping focuses on quick price movements and requires a high degree of precision. Here is one of the most popular candlestick patterns and strategies for scalping:

Example

You may look for reversal candlestick patterns like hammer formations for quick trade execution. Considering this XAUUSD (Gold) 1-minute chart, enter a long position after a hammer at the bottom of a downtrend. This bottom is marked by the candlestick pattern below the SMA(5) line. Here, you may earn a maximum profit of 141 pips, purchasing at 1854.39 and exiting at 1855.98 dollars. Additionally, exit the later position and/or enter a short position after a shooting star or a hanging man at the top of an uptrend. This top is marked by the candlestick pattern above the SMA(5) line. Here, you may earn a maximum profit of 159 pips, shorting at 1856.10 and exiting at 1854.69 dollars. Hence, this candlestick scalping strategy considers both trading signals and money management based on patterns.
candle designs for scalpers
Remember that scalping is a challenging and high-risk trading style that demands experience, discipline, and focus. Before transitioning to a live account, begin with a demo account to practice and test your strategy. Always employ risk management tools like stop-loss orders to mitigate excessive losses, and don’t forget to adapt your strategy to the prevailing market conditions.

Which one is most reliable for day trading ?

While numerous candlestick patterns can be applied to day trading, here is one of the most popular and effective patterns for day traders:

Example

As illustrated in the chart below, this candlestick pattern occurs when a smaller candlestick is followed by a larger candlestick that entirely engulfs the body of the smaller one. This can be an indicator of a reversal in price direction. The following EURUSD, M30 cnadlestick chart depicts the candle as a reliable pattern for day trading.

candle shapes for day traders
It’s crucial to note that no trading strategy is foolproof, and thorough research and analysis are essential before making any trades. Additionally, combining these patterns with other technical indicators can enhance their effectiveness, as demonstrated in the previous example.

Which one is most reliable for swing trading ?

Swing trading involves holding a position over several days or weeks, so the optimal candlestick pattern strategy for this type of trading may differ from that of day trading. Here’s one of the most popular and effective candlestick patterns and strategies for swing trading:

Example

As shown in the chart below, Bullish/Bearish Candles with Long Lower/Upper Shadows can be a highly effective candlestick pattern strategy for swing trading. These candles indicate that sellers/buyers are attempting to drive the price down/up but are unsuccessful, and buyers/sellers subsequently take control. They suggest a potential reversal. The BTCUSD daily chart depicts cryptocurrency reversals near long-tailed candles.
candle figures for swing traders
As with day trading, it’s crucial to remember that no trading strategy is infallible. Therefore, conducting thorough research and analysis before executing any trades is essential. Combining these patterns with other technical indicators and fundamental analysis can enhance their effectiveness. Additionally, backtesting is paramount to evaluate their performance over time. Moreover, implementing risk management rules is crucial to safeguard your trading capital.

Conclusion

In summary, candlestick patterns and trading strategies are extensively used by traders to analyze market movements and make informed trading decisions. These candle pattern guides provide valuable insights into market sentiment and can be combined with various trading strategies for a more comprehensive approach. However, it is important to note that these patterns are not foolproof and should be used in conjunction with other analysis techniques and risk management strategies.
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