COMPLETE GUIDE TO

CANDLESTICK PATTERNS
For NIFTY & BANKNIFTY Options Trading
Entry · Exit · Stop Loss · Real Examples · Psychology

35+ 7 Real NIFTY Entry & SL

Patterns Categories Examples For Each

Complete Candlestick Patterns Guide | Page 1 | NIFTY & BANKNIFTY Options Trading
TABLE OF CONTENTS

# Topic Page

1 Anatomy of a Candlestick 3

2 Single Candlestick Patterns – Bullish 4

3 Single Candlestick Patterns – Bearish 7

4 Neutral / Indecision Patterns 10

5 Double Candlestick Patterns 12

6 Triple Candlestick Patterns 17

7 Continuation Patterns 21

8 How to Confirm Patterns 24

9 Complete Quick Reference Table 25

10 Common Mistakes & Pro Tips 27

Complete Candlestick Patterns Guide | Page 2 | NIFTY & BANKNIFTY Options Trading
 Section 1: Anatomy of a Candlestick
Understanding the building blocks before reading patterns

A candlestick chart was invented in Japan in the 18th century by rice trader Homma Munehisa. Each candle
represents ONE time period (1 minute, 5 minutes, 1 day, etc.) and shows four critical price points: Open, High,
Low, and Close (OHLC).

ANATOMY OF A CANDLESTICK
Green = Bullish (Close > Open) | Red = Bearish (Close < Open)

HIGH (Upper Shadow tip) HIGH

Upper Shadow

CLOSE (Top of body) OPEN (Top of body)

BODY

OPEN (Bottom of body) CLOSE (Bottom of body)

Lower Shadow

LOW (Lower Shadow tip) LOW

BULLISH CANDLE BEARISH CANDLE

Key Rules of Candlestick Reading

• Green/White candle = Closing price HIGHER than opening price (Bulls won that period)
• Red/Black candle = Closing price LOWER than opening price (Bears won that period)
• Longer body = stronger conviction in that direction
• Longer wick = price tested that level but was rejected
• No wick = price moved in one direction without any opposition (Marubozu)
• Small body + long wicks = indecision, battle between bulls and bears

■ PRO TIP
Angel One Platform: Set chart to Candlestick view → Select 3-min or 5-min timeframe for intraday.
Use 15-min or 1-hr for swing trading. Daily chart for identifying major trend.

Complete Candlestick Patterns Guide | Page 3 | NIFTY & BANKNIFTY Options Trading
 Section 2: Single Bullish Patterns
These appear at bottoms/support zones · Signal potential upward reversal

2.1 HAMMER
Bullish Reversal | Reliability: ★★★★■ | Found at: Support / Bottom

HAMMER What It Looks Like:

A candle with a small body at the TOP and a lower wick that is at
least 2× the body length. Little or no upper wick. The body can be
green or red — green is more bullish.
Small Body
Psychology:
Price opened, sellers pushed it way down during the session, but
Long Long Lower Wick buyers stepped in aggressively and pushed price back up near the
(2x+ body length)
open. The long lower wick = buyers rejected the lower prices. Think
of it as a hammer 'hammering out a bottom'.

NIFTY Example:
NIFTY is in a downtrend, falls to support at 22,000. A Hammer
forms on the 15-min chart at 9:45 AM. Open: 22,020 | Low: 21,900 |
Close: 22,010 Signal: Buy 22,100 CE. Stop: Below 21,900.

■ ENTRY/EXIT RULES
ENTRY: Buy CE (Call Option) on the NEXT candle open after Hammer forms
STOP LOSS: Below the low of the Hammer candle
TARGET: Next resistance level (usually 1.5x the wick length above)
CONFIRMATION: Higher volume on Hammer + RSI below 40 + near support zone

2.2 INVERTED HAMMER

Bullish Reversal | Reliability: ★★★■■ | Needs next-candle confirmation

Complete Candlestick Patterns Guide | Page 4 | NIFTY & BANKNIFTY Options Trading
INV. HAMMER What It Looks Like:
Small body at the BOTTOM, long upper wick (2x+ body), little/no
lower wick. Appears after a downtrend. Opposite shape to hammer
but similar bullish meaning.

Long Upper Wick

Psychology:
Buyers tried to push price up (long upper wick shows buying
Small Body attempt), but sellers brought it back down. However, the very
presence of buying interest at these lows signals potential reversal.
Wait for next candle to confirm!

NIFTY Example:
NIFTY falls to 22,200 support. Inverted Hammer forms. Open:
22,205 | High: 22,340 | Close: 22,215 Next candle is green →
CONFIRMED → Buy 22,300 CE

■ ENTRY/EXIT RULES
ENTRY: ONLY after next candle closes GREEN (confirmation required)
STOP LOSS: Below the low of the Inverted Hammer
TARGET: Previous resistance. Risk:Reward minimum 1:1.5
NOTE: Weaker signal than regular Hammer — always wait for confirmation

2.3 BULLISH MARUBOZU

Strong Bullish Continuation | Reliability: ★★★★★ | No wicks = full dominance

BULL MARUBOZU What It Looks Like:

A long GREEN candle with NO upper wick and NO lower wick (or
Open (Bottom)
negligible wicks). Open = Low, Close = High. Shows complete bull
domination.

Psychology:
NO WICKS
Full Bull Power Bulls were in control from the very first tick to the last. Price opened
and went straight up without any pullback. This shows extreme
buying pressure — institutions are aggressively accumulating. This
Close (Top) is one of the most powerful single candles.

NIFTY Example:
NIFTY opens at 22,400, goes straight to 22,680 — no dips. Full
green Marubozu with high volume. Signal: Strong uptrend day. Buy
CE on any small dip.

■ ENTRY/EXIT RULES
ENTRY: Buy on the very next candle open — don't wait, trend is strong
STOP LOSS: Below 50% of the Marubozu body (if broken, momentum reversed)
TARGET: Trail stop — Marubozu shows start of a strong trend move
ANGEL ONE TIP: Look for high volume (3x average) to confirm institutional buying

Complete Candlestick Patterns Guide | Page 5 | NIFTY & BANKNIFTY Options Trading
 2.4 DRAGONFLY DOJI
Bullish Reversal | Reliability: ★★★★■ | T-shape at bottoms

DRAGONFLY What It Looks Like:

Open = High = Close (at the top). Long lower shadow. Looks like
the letter 'T'. Appears after a downtrend at support levels.

Open=High=Close Psychology:
Sellers pushed price down significantly during the session, but

Long Lower Wick

buyers completely reversed the move, pushing price back to the
Strong Buying open/high. This shows powerful rejection of lower prices and strong
buying interest at support.

NIFTY Example:
NIFTY at support 21,900. Forms Dragonfly Doji. Open: 21,920 |
Low: 21,750 | Close: 21,918 Long lower wick = buyers absorbed all
selling. Buy 22,000 CE on next green candle.

■ ENTRY/EXIT RULES
ENTRY: Buy CE after next candle opens and stays above Dragonfly close
STOP LOSS: Below the LOW of the Dragonfly (absolute support)
TARGET: Next resistance level above. Often gives 1:2 or better R:R
BEST TIMEFRAME: 15-min or hourly chart for strongest signals

2.5 PIERCING LINE

Bullish Reversal (2-candle) | Reliability: ★★★★■ | At downtrend bottoms

PIERCING LINE What It Looks Like:

Day 1: Large bearish (red) candle. Day 2: Gap down open, then
bulls push price UP above the MIDPOINT of Day 1's body. The
green candle 'pierces' into the red candle.

Psychology:
50% midpoint
Green closes above After a bearish day, gap down next day triggered panic selling. But
buyers stepped in strongly and pushed price back up past the
midpoint of the previous red candle. This shows bulls are taking
control — sellers are exhausted.

NIFTY Example:
Day 1: NIFTY falls from 22,500 to 22,200 (red candle). Day 2:
Opens at 22,100 (gap down), rallies to 22,380 (above midpoint
22,350) Signal: Strong reversal → Buy ATM CE

Complete Candlestick Patterns Guide | Page 6 | NIFTY & BANKNIFTY Options Trading
■ ENTRY/EXIT RULES
ENTRY: Next day open — confirms buyers are in control
STOP LOSS: Below the low of Day 2 (the green candle)
KEY RULE: Green candle MUST close above 50% of Day 1's red body — else pattern invalid
CONFIRMATION: Volume on Day 2 should be higher than Day 1

Complete Candlestick Patterns Guide | Page 7 | NIFTY & BANKNIFTY Options Trading
 Section 3: Single Bearish Patterns
These appear at tops/resistance zones · Signal potential downward reversal

3.1 SHOOTING STAR

Bearish Reversal | Reliability: ★★★★■ | At resistance / Tops

SHOOTING STAR What It Looks Like:

Small body at the BOTTOM, long upper wick (2x+ body), little/no
lower wick. Appears after an uptrend at resistance. RED body is
more bearish.

Long Upper Wick

(Rejection at high) Psychology:
Price opened and buyers pushed it high (long upper wick), but
Small Red Body sellers took control and pushed price back near the open. The long
upper wick = rejection at high price. Bears dominated the session
despite initial bullish push. Think of it as a shooting star falling from
the sky.

NIFTY Example:
NIFTY rallies to resistance at 23,000. Shooting Star forms. Open:
22,950 | High: 23,200 | Close: 22,960 250-point rejection from the
top! Signal: Buy 23,000 PE. SL: Above 23,200.

■ ENTRY/EXIT RULES
ENTRY: Buy PE (Put Option) on next candle open after Shooting Star
STOP LOSS: Above the HIGH of the Shooting Star (if broken, pattern failed)
TARGET: Previous support level below. Typically 1:2 or better R:R
POWER SIGNAL: Shooting Star + Overbought RSI (>70) + at key resistance = HIGH PROBABILITY

3.2 HANGING MAN

Bearish Reversal | Reliability: ★★★■■ | Confirms on next red candle

Complete Candlestick Patterns Guide | Page 8 | NIFTY & BANKNIFTY Options Trading
HANGING MAN What It Looks Like:
Same SHAPE as Hammer — small body + long lower wick. BUT it
appears at the TOP of an uptrend (not at the bottom). Context
makes it BEARISH.
Small Red Body
Psychology:
During an uptrend, sellers tried to push price down (long lower
Long Lower Wick wick). Although buyers recovered, the selling attempt at these high
(Appears at TOPS)
levels is a warning sign. Bears are starting to test the market. Next
candle must be red to confirm.

NIFTY Example:
NIFTY uptrend reaches 23,100 (resistance). Hanging Man forms.
Open: 23,080 | Low: 22,950 | Close: 23,070 Next candle RED →
CONFIRMED bearish → Buy 23,000 PE

■ ENTRY/EXIT RULES
ENTRY: ONLY after next candle is bearish (red) — confirms the reversal
STOP LOSS: Above the HIGH of the Hanging Man
KEY DIFFERENCE FROM HAMMER: Same shape, opposite context. Location = everything!
IMPORTANT: Never trade Hanging Man without confirmation — many false signals

3.3 GRAVESTONE DOJI

Bearish Reversal | Reliability: ★★★★■ | Inverted T at tops

GRAVESTONE What It Looks Like:

Open = Low = Close (at the bottom). Long upper shadow. Looks like
an upside-down 'T'. Appears at tops — the 'gravestone' marks the
end of the uptrend.

Long Upper Wick Psychology:

Strong Rejection
Bulls pushed price up aggressively during the session (long upper
wick), but bears completely crushed the move and closed price at
Open=Low=Close
the open/low. This shows total rejection at the top — bears are
firmly in control.

NIFTY Example:
NIFTY rallies to 23,200 (all-time high zone). Open: 23,150 | High:
23,380 | Close: 23,148 230-point rejection from top! Gravestone Doji
→ Buy 23,100 PE aggressively

■ ENTRY/EXIT RULES
ENTRY: Buy PE immediately on next candle — strong signal, doesn't need much confirmation
STOP LOSS: Above the HIGH of the Gravestone (absolute top)
TARGET: Gap fill or next major support. Often gives 1:3+ R:R at major tops
BEST SCENARIO: Gravestone Doji + RSI >70 + at round number/all-time high = SELL strongly

Complete Candlestick Patterns Guide | Page 9 | NIFTY & BANKNIFTY Options Trading
 3.4 BEARISH MARUBOZU
Strong Bearish Continuation | Reliability: ★★★★★ | No wicks = full bear control

BEAR MARUBOZU What It Looks Like:

A long RED candle with NO upper wick and NO lower wick. Open =
Open (Top)
High, Close = Low. Bears completely dominated every minute of the
session.

Psychology:
NO WICKS
Full Bear Power Bears took control from the opening tick and never allowed any
recovery. Price fell continuously without any relief buying. This
shows institutional selling — FIIs or large operators aggressively
Close (Bottom) offloading positions. A sign of panic or capitulation.

NIFTY Example:
Global selloff day. NIFTY opens at 22,800, falls straight to 22,450.
Full red Marubozu — no wick, high volume. Signal: Strong
downtrend. Buy PE on any bounce.

■ ENTRY/EXIT RULES
ENTRY: Buy PE on any small bounce (don't chase the fall directly)
STOP LOSS: Above 50% of the Marubozu body
TARGET: Next support level below. Trail stop as trend continues
CAUTION: If Bearish Marubozu appears at a major support level, may reverse sharply!

3.5 DARK CLOUD COVER

Bearish Reversal (2-candle) | Reliability: ★★★★■ | Opposite of Piercing Line

DARK CLOUD What It Looks Like:

Day 1: Large bullish (green) candle. Day 2: Gap UP open, but bears
push price DOWN below the MIDPOINT of Day 1's body. The red
candle 'covers' the green like dark cloud.

Psychology:
50% midpoint
Red closes below After a strong bullish day, price gaps up creating excitement. But
sellers immediately step in and drive price below the midpoint of the
previous day. Bulls who bought the day before are now sitting at a
loss — selling pressure increases.

NIFTY Example:
Day 1: NIFTY rallies from 22,200 to 22,600 (large green candle).
Day 2: Opens at 22,700 (gap up), but falls to 22,340 (below
midpoint 22,400) Signal: Bearish reversal → Buy 22,400 PE

Complete Candlestick Patterns Guide | Page 10 | NIFTY & BANKNIFTY Options Trading
■ ENTRY/EXIT RULES
ENTRY: Buy PE at the open of Day 3 — selling momentum confirmed
STOP LOSS: Above the HIGH of Day 2 (the red candle's high)
KEY RULE: Red candle MUST close below 50% of Day 1's green body — else false signal
BONUS SIGNAL: If Day 2 also shows high volume, the reversal is very strong

Complete Candlestick Patterns Guide | Page 11 | NIFTY & BANKNIFTY Options Trading
 Section 4: Neutral / Indecision Patterns
Market is undecided · Wait for breakout direction · Context is everything

4.1 DOJI (Classic)

Indecision | Reliability: ★★★■■ | Needs direction confirmation

DOJI What It Looks Like:

Open = Close (or very close). Has both upper and lower wicks. The
body is a thin horizontal line. Perfectly balanced between bulls and
bears.

Upper Shadow Psychology:

Complete indecision. Bulls and bears fought all session and ended
Open = Close
exactly where they started. This is a tug-of-war with no winner. After
(No real body)
a trend, a Doji signals the trend may be exhausting. The NEXT
Lower Shadow
candle tells you who won.

Types of Doji:
• Standard Doji: Equal wicks both sides (true indecision) •
Long-legged Doji: Very long wicks — extreme indecision, big
move coming • Four-Price Doji: All four prices equal — extremely
rare, very low volume

NIFTY Example:
NIFTY uptrend. Doji forms at 23,000 resistance. Wait for next
candle → Red candle confirms → Buy PE Wait for next candle →
Green candle confirms → Buy CE

■ ENTRY/EXIT RULES
RULE: NEVER trade a Doji alone — always wait for the next candle's direction
IF NEXT CANDLE IS GREEN: Buy CE. Stop below Doji low.
IF NEXT CANDLE IS RED: Buy PE. Stop above Doji high.
BEST USE: Doji after a long trend = high probability reversal signal

4.2 SPINNING TOP

Indecision / Consolidation | Reliability: ★★★■■ | Breakout signal coming

Complete Candlestick Patterns Guide | Page 12 | NIFTY & BANKNIFTY Options Trading
SPINNING TOP What It Looks Like:
Small body (can be green or red) with EQUAL upper and lower
wicks. Wicks are significantly longer than the body. Balance point.

Long Upper Wick

Psychology:
Both bulls and bears tried to move price in their direction, but neither
Small Body
could establish dominance. Unlike Doji, there IS a body — slight
edge given to either bulls or bears. Multiple spinning tops in a row =
Both wicks ≈ equal
Long Lower
Market Wick
INDECISION consolidation/sideways phase.

NIFTY Example:
NIFTY been moving sideways at 22,400-22,600 for 3 days. Multiple
Spinning Tops forming → Prepare for breakout! If breaks above
22,600 → Buy CE If breaks below 22,400 → Buy PE

■ ENTRY/EXIT RULES
STRATEGY: Use Spinning Top zone as consolidation. Trade the BREAKOUT.
LONG ENTRY: Buy CE when price breaks above the Spinning Top's HIGH + volume spike
SHORT ENTRY: Buy PE when price breaks below the Spinning Top's LOW + volume spike
IRON CONDOR OPPORTUNITY: Multiple Spinning Tops = range-bound → Sell both sides!

4.3 INSIDE BAR

Consolidation / Breakout Setup | Reliability: ★★★★■ | Powerful breakout predictor

INSIDE BAR What It Looks Like:

Day 2's candle is COMPLETELY inside Day 1's (Mother Bar) range.
High is lower than Mother Bar's high AND Low is higher than Mother
Bar's low.

Psychology:
Mother Bar
After a big move (Mother Bar), the market pauses and consolidates
(Large candle) within the previous range. Market is coiling like a spring — energy
building for a breakout. The smaller the Inside Bar relative to Mother
Inside Bar
Bar, the more explosive the potential breakout.
(Fully inside)

NIFTY Example:
NIFTY has a large red candle (Mother Bar): High 22,800, Low
22,400. Next day: Inside Bar — High 22,680, Low 22,480 Watch for
breakout: Above 22,680 → Buy CE | Below 22,480 → Buy PE

■ ENTRY/EXIT RULES
ENTRY (BULLISH BREAKOUT): Buy CE when price breaks above Inside Bar HIGH + volume
ENTRY (BEARISH BREAKOUT): Buy PE when price breaks below Inside Bar LOW + volume
STOP LOSS: Place just beyond the Mother Bar's extreme (opposite side of breakout)
PRO TIP: The best Inside Bars are tiny — the tighter the range, the bigger the move!

Complete Candlestick Patterns Guide | Page 13 | NIFTY & BANKNIFTY Options Trading
 Section 5: Double Candlestick Patterns
Two-candle formations · Higher reliability · Most widely used by professionals

5.1 BULLISH ENGULFING

Strong Bullish Reversal | Reliability: ★★★★★ | One of the BEST patterns

BULL ENGULFING What It Looks Like:

Day 1: Small bearish (red) candle. Day 2: Large bullish (green)
candle that COMPLETELY engulfs Day 1's body (opens below Day
Green body 1 close, closes above Day 1 open).
ENGULFS red

Psychology:
After a bearish day (bears had control), bulls come in the next day
with such force that they swallow the entire previous selling. Volume
on Day 2 should be significantly higher. This is a clear statement:
Day 1 (Red)
bulls have taken over. Institutions are stepping in to buy at these
levels.
Day 2 (Green)

NIFTY Example:
NIFTY downtrend reaches support 22,000. Day 1 Red: Open
22,050, Close 21,980 Day 2 Green: Open 21,940, Close 22,100
(engulfs Day 1!) Signal: STRONG BUY → 22,100 CE or 22,200 CE

■ ENTRY/EXIT RULES
ENTRY: Buy CE at the OPEN of Day 3 (next candle after engulfing) for safety
AGGRESSIVE ENTRY: Buy CE at close of Day 2 if volume is very high
STOP LOSS: Below the LOW of the engulfing (green) candle
HIGH PROBABILITY SETUP: Bullish Engulfing + at key support + RSI < 35 + high volume = 5-star signal!

5.2 BEARISH ENGULFING

Strong Bearish Reversal | Reliability: ★★★★★ | Mirror of Bullish Engulfing

Complete Candlestick Patterns Guide | Page 14 | NIFTY & BANKNIFTY Options Trading
 BEAR ENGULFING What It Looks Like:
Day 1: Small bullish (green) candle. Day 2: Large bearish (red)
candle that COMPLETELY engulfs Day 1's body. Opens above Day
Red body 1 close, closes below Day 1 open.
ENGULFS green

Psychology:
Bulls had a winning day, but bears come in with overwhelming force
the next session. The entire bull move is consumed. Bears have
clearly taken control at these levels. Institutions are distributing
Day 1 (Green)
(selling) at resistance. Very reliable at tops.

Day 2 (Red) NIFTY Example:

NIFTY uptrend reaches resistance 23,200. Day 1 Green: Open
23,100, Close 23,180 Day 2 Red: Open 23,220, Close 23,060
(engulfs Day 1!) Signal: STRONG SELL → Buy 23,100 PE
immediately

■ ENTRY/EXIT RULES
ENTRY: Buy PE at next candle open after Bearish Engulfing confirms
STOP LOSS: Above the HIGH of the engulfing (red) candle
TARGET: Previous support level — often 1:2 to 1:3 R:R
COMBINATION SIGNAL: Bearish Engulfing + RSI > 70 + FII net selling = highest probability short

5.3 TWEEZER TOP & BOTTOM

Reversal Patterns | Reliability: ★★★★■ | Equal highs/lows = double rejection

TWEEZER TOP TWEEZER BOTTOM

Equal Highs
= Resistance

Equal Lows
= Support

Tweezer Top (Bearish):

Two candles with the SAME HIGH (equal highs) — Day 1 green, Day 2 red. Price tried to break above that level
TWICE and failed both times. The equal highs form a strong double resistance. Bears are defending that price
aggressively.

Tweezer Bottom (Bullish):

Two candles with the SAME LOW (equal lows) — Day 1 red, Day 2 green. Price tested that support twice and
bounced both times. Bulls are strongly defending that level. Excellent entry for CE options.

Complete Candlestick Patterns Guide | Page 15 | NIFTY & BANKNIFTY Options Trading
■ ENTRY/EXIT RULES
TWEEZER TOP → Buy PE: Stop above the equal highs. Target: Next major support.
TWEEZER BOTTOM → Buy CE: Stop below the equal lows. Target: Next major resistance.
PRO TIP: These patterns are EXTREMELY reliable because you have a defined S/R level.
The stop loss is clear (above/below the equal highs/lows) making risk management easy.

Complete Candlestick Patterns Guide | Page 16 | NIFTY & BANKNIFTY Options Trading
 5.4 BULLISH & BEARISH HARAMI
Reversal Patterns | Reliability: ★★★■■ | 'Harami' = Pregnant in Japanese

BULLISH HARAMI BEARISH HARAMI

Large Red = Day 1 Large Green = Day 1

Small Green Small Red

inside = Day 2 inside = Day 2

In Harami patterns, the second candle is completely inside the first candle's body (like a baby inside the mother).
Bullish Harami: large red candle followed by small green candle inside it — sellers losing power. Bearish Harami:
large green candle followed by small red candle inside it — buyers losing steam. Needs next candle confirmation
for reliability.

■ ENTRY/EXIT RULES
BULLISH HARAMI → Buy CE on next green candle confirmation. SL: Below mother bar low.
BEARISH HARAMI → Buy PE on next red candle confirmation. SL: Above mother bar high.
NOTE: Harami Cross = second candle is a Doji → much stronger signal than regular Harami

Complete Candlestick Patterns Guide | Page 17 | NIFTY & BANKNIFTY Options Trading
 Section 6: Triple Candlestick Patterns
Three-candle formations · Highest reliability · Used by institutional traders

6.1 MORNING STAR

Strong Bullish Reversal | Reliability: ★★★★★ | The dawn of a new uptrend

MORNING STAR What It Looks Like:

Day 1: Large bearish candle (downtrend continues) Day 2: Small
candle (Doji or Spinning Top) — gaps below Day 1 Day 3: Large
bullish candle — closes above 50% of Day 1's body

Psychology:
Day 1: Bears in full control — strong selloff. Day 2: Indecision —
Bullish
bears tired, bulls testing the water. Day 3: Bulls take full control with
Reversal conviction — reversal confirmed! Like a morning star appearing in
darkness — dawn of a new uptrend.
Signal!
Long Red Long Green
Small Star
(Day 1)
(Day 2)
(Day 3) NIFTY Example:
Day 1: NIFTY crashes from 22,500 to 22,050 (red) Day 2: Small Doji
at 22,000 (indecision at support) Day 3: NIFTY rallies from 22,020 to
22,380 (green) Signal: STRONG BUY → 22,400 CE

■ ENTRY/EXIT RULES
ENTRY: Buy CE at the OPEN of Day 4 (after pattern completes)
AGGRESSIVE: Buy CE at close of Day 3 if it closes above 50% of Day 1's body
STOP LOSS: Below the LOW of Day 2 (the small star candle)
TARGET: Retracement of entire Day 1 fall + beyond. Often 1:3 R:R opportunity!
STRONGEST SIGNAL: Morning Star + at 200 EMA support + high volume on Day 3

6.2 EVENING STAR

Strong Bearish Reversal | Reliability: ★★★★★ | The dusk of an uptrend

Complete Candlestick Patterns Guide | Page 18 | NIFTY & BANKNIFTY Options Trading
EVENING STAR What It Looks Like:
Day 1: Large bullish candle (uptrend continues) Day 2: Small candle
(Doji or Spinning Top) — gaps above Day 1 Day 3: Large bearish
candle — closes below 50% of Day 1's body

Small Star
(Day 2) Bearish
Psychology:
Day 1: Bulls in full control — strong rally. Day 2: Indecision at the
Reversal
top — bulls running out of fuel. Day 3: Bears take full control —
Signal! uptrend reversed! Mirror image of Morning Star — one of the most
reliable bearish patterns.
Long Green Long Red
(Day 1) (Day 3)
NIFTY Example:
Day 1: NIFTY rallies from 22,600 to 23,100 (green) Day 2: Small
Doji at 23,150 (exhaustion at resistance) Day 3: NIFTY falls from
23,100 to 22,700 (red) Signal: STRONG SELL → Buy 23,000 PE

■ ENTRY/EXIT RULES
ENTRY: Buy PE at OPEN of Day 4 or at close of Day 3
STOP LOSS: Above the HIGH of Day 2 (the small star)
TARGET: Fill the Day 1 rally + beyond. Often gives 1:3 to 1:4 R:R
PRO NOTE: If Day 2 is a Doji (not just small candle) → 'Morning/Evening Doji Star' = STRONGER signal

Complete Candlestick Patterns Guide | Page 19 | NIFTY & BANKNIFTY Options Trading
 6.3 THREE WHITE SOLDIERS
Strong Bullish Continuation | Reliability: ★★★★■ | Steady institutional accumulation

3 SOLDIERS What It Looks Like:

3 consecutive green candles = Strong Bull
Three consecutive large GREEN candles, each: • Opens within the
Each opens within prev. body, closes near high body of the previous candle • Closes near the high with little/no
upper wick • Each close is higher than the previous

Psychology:
Steady, disciplined institutional accumulation over three sessions.
No panic buying — organized, systematic. Each day bulls open
slightly lower, then march straight up to a new high. Classic sign of
smart money building a large position. Very bullish for swing traders.

NIFTY Example:
After a consolidation at 21,800: Day 1: 21,800 → 22,050 (green) |
Day 2: 21,980 → 22,280 | Day 3: 22,220 → 22,500 Signal:
Sustained uptrend confirmed → Buy CEs aggressively

■ ENTRY/EXIT RULES
ENTRY: Buy CE on Day 3 close or Day 4 open — trend is confirmed
STOP LOSS: Below the OPEN of Day 1 (the beginning of the pattern)
TARGET: Use Fibonacci extension from Day 1 low to Day 3 high for targets
CAUTION: If candles are very long and extended, be careful of short-term exhaustion!

6.4 THREE BLACK CROWS

Strong Bearish Continuation | Reliability: ★★★★■ | Organized institutional distribution

3 BLACK CROWS What It Looks Like:

Three consecutive large RED candles, each: • Opens within the
body of the previous candle • Closes near the low with little/no lower
wick • Each close is lower than the previous

Psychology:
Systematic institutional distribution — selling in an organized,
controlled manner over three sessions. Bears have full control.
Each day price opens slightly higher (brief hope), then collapses to
new lows. Classic sign of smart money exiting or building short
positions.
3 consecutive red candles = Strong Bear
Each opens within prev. body, closes near low
NIFTY Example:
After NIFTY peaks at 23,200: Day 1: 23,150→22,850 | Day 2:
22,940→22,600 | Day 3: 22,680→22,320 Signal: Strong downtrend
→ Buy PEs aggressively

Complete Candlestick Patterns Guide | Page 20 | NIFTY & BANKNIFTY Options Trading
■ ENTRY/EXIT RULES
ENTRY: Buy PE on Day 3 close or Day 4 open — downtrend confirmed
STOP LOSS: Above the OPEN of Day 1 (beginning of the bearish pattern)
TARGET: Use Fibonacci extension to project downside targets
IMPORTANT: Three Black Crows near a major distribution zone = high conviction short trade

Complete Candlestick Patterns Guide | Page 21 | NIFTY & BANKNIFTY Options Trading
 Section 7: Continuation Patterns
Market pauses then continues the original trend · 'Profit-taking' phases

7.1 Rising Three Methods (Bullish Continuation)

In an uptrend: Large green candle (Day 1), followed by 2-3 small red candles that stay within Day 1's range (Days
2-4), then another large green candle breaks above (Day 5). The small red candles = profit-taking / short-term
pullback. The final green candle confirms trend continuation.

■ NIFTY EXAMPLE
NIFTY uptrend. Large green candle from 22,200-22,600.
Next 3 days: small pullback to 22,400 area (all within 22,200-22,600)
Day 5: Strong green candle breaks above 22,600 → Buy CE — trend continues!
Stop: Below the lowest of the 3 small red candles

7.2 Falling Three Methods (Bearish Continuation)

Opposite of Rising Three. In a downtrend: Large red candle (Day 1), followed by 2-3 small green candles within the
range (consolidation/short covering), then another large red candle breaks below — downtrend continues.

■ NIFTY EXAMPLE
NIFTY downtrend. Large red candle from 23,000 to 22,550.
Next 3 days: small bounce to 22,700 area (stays within 22,550-23,000)
Day 5: Strong red candle breaks below 22,550 → Buy PE — downtrend resumes!
Stop: Above the highest of the 3 small green candles

7.3 Windows (Gaps)

In Japanese candlestick theory, gaps are called 'Windows'. They are very powerful S&R; levels.

• Gap Up (Rising Window): Price gaps above previous close → Bullish. Gap acts as support below.
• Gap Down (Falling Window): Price gaps below previous close → Bearish. Gap acts as resistance above.
• Island Reversal: Gap up followed by gap down (or vice versa) = powerful reversal signal

■ NIFTY EXAMPLE
NIFTY gaps up from 22,500 to 22,700 on strong budget news.
The gap zone (22,500-22,700) = strong support now.
If NIFTY pulls back to 22,700 and bounces → Buy CE with stop below 22,500
Rule: 'Gaps tend to get filled eventually' — but not always immediately!

7.4 Doji Star (Continuation Warning)

A Doji that gaps above (in uptrend) or below (in downtrend) the previous candle. It's a warning that the trend may
pause or reverse. Commonly seen before a major reversal. Different from Evening/Morning Star only in that it
appears mid-trend.

■ PRO TIP
Continuation patterns tell you to HOLD existing positions, not reverse them.
Use the consolidation phase (small candles) to add to winning positions at better prices.
Best risk management: Trail your stop to below/above the consolidation range.

Complete Candlestick Patterns Guide | Page 22 | NIFTY & BANKNIFTY Options Trading
 Section 8: How to Confirm Candlestick Patterns
Patterns alone are not enough · Confluence = High Probability

The most common mistake traders make is acting on a candlestick pattern WITHOUT confirmation. A Bullish
Engulfing at a random price level in the middle of a chart means very little. The SAME Bullish Engulfing at a key
support + high volume + RSI oversold = one of the highest probability trades you can make. Always seek
confluence.

Confirmation Factor What to Check Why It Matters

Volume Pattern candle volume vs average (3x = strong) High volume = institutional participation = conviction

Location Is pattern at key S/R, Fibonacci, VWAP? Random patterns fail; patterns at key levels succeed

RSI Oversold (<35) for bullish, Overbought (>70) for bearish

Momentum confirms reversal probability

EMA Is price above/below key EMAs (9,21,50,200)? Trend direction filter prevents fighting the trend

Open Interest OI buildup at the pattern level? Institutional positioning validates your trade

Timeframe Does higher TF agree with lower TF signal? Multi-timeframe confluence = strongest signals

Gap Did pattern form with a gap? Gapped patterns show strong conviction in direction

Time of Day 9:30-11:30 or 1:00-3:00 PM patterns = more reliable

First/last 15 min signals are often whipsaws

■ PRO TIP
THE GOLDEN RULE: The more confluence factors align, the higher the probability.
1 factor = 40% win rate | 2 factors = 55% | 3 factors = 65-70% | 4+ factors = 75%+
Wait for 3+ factors to align before entering any candlestick pattern trade!

Complete Candlestick Patterns Guide | Page 23 | NIFTY & BANKNIFTY Options Trading
 Section 9: Complete Quick Reference Table
All patterns at a glance · Print & keep at your trading desk

Pattern Type Signal Candles Reliability Options Trade

Hammer Single Bullish Rev. 1 ★★★★■ Buy CE at support

Inverted Hammer Single Bullish Rev. 1 ★★★■■ Buy CE after confirmation

Shooting Star Single Bearish Rev. 1 ★★★★■ Buy PE at resistance

Hanging Man Single Bearish Rev. 1 ★★★■■ Buy PE after confirmation

Bull Marubozu Single Bull Cont. 1 ★★★★★ Buy CE immediately

Bear Marubozu Single Bear Cont. 1 ★★★★★ Buy PE immediately

Doji (Classic) Single Indecision 1 ★★★■■ Wait for next candle

Dragonfly Doji Single Bullish Rev. 1 ★★★★■ Buy CE at support

Gravestone Doji Single Bearish Rev. 1 ★★★★■ Buy PE at resistance

Spinning Top Single Indecision 1 ★★★■■ Trade the breakout

Inside Bar Single Breakout 1-2 ★★★★■ Buy breakout direction

Bull Engulfing Double Bullish Rev. 2 ★★★★★ Buy CE — high priority

Bear Engulfing Double Bearish Rev. 2 ★★★★★ Buy PE — high priority

Piercing Line Double Bullish Rev. 2 ★★★★■ Buy CE at bottoms

Dark Cloud Cover Double Bearish Rev. 2 ★★★★■ Buy PE at tops

Bullish Harami Double Bullish Rev. 2 ★★★■■ Buy CE after confirm

Bearish Harami Double Bearish Rev. 2 ★★★■■ Buy PE after confirm

Tweezer Top Double Bearish Rev. 2 ★★★★■ Buy PE at double top

Tweezer Bottom Double Bullish Rev. 2 ★★★★■ Buy CE at double bottom

Morning Star Triple Bullish Rev. 3 ★★★★★ Buy CE — best reversal

Evening Star Triple Bearish Rev. 3 ★★★★★ Buy PE — best reversal

3 White Soldiers Triple Bull Cont. 3 ★★★★■ Buy CE / hold CEs

3 Black Crows Triple Bear Cont. 3 ★★★★■ Buy PE / hold PEs

Morning Doji Star Triple Bullish Rev. 3 ★★★★★ Strongest bull reversal

Evening Doji Star Triple Bearish Rev. 3 ★★★★★ Strongest bear reversal

Rising 3 Methods Cont. Bull Cont. 5 ★★★★■ Hold/add CE on pullback

Falling 3 Methods Cont. Bear Cont. 5 ★★★★■ Hold/add PE on bounce

Complete Candlestick Patterns Guide | Page 24 | NIFTY & BANKNIFTY Options Trading
 Section 10: Mistakes & Professional Tips
What separates profitable traders from losing ones

Mistake #1: Trading Every Pattern You See

Most patterns are low quality. Trade only HIGH-CONVICTION setups — 3+ confirmation factors. 2-3 excellent
trades per day beats 15 mediocre ones.

Mistake #2: Ignoring the Higher Timeframe Trend

A Bullish Engulfing on a 1-min chart means nothing if the 15-min trend is strongly bearish. ALWAYS check the
higher timeframe first. Trade WITH the trend, not against it.

Mistake #3: Entering at Pattern Formation (Not Confirmation)

Enter AFTER the pattern completes and the next candle confirms. Many patterns fail at the first test. The
confirmation candle is your green light.

Mistake #4: Ignoring Volume

A Bullish Engulfing with 3x average volume is a 5-star signal. The same pattern with below-average volume = likely
to fail. Volume = conviction.

Mistake #5: Setting Stop Loss Too Tight

Your SL should be just beyond the pattern's extreme — not a few points away. Give the trade room to breathe. A
tight stop on a valid pattern will get stopped out randomly.

Mistake #6: Holding Losing Option Positions

Unlike stocks, options have time decay. A pattern failure in options = exit quickly. Cut losses at 30-40% of premium
paid. Options can go to ZERO. Never average down.

Mistake #7: Trading Patterns Near Expiry

In the last 2 days before NIFTY expiry, Theta decay destroys premiums extremely fast. Even if a Bullish Engulfing
forms, the CE premium may not move enough to profit.

Mistake #8: Curve Fitting (Seeing Patterns Everywhere)

A pattern is only valid when it meets ALL criteria strictly. Don't force a pattern. If you have to question 'is this a
Hammer?', it's probably not.

TOP 5 PRO TIPS FROM 20+ YEARS OF TRADING

■ PRO TIP
Focus on 3-5 patterns only:
Master the Bullish/Bearish Engulfing, Morning/Evening Star, and Hammer/Shooting Star. These 5 patterns cover 80% of high-quality setups i

■ PRO TIP
The 'Right Side' Rule:
In an uptrend, only trade bullish patterns (CE buys). In a downtrend, only trade bearish patterns (PE buys). 'Right side' = trading with the majo

Complete Candlestick Patterns Guide | Page 25 | NIFTY & BANKNIFTY Options Trading
■ PRO TIP
Use 15-min chart for signals, 3-min for entry:
Find the pattern on the 15-min chart (higher quality signal). Then zoom into 3-min chart for a precise entry point. This gives you both quality a

■ PRO TIP
The 'Big Picture' Check (5 seconds before every trade):
Before entering ANY trade: 1) What is 15-min trend? 2) Is pattern at key S/R? 3) Is volume confirming? 4) What is RSI? 5) Where is VWAP?

■ PRO TIP
Journal Every Candlestick Trade:
Screenshot every trade. Note the pattern, entry, SL, target, result, and what you learned. After 100 trades, you'll know which patterns work BE

Candlesticks are the language of the market.

Learn to read them — and the market will speak to you clearly.
For Educational Purposes Only — Always Practice on Paper Before Real Trading

Complete Candlestick Patterns Guide | Page 26 | NIFTY & BANKNIFTY Options Trading