35 Powerful Candlestick Patterns Explained
35 Powerful Candlestick Patterns Explained
Listen to this:
35 Candlestick Chart Patterns in the Stock Market
Jun 2022 · Your Journey to Financial Freedom
Save on Spoti&
21:57
The candlesticks are used to identify trading patterns that help technical analyst
set up their trades.
These candlestick patterns are used for predicting the future direction of the price
movements.
In this blog, we will discuss all 35 powerful candlestick patterns, but before that, let
us discuss how to read candlestick charts.
Table Of Contents
How to Read Candlestick Charts?
1. Hammer:
2. Piercing Pattern:
3. Bullish Engulfing:
6. White Marubozu:
8. Bullish Harami:
9. Tweezer Bottom:
26. Doji:
32. Mat-Hold-
You can also watch the video on candlesticks charts from here.
Bottomline:
A daily candlestick chart shows the security’s open, high, low, and close prices for
the day. The candlestick’s wide or rectangle part is called the “real body” which
shows the link between opening and closing prices.
This real body shows the price range between the open and close of that day’s
trading.
When the real body is filled, black or red then it means that the close is lower than
the open and is known as the bearish candle. It shows that the prices opened, the
bears pushed the prices down and closed lower than the opening price.
If the real body is empty, white or green then it means that the close was higher
than the open known as the bullish candle. It shows that the prices opened, the
bulls pushed the prices up and closed higher than the opening price.
The thin vertical lines above and below the real body is knowns as the wicks or
shadows which represents the high and low prices of the trading session.
The upper shadow shows the high price and lower shadow shows the low prices
reached during the trading session.
Related Posts
Trade with Relative Strength Index – Use RSI Range shift effectively for trading
NOVEMBER 14, 2023 26.2K
Before we jump into learning about different candlestick charts, there are few
assumptions which need to be kept in mind that are specific to the candlestick
charts.
2. The textbook definition of a patterns states certain criteria, but one should state
that there could be minor variations to the pattern depending on certain market
conditions.
3. One should look for a prior trend. If you are looking at a bullish reversal pattern,
then the prior trend should be bearish and if you are looking for a bearish reversal
pattern then the prior trend should be bullish.
Thus, traders should be cautious about their short positions when the bullish
reversal candlestick chart patterns are formed.
1. Hammer:
Hammer is a single candlestick pattern that is formed at the end of a downtrend
and signals a bullish reversal.
The real body of this candle is small and is located at the top with a lower shadow
which should be more than twice the real body. This candlestick chart pattern has
no or little upper shadow.
The psychology behind this candle formation is that the prices opened, and sellers
pushed down the prices.
Suddenly the buyers came into the market and pushed the prices up and closed
the trading session more than the opening price.
This resulted in the formation of bullish pattern and signifies that buyers are back
in the market and downtrend may end.
Traders can enter a long position if next day a bullish candle is formed and can
place a stop-loss at the low of Hammer.
Two candles form it, the first candle being a bearish candle which indicates the
continuation of the downtrend.
The second candle is a bullish candle which opens the gap down but closes more
than 50% of the real body of the previous candle, which shows that the bulls are
back in the market and a bullish reversal is going to take place.
Traders can enter a long position if the next day a bullish candle is formed and
can place a stop-loss at the low of the second candle.
It is formed by two candles, the second candlestick engulfing the first candlestick.
The first candle is a bearish candle that indicates the continuation of the
downtrend.
The second candlestick is a long bullish candle that completely engulfs the first
candle and shows that the bulls are back in the market.
Traders can enter a long position if next day a bullish candle is formed and can
place a stop-loss at the low of the second candle.
It is made of 3 candlesticks, the first being a bearish candle, the second a Doji and
the third being a bullish candle.
The first candle shows the continuation of the downtrend. The second candle
being a doji indicates indecision in the market. The third bullish candle shows that
the bulls are back in the market and reversal will take place.
The second candle should be completely out of the real bodies of the first and
third candles.
Traders can enter a long position if the next day a bullish candle is formed and
can place a stop-loss at the low of the second candle.
These candlestick charts are made of three long bullish bodies which do not have
long shadows and are open within the real body of the previous candle in the
pattern.
6. White Marubozu:
The White Marubozu is a single candlestick pattern that is formed after a
downtrend indicating a bullish reversal.
This candlestick has a long bullish body with no upper or lower shadows which
shows that the bulls are exerting buying pressure and the markets may turn
bullish.
At the formation of this candle, the sellers should be cautious and close their
shorting position.
It consists of three candlesticks, the first being a long bearish candle, the second
candlestick being a small bullish candle which should be in the range the first
candlestick.
The third candlestick should be a long bullish candlestick confirming the bullish
reversal.
The relationship of the first and second candlestick should be of the bullish harami
candlestick pattern.
Traders can take a long position after the completion of this candlestick pattern.
8. Bullish Harami:
The Bullish Harami is multiple candlestick chart pattern which is formed after a
downtrend indicating bullish reversal.
It consists of two candlestick charts, the first candlestick being a tall bearish
candle and second being a small bullish candle which should be in the range of
the first candlestick.
The first bearish candle shows the continuation of the bearish trend and the
second candle shows that the bulls are back in the market.
Traders can take a long position after the completion of this candlestick pattern.
9. Tweezer Bottom:
The Tweezer Bottom candlestick pattern is a bullish reversal candlestick pattern
that is formed at the end of the downtrend.
It consists of two candlesticks, the first one being bearish and the second one
being bullish candlestick.
Both the candlesticks make almost or the same [Link] the Tweezer Bottom
candlestick pattern is formed the prior trend is a downtrend.
A bearish tweezer candlestick is formed which looks like the continuation of the
ongoing downtrend. On the next day, the second day’s bullish candle’s low
indicates a support level.
The bottom-most candles with almost the same low indicate the strength of the
support and also signal that the downtrend may get reversed to form an uptrend.
Due to this the bulls step into action and move the price upwards.
This bullish reversal is confirmed the next day when the bullish candle is formed.
In this candlestick, the real body is located at the end and there is a long upper
shadow. It is the inverse of the Hammer Candlestick pattern.
This pattern is formed when the opening and closing prices are near to each other
and the upper shadow should be more than twice the real body.
11. Three Outside Up:
The Three Outside Up is multiple candlestick pattern which is formed after a
downtrend indicating bullish reversal.
It consists of three candlesticks, the first being a short bearish candle, the second
candlestick being a large bullish candle which should cover the first candlestick.
The third candlestick should be a long bullish candlestick confirming the bullish
reversal.
The relationship of the first and second candlestick chart should be of the Bullish
Engulfing candlestick pattern.
Traders can take a long position after the completion of this candlestick pattern.
The pattern is called a neckline because the two closing prices are the same or
almost the same across the two candles, forming a horizontal neckline.
13. Bullish Counterattack-
The bullish counterattack pattern is a bullish reversal pattern that predicts the
upcoming reversal of the current downtrend in the market. This candlestick
pattern is a two-bar pattern that appears during a downtrend in the market. A
pattern needs to meet the following conditions to be a bullish counterattack
pattern.
There must be a strong downtrend in the market for the formation of the bullish
counterattack pattern.
The first candle must be a long black candle with a real body.
The second candle must also be a long (ideally, equal in size to the first candle) but
a white candle with a real body. The second candle must close near the close of
the first candle.
Thus, the traders should be cautious about their long positions when the bearish
reversal candlestick patterns are formed.
Below are the different types of bearish reversal candlestick chart patterns:
The real body of this candle is small and is located at the top with a lower shadow
which should be more than the twice of the real body. This candlestick pattern has
no or little upper shadow.
The psychology behind this candle formation is that the prices opened and seller
pushed down the prices.
Suddenly the buyers came into the market and pushed the prices up but were
unsuccessful in doing so as the prices closed below the opening price.
This resulted in the formation of bearish pattern and signifies that seller are back
in the market and uptrend may end.
Traders can enter a short position if next day a bearish candle is formed and can
place a stop-loss at the high of Hanging Man.
It is formed by two candles, the first candle being a bullish candle which indicates
the continuation of the uptrend.
The second candle is a bearish candle which opens the gap up but closes more
than 50% of the real body of the previous candle which shows that the bears are
back in the market and a bearish reversal is going to take place.
Traders can enter a short position if the next day a bearish candle is formed and
can place a stop-loss at the high of the second candle.
It is formed by two candles, the second candlestick engulfing the first candlestick.
The first candle being a bullish candle indicates the continuation of the uptrend.
The second candlestick chart is a long bearish candle that completely engulfs the
first candle and shows that the bears are back in the market.
Traders can enter a short position if next day a bearish candle is formed and can
place a stop-loss at the high of the second candle.
It is made of 3 candlesticks, first being a bullish candle, second a doji and third
being a bearish candle.
The first candle shows the continuation of the uptrend, the second candle being a
doji indicates indecision in the market, and the third bearish candle shows that the
bears are back in the market and reversal is going to take place.
The second candle should be completely out of the real bodies of first and third
candle.
Traders can enter a long position if next day a bearish candle is formed and can
place a stop-loss at the high of the second candle.
These candlesticks are made of three long bearish bodies which do not have long
shadows and open within the real body of the previous candle in the pattern.
19. Black Marubozu:
The Black Marubozu is a single candlestick pattern which is formed after an
uptrend indicating bearish reversal.
This candlestick chart has a long bearish body with no upper or lower shadows
which shows that the bears are exerting selling pressure and the markets may
turn bearish.
At the formation of this candle, the buyers should be caution and close their
buying position.
20. Three Inside Down:
The Three Inside Down is multiple candlestick pattern which is formed after an
uptrend indicating bearish reversal.
It consists of three candlesticks, the first being a long bullish candle, the second
candlestick being a small bearish which should be in the range the first
candlestick.
The third candlestick chart should be a long bearish candlestick confirming the
bearish reversal.
The relationship of the first and second candlestick should be of the bearish
Harami candlestick pattern.
Traders can take a short position after the completion of this candlestick pattern.
It consists of two candlesticks, the first candlestick being a tall bullish candle and
second being a small bearish candle which should be in the range of the first
candlestick chart.
The first bullish candle shows the continuation of the bullish trend and the second
candle shows that the bears are back in the market.
Traders can take a short position after the completion of this candlestick pattern.
In this candlestick chart the real body is located at the end and there is long upper
shadow. It is the inverse of the Hanging Man Candlestick pattern.
This pattern is formed when the opening and closing prices are near to each other
and the upper shadow should be more than the twice of the real body.
It consists of two candlesticks, the first one being bullish and the second one being
bearish candlestick. Both the tweezer candlestick make almost or the same high.
When the Tweezer Top candlestick pattern is formed the prior trend is an uptrend.
A bullish candlestick is formed which looks like the continuation of the ongoing
uptrend.
On the next day, the high of the second day’s bearish candle’s high indicates a
resistance level. Bulls seem to raise the price upward, but now they are not willing
to buy at higher prices.
The top-most candles with almost the same high indicate the strength of the
resistance and also signal that the uptrend may get reversed to form a
downtrend. This bearish reversal is confirmed on the next day when the bearish
candle is formed.
It consists of three candlesticks, the first being a short bullish candle, the second
candlestick being a large bearish candle which should cover the first candlestick.
The third candlestick should be a long bearish candlestick confirming the bearish
reversal.
CATEGORIES LANGUAGE
COURSES WEBINARS
Search...
The relationship of the first and second candlestick should be of the Bearish
Engulfing candlestick pattern.
Traders can take a short position after the completion of this candlestick pattern.
26. Doji:
Doji pattern is a price action candlestick pattern of indecision that is formed when
the opening and closing prices are almost equal.
It is formed when both the bulls and bears are fighting to control prices but
nobody succeeds in gaining full control of the prices.
The only difference between spinning top and doji is in their formation, the real
body of the spinning is larger as compared to Doji.
28. Falling Three Methods:
The “falling three methods” is a bearish, five candle continuation pattern which
signals an interruption, but not a reversal, of the ongoing downtrend.
The candlestick pattern is made of two long candlestick charts in the direction of
the trend i.e downtrend at the beginning and end, with three shorter counter-trend
candlesticks in the middle.
The candlestick pattern is important as it shows traders that the bulls still do not
have enough power to reverse the trend.
The candlestick pattern is made of two long candlesticks in the direction of the
trend i.e uptrend in this case. at the beginning and end, with three shorter
counter-trend candlesticks in the middle.
The candlestick pattern is important as it shows traders that the bears still do not
have enough power to reverse the trend.
This candlestick pattern consists of three candles, the first candlestick is a long-
bodied bullish candlestick, and the second candlestick is also a bullish candlestick
chart formed after a gap up.
The third candlestick is a bearish candle that closes in the gap formed between
these first two bullish candles.
This candlestick pattern consists of three candles, the first candlestick is a long-
bodied bearish candlestick, and the second candlestick is also a bearish
candlestick formed after a gap down.
The third candlestick is a bullish candle that closes in the gap formed between
these first two bearish candles.
32. Mat-Hold-
A mat hold pattern is a candlestick formation indicating the continuation of a prior
trend.
There can be either bearish or bullish mat hold patterns. A bullish pattern begins
with a large bullish candle followed by a gap higher and three smaller candles
which move lower.
These candles must stay above the low of the first candle. The fifth candle is a
large candle that moves to the upside again. The pattern occurs within an overall
uptrend.
You can also download our Ebook on Technical Analysis which has
all candlestick patterns in pdf format.
In this course, Candlestick Made Easy traders will understand various candlestick
patterns and how to use them in trading.
We hope you found this blog informative and use it to its maximum potential in
the practical world. Also, show some love by sharing this blog with your family and
friends and helping us in our mission of spreading financial literacy.
Happy Investing!
Elearnmarkets
Elearnmarkets (ELM) is a complete financial market portal where the
market experts have taken the onus to spread financial education. ELM
constantly experiments with new education methodologies and
technologies to make financial education effective, affordable and
accessible to all. You can connect with us on Twitter @elearnmarkets.
Related Posts
TECHNICAL ANALYSIS TECHNICAL ANALYSIS
5 Most Used Swing Trading Indicators Trade with Relative Strength Index – Use
NOVEMBER 16, 2023 56.4K RSI Range shift effectively for trading
NOVEMBER 14, 2023 26.2K
Relative Strength Index Indicator and How Trading with Elliott Wave
is it useful in Trading Stocks? NOVEMBER 1, 2023 11.4K
Comments 98
Reply
Hi,
Reply
Amazing stuff
Reply
Hi,
Keep Reading!!
Reply
Thank you yesterday i made 21 trades 3000 eur each and only lost 2 it was
really helpful.
1 sujjestion please change colour of comment i really cant see anything i’m
writing
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your
feedback!
Keep Reading!
Reply
Hi, Liked this stuff and it is really helpful to beginners. Suggest if you include few
examples, that would help beginners to understand it better
Reply
Sakshi Agarwal 2 years ago
Hi,
Keep Reading!
Reply
Enjoyed reading the article above, really explains everything in detail, the article is
very interesting and effective. Thank you and good luck with the upcoming articles.
Reply
Hi,
Keep Reading!
Reply
Just great learning with it. Please share more possible patterns if same are there.
Reply
Hi,
Keep Reading!
Reply
Very useful for bigners and very easy understanding thanks lot
Reply
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
good information
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
Reply
Reply
Hi,
Keep Reading!
Reply
Hi,
There is no option to download the blog but you can bookmark this page so you
can come back and read whenever you need reference. Sorry for the
incontinence caused.
Reply
Really
Helpful for beginners
Great
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your
feedback!
Keep Reading!
Reply
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
I found a lot of useful information on your site. Thank you for the valuable
information.
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading
Reply
Reply
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading
Reply
Great
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Right on. It’s more informative and easy to understand. Thanks a lot such a nice
guideline.
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading
Reply
Thank you for your very nice topic and Very significant Information for us.
Reply
Sakshi Agarwal 2 years ago
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Reply
Sakshi Agarwal 2 years ago
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Reply
Sakshi Agarwal 2 years ago
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Great knowledge piece to understand candle stick patterns. My doubts on types &
pattern of candles are clear now.
Thanks
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
heyyyy……thank you very much for this information. you made this in a very simple
way it is very easy to understand.
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
1 no .
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
as a beginner, its very very useful & effective in the details. i really thanks for helping
me.
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
AASHISH SRIVASTAVA 2 years ago
Reply
Hi,
We really appreciated that you liked our blog! Thank you for your feedback!
Keep Reading!
Reply
its very helpful , i need a pdf of this so how can i download this ?
Reply
Hi,
We really appreciated that you liked our blog! However, there is no option to
download the same.
Keep Reading!
Reply
Very nice
Reply
Hi,
We really appreciated that you liked our blog! However, there is no option to
download the same.
Keep Reading!
Reply
Reply
Hi,
We really appreciated that you liked our blog! However, there is no option to
download the same.
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
Hi,
Keep Reading!
Reply
Great…
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
Good effort for beginner , Pls Provide this blog in Hindi too….
Reply
Hi,
Keep Reading!
Reply
Nice
Reply
Hi,
Keep Reading!
Reply
Reply
Hi,
We really appreciated that you liked our blog!
Keep Reading!
Reply
Reply
Hi,
Keep Reading!
Reply
Reply
Reply
Reply
Rashid khan 4 weeks ago
Reply
Leave a Reply
Your email address will not be published. Required fields are marked *
Comment *
Name *
Email *
POST COMMENT
Register on Elearnmarkets
Download App
Categories
Popular On Elearnmarkets
Market Superheroes: Vivek Bajaj Chetan Panchamia Ashish Kyal Premal Parekh Abhijit Paul
Jegan Sivakumar Jayachadran Vishal Malkan Jyoti Budhia Vivek Gadodia Vishal Mehta
Piyush Chaudhry Santosh Pasi Gomathi Shankar
Stock Market for Beginners Harmonic Chart Patterns Algo Trading Elliot Wave Theory
Advanced Excel Cryptocurrency NSE Certification Course
Webinars: Bank Nifty Scalping Intraday Trading Strategies Options Trading Strategies
Options selling Price Action Relative Strength Tax Planning Options Buying Growth Stocks
Portfolio Management Relative Strength Index Risk Management Renko Charts Crude Oil
Free Learning Modules: Intraday Trading Options Scalping Swing Trading Financial Modelling
RSI Indicator Bollinger Bands Pricing of Futures Personal Finance Initial Public Offerings (IPO)
Value Investing Technical Indicators Candlesticks Chart Patterns Option Greeks ELSS Funds
Book Summaries: Rich Dad Poor Dad Psychology of Money The Intelligent Investor
The Richest Man in Babylon Think and Trade Like a Champion
Value Investing and Behavioural Finance Trading in the Zone Learn to Earn