COMPLETE CANDLESTICK PATTERN GUIDE
This PDF explains candlestick behavior in full detail: why a candle forms, why its body or shadow is
long or short, what buyers and sellers were doing during its formation, and what it may indicate
about future price movement. Candlesticks reflect market psychology, not guarantees.
1. What Is a Candlestick?
A candlestick represents price movement for a specific time period. Each candle has four data
points: Open, High, Low, and Close. The real body shows the distance between open and close.
Wicks (shadows) show rejection of prices. Candles form because of continuous conflict between
buyers (bulls) and sellers (bears).
Long body: Strong control by buyers or sellers.
Short body: Indecision or balance.
Long upper wick: Price rejected from above (selling pressure).
Long lower wick: Price rejected from below (buying pressure).
2. Single Candlestick Patterns
Bullish Marubozu
Why it forms: Buyers dominate the entire session with almost no selling pressure.
Characteristics: Long bullish body, no or very small shadows.
Future implication: Strong continuation or start of bullish trend.
Bearish Marubozu
Why it forms: Sellers dominate completely; buyers fail to push price up.
Characteristics: Long bearish body, no or very small shadows.
Future implication: Strong bearish continuation or trend start.
Doji
Why it forms: Buyers and sellers are equally strong; open and close are almost same.
Characteristics: Very small body, long or short wicks.
Future implication: Possible reversal or pause, needs confirmation.
Hammer
Why it forms: Sellers push price down, but buyers step in aggressively and close higher.
Characteristics: Small body, long lower shadow, little or no upper shadow.
Future implication: Bullish reversal after downtrend.
Inverted Hammer
Why it forms: Buyers attempt to push price up but face resistance.
Characteristics: Small body, long upper shadow.
Future implication: Potential bullish reversal if confirmed.
Hanging Man
Why it forms: Selling pressure appears after an uptrend.
Characteristics: Same shape as hammer but occurs after uptrend.
Future implication: Bearish reversal warning.
Shooting Star
Why it forms: Buyers push price up, sellers reject higher prices strongly.
Characteristics: Small body, long upper wick.
Future implication: Bearish reversal after uptrend.
Spinning Top
Why it forms: Market uncertainty; neither side in control.
Characteristics: Small body, long upper and lower shadows.
Future implication: Indecision; wait for next candle.
3. Multiple Candlestick Patterns
Bullish Engulfing
Why it forms: Strong buyers completely overpower previous sellers.
Characteristics: Bullish candle fully engulfs previous bearish candle.
Future implication: Strong bullish reversal.
Bearish Engulfing
Why it forms: Sellers overwhelm buyers.
Characteristics: Bearish candle engulfs prior bullish candle.
Future implication: Strong bearish reversal.
Morning Star
Why it forms: Selling pressure weakens and buyers take control.
Characteristics: Three candles: bearish, small indecision, bullish.
Future implication: Bullish trend reversal.
Evening Star
Why it forms: Buying pressure weakens after strong rise.
Characteristics: Three candles: bullish, indecision, bearish.
Future implication: Bearish trend reversal.
Harami
Why it forms: Momentum slows as market pauses.
Characteristics: Small candle inside previous large candle.
Future implication: Possible reversal or consolidation.
Piercing Pattern
Why it forms: Buyers regain strength mid-session.
Characteristics: Bullish candle closes above midpoint of previous bearish candle.
Future implication: Bullish reversal.
Dark Cloud Cover
Why it forms: Sellers enter aggressively after bullish move.
Characteristics: Bearish candle closes below midpoint of prior bullish candle.
Future implication: Bearish reversal.
4. Final Notes on Candlestick Psychology
Candlesticks do not predict the future; they reveal market psychology. Every wick shows rejection,
every body shows control. Always use candlesticks with trend, support/resistance, volume, and
confirmation. A single candle alone should never be blindly trusted.