Candlestick patterns encode the psychological battle between bulls and bears into visual forms. Each pattern tells a story: who was in control, who lost control, and what probably comes next. Learning these patterns is not about memorizing shapes — it's about understanding market psychology at specific price levels.
Single Candle Patterns
Single Candle Patterns
Doji: Market Indecision
A doji forms when open and close prices are the same (or very close), creating a cross-shape. It indicates indecision — neither bulls nor bears won the period. At the end of a trend; a doji is a warning sign of potential reversal.
Hammer / Inverted Hammer: Bullish Reversal
A hammer has a small body near the top and a long lower wick — bulls pushed back after sellers drove the price down. A bullish signal when it forms at the bottom of a downtrend. The inverted hammer has the wick pointing up; same bullish meaning at a bottom.
Shooting Star: Bearish Reversal
Opposite of hammer: small body near the bottom, long upper wick. Buyers tried to push price higher but failed; sellers reclaimed control. A bearish reversal signal when occurring after a prolonged uptrend at resistance.
Multi-Candle Patterns: Higher Reliability
Multi-Candle Patterns: Higher Reliability
- ✓Bullish Engulfing: large green candle completely engulfs prior red candle — strong bullish reversal
- ✓Bearish Engulfing: large red candle engulfs prior green candle — strong bearish reversal
- ✓Morning Star: 3-candle bullish reversal pattern — red candle, small indecision, large green candle
- ✓Evening Star: opposite of morning star — bearish reversal at top of uptrend
- ✓Three White Soldiers: three consecutive green candles — bullish momentum confirmation
- ✓Three Black Crows: three consecutive red candles — bearish momentum confirmation
- ✓Dragonfly Doji: all lower wick, no upper wick — very bullish at bottom of downtrend
- ✓Gravestone Doji: all upper wick, no lower wick — very bearish at top of uptrend
Candlestick Pattern FAQs
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