Skip to main content

Candlestick Patterns

Single and multi-candle reversal and continuation patterns.

Single Candle Patterns​

Hammer​

Structure:

  • Small body at top
  • Long lower wick (2-3× body)
  • Little or no upper wick

Signal:

  • Bullish reversal after downtrend
  • Rejection of lower prices

Confirmation:

  • Next candle closes above hammer body
  • Increased volume

Inverted Hammer​

Structure:

  • Small body at bottom
  • Long upper wick
  • Little lower wick

Signal:

  • Bullish reversal potential
  • Rejection of higher prices

Shooting Star​

Structure:

  • Small body at bottom
  • Long upper wick (2-3× body)
  • Little lower wick

Signal:

  • Bearish reversal after uptrend
  • Rejection of higher prices

Hanging Man​

Structure:

  • Identical to hammer
  • Appears in uptrend

Signal:

  • Bearish reversal warning
  • Requires confirmation

Doji Patterns​

Standard Doji​

Structure:

  • Open ≈ Close
  • Wicks on both sides

Signal:

  • Indecision
  • Potential reversal (context matters)

Dragonfly Doji​

Structure:

  • Open = Close = High
  • Long lower wick

Signal:

  • Bullish reversal
  • Strong rejection of lows

Gravestone Doji​

Structure:

  • Open = Close = Low
  • Long upper wick

Signal:

  • Bearish reversal
  • Strong rejection of highs

Double Candle Patterns​

Bullish Engulfing​

Structure:

  • First: Small bearish candle
  • Second: Larger bullish candle
  • Bullish body completely engulfs previous

Signal:

  • Strong bullish reversal
  • Buyers overpower sellers

Confirmation:

  • Close above engulfing candle high

Bearish Engulfing​

Structure:

  • First: Small bullish candle
  • Second: Larger bearish candle
  • Bearish body completely engulfs previous

Signal:

  • Strong bearish reversal
  • Sellers overpower buyers

Confirmation:

  • Close below engulfing candle low

Piercing Line​

Structure:

  • First: Long bearish candle
  • Second: Bullish gap down, closes above midpoint

Signal:

  • Bullish reversal
  • Strong recovery

Dark Cloud Cover​

Structure:

  • First: Long bullish candle
  • Second: Bearish gap up, closes below midpoint

Signal:

  • Bearish reversal
  • Strong rejection

Triple Candle Patterns​

Morning Star​

Structure:

  1. Long bearish candle
  2. Small-bodied candle (gap down)
  3. Long bullish candle (close into first body)

Signal:

  • Strong bullish reversal
  • Bottom formation

Evening Star​

Structure:

  1. Long bullish candle
  2. Small-bodied candle (gap up)
  3. Long bearish candle (close into first body)

Signal:

  • Strong bearish reversal
  • Top formation

Three White Soldiers​

Structure:

  • Three consecutive long bullish candles
  • Each opens within previous body
  • Each closes progressively higher

Signal:

  • Strong uptrend beginning
  • Steady buying pressure

Three Black Crows​

Structure:

  • Three consecutive long bearish candles
  • Each opens within previous body
  • Each closes progressively lower

Signal:

  • Strong downtrend beginning
  • Steady selling pressure

Trading Strategies​

Hammer Entry​

Setup:
1. Identify downtrend
2. Hammer forms at support
3. Lower wick 2-3× body

Entry:
- Above hammer high
- Next candle bullish

Stop:
- Below hammer low

Target:
- 2-3× risk
- Previous swing high

Engulfing Entry​

Setup:
1. Clear trend (for reversal)
2. Engulfing pattern forms
3. Volume increases

Entry:
- Above engulfing high (bullish)
- Below engulfing low (bearish)

Stop:
- Opposite side of pattern

Target:
- Measured move
- Previous swing

Best Practices​

✅ Wait for confirmation (next candle)
✅ Check overall trend context
✅ Look for support/resistance confluence
✅ Use volume to confirm strength
✅ Larger timeframes = more reliable

❌ Don't trade in isolation
❌ Avoid choppy, sideways markets
❌ Ignore against strong trends
❌ Don't chase without confirmation

Pattern Reliability​

PatternReliabilityTimeframe
HammerMediumAny (better on higher)
EngulfingHighDaily+
DojiLow-MediumAll timeframes
Morning StarHighDaily+
Shooting StarMediumDaily+

API Usage​

// No API needed - these are visual patterns
// Use indicators to identify potential setups

chart.addIndicator(new RSI(14), {
  pane: 'below',
  bands: [
    { value: 30, color: '#00ff00' },
    { value: 70, color: '#ff0000' }
  ]
});

// Then manually identify candlestick patterns

Automation​

While patterns can be identified programmatically, visual recognition is often more reliable. Consider:

  • Alerts: Volume spikes, doji formation
  • Indicators: RSI divergence, support/resistance
  • Drawing Tools: Mark patterns for analysis

See Also​