A Complete Guide to Trading Candlestick Patterns

Candlestick patterns are a fundamental element of any technical analysis strategy. Beginner traders often rely on them due to their simplicity and effectiveness. These patterns are easy to study and recognize on a chart, with many boasting an accuracy rate of over 60%, making them one of the most reliable tools for market analysis.

Before diving into the top 40 candlestick patterns curated by the JustMarkets team, we’ll cover some key technical aspects. This section is essential for beginners who are just starting their trading journey. If you’re already an experienced trader, feel free to scroll down to the patterns!

What Are Candlesticks?

Japanese candlesticks visually represent price movements over a given period. By analyzing their shape and color, traders can interpret the relationship between the opening and closing prices and the price range for that period.

Historically, Japanese candlesticks date back to the 18th century and were first used in Japan (specifically in rice trading). By the early 20th century, candlestick charts had made their way to Europe and the U.S. However, they gained widespread popularity after the publication of Steve Nison’s 1991 book, Japanese Candlestick Charting Techniques, which introduced these techniques to traders worldwide.

What Is Candlestick Structure?

Candlesticks have two key components:

• The body – A thick rectangular section representing the difference between the opening and closing prices during a specific timeframe.
• Shadows (wicks) – Thin lines extending above and below the body, indicating the highest and lowest price points reached during that period.

Candlesticks can be green (white) or red (black):

• Green/white means the closing price was higher than the opening price.
• Red/black means the closing price was lower than the opening price.

At first glance, candlestick pattern analysis may seem complex, but it primarily involves studying these elements. Some patterns may have no shadows, while others may feature extremely small bodies, almost disappearing altogether. The art of candlestick analysis lies in recognizing these variations and interpreting their significance.

Bullish & Bearish Reversal Patterns, Continuation Patterns

Candlestick patterns fall into four broad categories:

1. Bullish reversal patterns – Indicate a potential shift from a downtrend to an uptrend.
2. Bearish reversal patterns – Suggest a transition from an uptrend to a downtrend.
3. Continuation patterns – Signal that the current trend is likely to persist.
4. Indecision patterns – Reflect market uncertainty between buyers and sellers and can often hint at an upcoming trend reversal.

Since we anticipate and hope for growth in all assets within our portfolio, let’s start with bullish candlestick patterns. Below, we’ve highlighted 12 of the most popular bullish formations.

Top 12 Bullish Candlestick Patterns

Bullish candlestick patterns help traders identify potential trend reversals and catch even the smallest changes in market sentiment. Knowing these 12 patterns will almost certainly allow you to expand your trading strategy with new and effective tools. Let’s get started!

1. Bullish Engulfing

The bullish engulfing pattern is a strong reversal signal that suggests buyers have taken control of the market, overpowering the previous selling momentum. This formation appears at the bottom of a downtrend and is considered a key indication that the market could be shifting toward an uptrend.

This pattern is formed when a small red (bearish) candle is followed by a larger green (bullish) candle, which completely engulfs the previous day’s price range. The second candle’s open is lower than the prior day’s close, but strong buying pressure pushes the price higher, closing above the previous day’s open. This shift in sentiment suggests that sellers have exhausted their momentum, and buyers are stepping in aggressively.

2. Bullish Harami

The bullish harami is a two-candle formation that signals a possible trend reversal from bearish to bullish. It typically appears at the bottom of a downtrend, suggesting that selling pressure is fading and buyers are beginning to gain control.

This pattern consists of a large red candle, representing strong bearish sentiment, followed by a smaller green candle that fits entirely within the previous candle’s body. This second, smaller candle indicates hesitation among sellers, as they fail to push the price lower. Instead, the market stabilizes, hinting at a potential shift toward an uptrend.

The bullish harami is often interpreted as a sign of uncertainty in the market, where bears start losing dominance, and bulls begin testing the waters. Confirmation usually comes when the price breaks above the high of the harami’s second candle.

According to Thomas N. Bulkowski’s Encyclopedia of Candlestick Charts, the bullish harami has a 54% probability of successfully predicting market reversals. While not as strong as other reversal patterns, it remains a valuable tool for traders looking to anticipate shifts in market sentiment.

3. Tweezer Bottom

The tweezer bottom is a bullish reversal candlestick pattern that emerges at the end of a downtrend, signaling that selling pressure is waning and buyers are stepping in. This pattern is identified by two or more consecutive candles with nearly identical lows, which establish a strong support level and indicate potential price stabilization before a bullish reversal.

What makes the tweezer bottom significant is its implication that sellers have tested the same low multiple times but failed to push the price lower. This repeated inability to break through the support level suggests that bearish momentum is weakening, while buyers are beginning to accumulate positions at this price point. The formation of this pattern often leads traders to anticipate a trend reversal, especially when confirmed by increased volume or additional bullish signals.

Dr. Thomas N. Bulkowski, in his comprehensive research on chart patterns, documented in Encyclopedia of Chart Patterns, found that the tweezer bottom pattern has a 61% probability of correctly predicting bullish reversals, making it a valuable tool in technical analysis.

4. Morning Star

The morning star is a three-candle formation that serves as a strong bullish reversal signal, often appearing at the bottom of a downtrend when market sentiment shifts from bearish to bullish. This pattern consists of three distinct candlesticks:

1. The first candle is a large bearish (red) candle, reflecting the continuation of selling pressure from the previous trend.
2. The second candle is a small-bodied candle, which could be a doji or spinning top, signifying market indecision and a potential slowdown in bearish momentum.
3. The third candle is a strong bullish (green) candle that confirms the reversal, closing above the midpoint of the first candle and signaling that buyers have regained control.

The morning star pattern is highly regarded by traders because it represents a shift in market sentiment. The appearance of the second, smaller candle suggests that sellers are losing strength, and the final bullish candle confirms that buyers are stepping in to drive prices higher.

When trading the morning star, traders often set stop-loss orders just below the low of the second or third candle to manage risk while targeting resistance levels or prior swing highs for profit-taking.

5. Morning Star Doji

The morning star doji is a powerful bullish reversal candlestick pattern that consists of three distinct candles. The first candle is a strong bearish (red) candle, signaling continued selling pressure and a prevailing downtrend. The second candle is a doji, a small-bodied candlestick that represents market indecision, suggesting that bears are losing control while buyers start to step in. Finally, the third candle is a robust bullish (green) candle that closes well above the midpoint of the first bearish candle, confirming a potential trend reversal.

This pattern is particularly significant because the doji acts as a turning point, highlighting a balance between buyers and sellers before momentum shifts in favor of the bulls. When this formation occurs at a key support level or alongside increasing volume, it provides a strong indication that the market is preparing for an upward move.

6. Bullish Abandoned Baby

The bullish abandoned baby is a rare yet highly effective bullish reversal pattern that signals a significant shift in market sentiment. It is composed of three candles that mark the transition from a bearish trend to a bullish one.

1. The first candle is a long bearish (red) candle, reflecting a strong downtrend and continued selling pressure.
2. The second candle is a doji that opens with a gap down, indicating uncertainty and a potential loss of bearish momentum.
3. The third candle is a large bullish (green) candle that gaps up, decisively shifting control to the buyers and confirming a trend reversal.

What makes the bullish abandoned baby stand out is the gaps on either side of the doji, which signify a sudden reversal in sentiment. The gap down before the doji reflects extreme pessimism, while the gap up in the third candle demonstrates a surge in buying interest, often accompanied by higher volume.

7. Three Outside Up

The three outside up candlestick pattern is a strong bullish reversal signal that appears at the bottom of a downtrend. This pattern consists of three candles that indicate a shift in momentum from sellers to buyers.

1. The first candle is bearish, continuing the existing downtrend.
2. The second candle is a large bullish candle that fully engulfs the first candle, signaling that buyers are stepping in with strength.
3. The third candle opens above the second candle’s high and closes even higher, confirming the reversal.

This formation suggests that selling pressure has weakened, and buyers are taking control, setting the stage for a possible uptrend. Many traders see this pattern as a reliable buy signal, especially when supported by increasing volume.

8. Three Inside Up

The three inside up candlestick pattern is another bullish reversal formation, signaling that a downtrend is losing momentum and a potential upward move may follow. This pattern is made up of three candles, each playing a key role in the shift from bearish to bullish sentiment.

1. The first candle is bearish, reflecting ongoing selling pressure.
2. The second candle is a smaller bullish candle that forms within the body of the first candle, hinting at buyer interest.
3. The third candle is a strong bullish candle that closes above the high of the previous two candles, confirming the trend change.

This pattern indicates that sellers are losing strength, while buyers are gaining control, pushing prices higher. When observed at a key support level or alongside rising volume, the three inside up pattern strengthens the case for an upward reversal.

9. Bullish Kicker

The bullish kicker candlestick pattern is a powerful bullish reversal signal that suggests a dramatic shift in market sentiment. It consists of two distinct candles: the first one is bearish, reflecting strong selling pressure, while the second candle is a bullish candle that opens with a gap up and closes significantly higher, completely overriding the previous bearish session.

This formation indicates that buyers have stepped in aggressively, overpowering the bears and pushing prices upward. The sudden shift in sentiment often occurs due to unexpected market news or a significant catalyst, causing traders to reassess their positions. A bullish kicker pattern appearing after a downtrend is a strong indication of a potential trend reversal.

10. Piercing Line

The piercing line candlestick pattern is a bullish reversal formation that signals a possible change in trend. It is formed by two candles: a bearish candle, followed by a bullish candle that opens lower but then surges to close above the midpoint of the previous bearish candle.

This pattern suggests that after an initial wave of selling pressure, buyers have regained control, leading to a strong recovery in price. The deeper the bullish candle closes into the previous bearish candle’s body, the stronger the reversal signal. Traders often use this pattern to anticipate potential buying opportunities, especially when it forms at a key support level.

The piercing line pattern is particularly effective when accompanied by increasing trading volume, as this confirms stronger buying momentum. 

11. Hammer

The hammer candlestick pattern is a single-candle bullish reversal signal that typically forms after a downtrend. This pattern is characterized by a small real body near the top of the candle with a long lower wick, indicating that sellers attempted to push the price lower, but buyers regained strength and drove it back up before the close.

This formation suggests a potential shift in market sentiment. The long lower shadow represents a failed bearish attempt, while the closing price near the session’s high signals that buyers have stepped in, rejecting the downtrend. When it appears at key support levels, the hammer pattern becomes even more significant, often leading to an upward price movement.

12. Inverted Hammer

The inverted hammer candlestick pattern is another bullish reversal formation, visually similar to the hammer but flipped upside down. It typically appears at the end of a downtrend, suggesting that selling pressure is weakening and a potential trend reversal may follow.

The pattern consists of a small real body at the bottom with a long upper wick, indicating that buyers attempted to push prices higher but couldn’t sustain the momentum. 

However, despite closing near its opening level, the strong upside movement within the session signals that the downtrend could be losing strength and a reversal might be on the horizon.

Top 13 Bearish Candlestick Patterns

Bearish candlestick patterns can indicate a potential trend reversal from an uptrend to a downtrend. Traders often use them to argue for shorts or to lock in profits from long positions. Let’s look at 13 of the most popular bearish candlestick patterns.

13. Bearish Engulfing

The bearish engulfing candlestick pattern is a strong bearish reversal signal that appears at the peak of an uptrend, indicating that selling pressure has overtaken buying momentum. This pattern suggests a shift in market sentiment, with sellers overpowering buyers and possibly marking the beginning of a downtrend.

The formation consists of two consecutive candles. The first is a smaller bullish candle, followed by a larger bearish candle that completely engulfs the first one. This complete takeover by the second candle signifies a sudden dominance of sellers, pushing the price lower and hinting at a potential market top.

According to research conducted by the Technical Analysis Research & Education (TARE) Foundation, published in their study “Analyzing the Efficacy of Candlestick Patterns in Modern Markets,” the bearish engulfing pattern has been found to predict bearish reversals with an accuracy of approximately 72%.

14. Bearish Harami

The bearish harami candlestick pattern is a two-candle formation that typically appears at the end of an uptrend, signaling a potential bearish reversal. This pattern emerges when a small bearish candle forms within the range of a larger bullish candle, suggesting a weakening of buying momentum and a possible shift toward selling pressure.

In this setup, the first large bullish candle reflects the market’s existing upward momentum. However, the second smaller bearish candle shows indecision and hesitation among traders, often leading to a trend reversal. This pattern is frequently compared to the bearish engulfing pattern, as both signal a potential market peak.

15. Tweezer Top

The tweezer top candlestick pattern is a bearish reversal formation that appears when two or more consecutive candles reach the same high price, forming a clear resistance level. This pattern suggests that buyers have attempted to push the price higher but failed to break past a strong resistance zone, increasing the likelihood of a trend reversal.

Typically, the first candle is bullish, reflecting the ongoing uptrend, while the second candle is bearish, signaling that sellers have stepped in to counteract buying pressure. The failure to surpass the previous high and the lower close on the second candle strengthens the case for a downtrend.

16. Evening Star

The evening star candlestick pattern is a well-known bearish reversal formation that typically appears at the end of an uptrend, signaling a shift in market sentiment from bullish to bearish. This pattern consists of three consecutive candles, each playing a crucial role in identifying a potential price decline.

The first candle is a large bullish candle, indicating strong buying pressure and an attempt to continue the prevailing uptrend. However, this momentum weakens as the second candle, which is often a doji or small-bodied candle, forms. This middle candle reflects indecision in the market, where neither buyers nor sellers have full control, hinting at a possible trend reversal. Finally, the third candle, a large bearish candle, confirms the trend shift by closing significantly lower, signaling that sellers have overtaken buyers and are now dominating the market.

Traders rely on this pattern as a warning sign of potential downside movement, often using it in combination with technical indicators like RSI or MACD for additional confirmation. A study published in the Journal of Technical Analysis by David Aronson and Timothy Masters, titled “Evaluating the Performance of Candlestick Patterns in Financial Markets,” revealed that the evening star pattern has a 69% accuracy rate in predicting bearish reversals, making it a valuable tool for traders identifying market tops.

17. Evening Star Doji

A variation of the standard evening star pattern, the evening star doji candlestick pattern strengthens the bearish reversal signal by adding an element of market indecision. This three-candle pattern shares similarities with the evening star but differs in the structure of the second candle, which is a doji instead of a small-bodied candle.

The first candle in this pattern is a strong bullish candle, indicating continued buying pressure. However, the second candle, which is a doji, highlights uncertainty among traders. The doji represents a moment when the bulls start losing strength, but the bears have not fully taken over yet, signaling that a reversal could be on the horizon. The third candle, a strong bearish candle, provides confirmation of the trend shift as sellers decisively push prices lower, breaking below the support levels established by the first candle.

18. Bearish Abandoned Baby

The bearish abandoned baby candlestick pattern is a three-candle reversal formation that signals a sharp shift in market sentiment from bullish to bearish. It is considered a rare but highly reliable pattern, as it requires a specific structure to be valid.

The first candle in this setup is a large bullish candle, reflecting strong buying momentum and suggesting that the uptrend is intact. However, this confidence is quickly disrupted by the second candle, a doji that gaps up, showing a clear hesitation from traders. The doji suggests indecision, as neither buyers nor sellers manage to push the price significantly in either direction. The final and most crucial element of this pattern is the third candle, which is a large bearish candle that gaps down, completely rejecting the previous bullish move and confirming that sellers have taken control.

This pattern is considered a strong bearish signal, as the gap down following the doji leaves no room for buyers to recover, reinforcing bearish dominance. It frequently appears after extended uptrends and is most effective when identified on higher timeframes, such as the daily or weekly chart.

19. Three Outside Down

The three outside down candlestick pattern is a bearish reversal signal that appears at the peak of an uptrend, indicating a shift in market control from buyers to sellers. This three-candle formation suggests that a potential downtrend is beginning, as sellers start to overpower buyers.

The first candle in this pattern is a strong bullish candle, reflecting the continuation of the uptrend. However, the second candle, which is bearish, completely engulfs the body of the first candle, signaling that sellers are stepping in aggressively. The third candle further confirms the reversal by closing below the second candle’s low, reinforcing the idea that bearish momentum is building.

Traders see this pattern as a strong warning sign that the previous uptrend is weakening, and a bearish phase may begin. To enhance its reliability, traders often look for additional confirmation, such as a drop in volume on the first candle and increased selling volume on the second and third candles.

20. Three Inside Down

The three inside down candlestick pattern is another bearish reversal formation, signaling that an uptrend is losing strength and that sellers are gaining control. Unlike the three outside down, this pattern reflects a more gradual transition from bullish dominance to bearish pressure.

This pattern starts with a bullish candle, which indicates the continuation of an uptrend. However, the second candle is a smaller bearish candle, which forms within the first candle’s body, indicating that momentum is slowing down. The final third bearish candle then breaks below the second candle’s low, confirming the bearish reversal and signaling potential further downside movement.

Traders view the three inside down pattern as a sign that buying pressure is weakening and sellers are starting to gain control. It is often used alongside other technical indicators, such as moving averages or momentum oscillators, to increase confidence in the potential reversal.

21. Hanging Man

The hanging man candlestick pattern is a single-candle formation that appears at the top of an uptrend, signaling a potential bearish reversal. Its name comes from its unique appearance, resembling a hanging figure with a small body and a long lower wick.

This pattern forms when the market opens at a high, but during the session, sellers push the price significantly lower before buyers attempt to recover, closing the session near the open. The long lower wick is the key characteristic of this pattern, showing that while buyers were able to regain some ground, selling pressure was strong enough to create concern about the sustainability of the uptrend.

The hanging man pattern is considered a cautionary signal rather than an immediate sell indicator. To confirm the reversal, traders often look for additional bearish confirmation, such as a lower opening price in the next session, high selling volume, or a bearish follow-through candle.

Traders interpret this pattern as a sign that buyers are losing control, and if selling pressure continues, it may lead to a trend reversal. For risk management, stop-loss orders are usually placed above the high of the hanging man candle to protect against false signals.

22. Bearish Kicker

The bearish kicker candlestick pattern is a powerful bearish reversal signal that indicates a sharp shift in market sentiment. This pattern consists of two candles, where the first is a bullish candle, reflecting ongoing buying momentum, followed by a strong bearish candle that gaps down at the open and closes below the previous bullish candle’s low.

What makes the bearish kicker pattern significant is the sudden and decisive shift in market direction. The first candle suggests that the uptrend is still in place, but the second candle reveals a complete rejection of bullish control as selling pressure dominates. This abrupt shift suggests that buyers have lost control, and a strong bearish move is likely to follow.

23. Dark Cloud Cover

The dark cloud cover candlestick pattern is a bearish reversal signal that appears when bullish momentum weakens and sellers begin to dominate. This pattern consists of two candles: the first is a strong bullish candle, continuing an uptrend, while the second is a bearish candle that opens above the first candle’s high but closes below its midpoint.

The name “dark cloud cover” comes from its visual representation: the second candle acts as a dark cloud, overshadowing the prior bullish momentum. This pattern suggests that buyers initially push the price higher, but selling pressure emerges, preventing the market from sustaining its gains. The close below the midpoint of the first candle signals weakness in the uptrend and the potential for a bearish reversal.

24. Shooting Star

The shooting star candlestick pattern is a single-candle formation that signals a potential reversal at the top of an uptrend. This pattern is identified by a small real body near the low of the candle and a long upper wick, showing that buyers pushed prices higher before sellers took control and drove the price back down.

The long upper wick of the shooting star represents an unsuccessful attempt by buyers to sustain the rally. While the market initially moves higher, strong selling pressure causes the price to close near its opening level, leaving behind a distinctive formation that looks like a falling star.

25.  Three Black Crows

The three black crows candlestick pattern is a bearish reversal formation that emerges following an uptrend, signaling a shift in market sentiment. This pattern consists of three consecutive bearish candles, each opening within the previous candle’s body and closing lower than the last. It typically appears at the top of a price chart, right after a bullish rally, and serves as an indication that the uptrend may be coming to an end.

In a three black crows pattern, the first bearish candle signals the initial rejection of bullish momentum, while the second and third candles confirm the selling pressure, as each closes progressively lower. This pattern suggests that buyers have lost control, allowing sellers to dominate and drive prices downward. The consistency in lower lows reinforces the potential trend reversal and suggests further downside movement.

A study titled conducted by the Technical Analysis of Stocks & Commodities (TASC) magazine found that the three black crows pattern has a success rate of approximately 78% in predicting bearish reversals.

Top 7 Continuation Candlestick Patterns

Continuation Patterns indicate that at the moment there are no preconditions for trend reversal on the market. Most likely, after a short-term trading and accumulation, the trend will continue its movement. In any case, Continuation Patterns is a powerful tool. Let’s take a look at the 7 most popular patterns.

26. Rising Three

The rising three candlestick pattern is a bullish continuation formation that appears during an ongoing uptrend, signaling that buyers remain in control despite a brief pullback. The pattern is composed of five candles: a strong bullish candle at the beginning, followed by three smaller bearish candles that remain within the range of the initial bullish candle, and a final bullish candle that closes above the first candle’s high.

This pattern illustrates a temporary consolidation phase within an uptrend, where sellers attempt to push the price down but fail to gain momentum. The three smaller bearish candles represent this pause in buying activity, while the final strong bullish candle confirms that buyers have regained control, reinforcing the likelihood of the uptrend continuing.

27. Falling Three

The falling three candlestick pattern is a bearish continuation setup that emerges within a downtrend, confirming that sellers maintain dominance despite a brief recovery. The formation consists of five candles: an initial strong bearish candle, followed by three smaller bullish candles that remain within its range, and a final bearish candle that closes below the first candle’s low.

This pattern reflects a temporary pause in the selling momentum, where buyers attempt to push the price upward but fail to establish a reversal. The final strong bearish candle serves as confirmation that the selling pressure remains intact, signaling that the downtrend is likely to continue.

28. Tasuki Gap

The Tasuki Gap candlestick pattern is a trend continuation signal that appears during both bullish and bearish market phases. It comes in two variations:

• Upside Tasuki Gap (bullish continuation)
• Downside Tasuki Gap (bearish continuation)

This pattern consists of three candlesticks. The first candle aligns with the prevailing trend, followed by a second candle that gaps in the direction of the trend, creating a price void. The third candle partially fills the gap but does not close it, confirming that the trend is intact.

The psychology behind the Tasuki Gap pattern reflects the market’s confidence in the existing trend. The gap represents a surge in momentum, and the failure of the third candle to close the gap indicates that buyers (in an uptrend) or sellers (in a downtrend) remain in control.

According to Thomas N. Bulkowski’s “Encyclopedia of Candlestick Charts”, the Upside Tasuki Gap pattern has a success rate of 57% in intraday trading, making it a moderately reliable signal for trend continuation.

29. Mat Hold

The Mat Hold candlestick pattern is a continuation signal that suggests the existing trend will persist after a brief consolidation. It typically appears midway through an uptrend or downtrend, confirming that buyers or sellers remain in control. This pattern consists of five candlesticks:

1. A long candle in the trend’s direction, reinforcing strong momentum.
2. A price gap, followed by three smaller candles that move against the trend, showing a temporary pullback.
3. A final strong candle that resumes movement in the trend’s original direction, confirming the continuation.

The Mat Hold pattern represents a short-lived market pause where the opposing side attempts to push back but ultimately fails. This failure reassures traders that the dominant trend remains intact and likely to continue. Traders interpret this pattern as a strong signal of trend strength, using it to enter trades in the direction of the prevailing trend.

A comprehensive study by Thomas N. Bulkowski in his book “Encyclopedia of Candlestick Charts” found that bullish Mat Hold patterns have a success rate of around 70% in predicting an ongoing uptrend, making it one of the more reliable continuation patterns.

30. Inside Bars

The Inside Bar candlestick pattern is a moment of indecision in the market, characterized by a smaller candle being completely contained within the high and low range of the previous candle. This structure signals a period of consolidation, where price movement tightens before a potential breakout.

Inside Bar patterns occur when market participants hesitate, waiting for further confirmation before making their next move. This pattern suggests that traders are holding positions while anticipating new information, which often leads to an eventual breakout in either direction.

Traders monitor Inside Bar formations closely, as a breakout from this pattern typically indicates the beginning of a significant price move. The direction of the breakout determines whether it will continue an existing trend or signal a reversal.

The Inside Bar pattern has long been used in technical analysis, dating back to early charting techniques. It gained further prominence through Dan Chesler’s research, where he highlighted its role in market structure analysis. Later, Nial Fuller, a price action trader, expanded on its effectiveness as a key component in breakout trading strategies.

31. Three White Soldiers

The Three White Soldiers pattern is a strong bullish reversal formation, appearing at the bottom of a downtrend and signaling a shift in market sentiment. This pattern is characterized by three consecutive bullish candles, each closing higher than the previous one, confirming that buyers have gained control.

This formation indicates that after a prolonged downtrend, buyers have overwhelmed sellers, leading to a steady increase in price. Each of the three bullish candles represents growing confidence, reducing the likelihood of a false reversal.

32. Marubozu

The Marubozu candlestick pattern is a distinct price formation that reflects strong dominance by either buyers or sellers. This pattern lacks wicks, meaning the price opens at one extreme and closes at the opposite, leaving no upper or lower shadows. The absence of wicks signifies continuous buying or selling pressure throughout the session.

Bullish Marubozu

A bullish Marubozu forms when the price opens at the session’s lowest point and steadily climbs without retracing, closing at the highest price of the session. This demonstrates that buyers maintained complete control, pushing the price higher from open to close without interruption. The structure of this candle follows the rule: High = Close, Low = Open, confirming unwavering bullish sentiment.

Bearish Marubozu

Conversely, a bearish Marubozu appears when the price opens at the highest point of the session and consistently declines, closing at the lowest price. This pattern suggests that sellers dominated the market, driving prices downward without any attempt at recovery. The structure here follows: High = Open, Low = Close, indicating strong bearish momentum.

The Marubozu pattern is often viewed as a signal of trend continuation or strong breakout momentum. When seen in an uptrend, a bullish Marubozu reinforces buying confidence, whereas in a downtrend, a bearish Marubozu signals continued selling pressure.

Top 8 Indecision Candlestick Patterns

Indecision Patterns indicate uncertainty in the market and no clear advantage for both buyers and sellers. In such situations, trading can become very unpredictable and volatile, so it may make sense to tighten stop-loss orders or even refrain from trading until things become clearer. Let’s take a look at the 8 most common Indecision Patterns

33. Doji

The Doji candlestick pattern emerges when an asset’s opening and closing prices are nearly identical, forming a candle with little to no body. This pattern suggests that buyers and sellers are evenly matched, creating a moment of hesitation in the market. Due to its distinctive structure, the Doji is one of the easiest candlestick patterns to recognize on a price chart.

The formation of a Doji reflects market uncertainty, where neither bulls nor bears manage to dominate. The price fluctuates during the session, but ultimately closes near its opening level, reinforcing the idea that the market is at a decision point. This can signal a potential trend reversal or continuation, depending on the preceding price action and volume.

34. Gravestone Doji

The Gravestone Doji candlestick pattern is a bearish reversal indicator that typically forms at the peak of an uptrend. It signals that buyers attempted to push prices higher but ultimately lost momentum, allowing sellers to regain control.

This pattern appears when the market opens at a certain level, rallies significantly, but then retraces all its gains to close at or near the opening price. The long upper wick and absence of a lower wick highlight strong rejection at higher price levels, indicating that the bullish momentum has weakened and sellers are stepping in to reverse the trend.

Technical traders often see the Gravestone Doji as a warning of an impending downturn, especially when it appears at a resistance level or after an extended bullish move.

35. Dragonfly Doji

The Dragonfly Doji candlestick pattern is the opposite of the Gravestone Doji, signaling a potential bullish reversal and typically appearing at the bottom of a downtrend. It forms when sellers push the price lower during the session, but buyers step in aggressively, driving the price back up to close near the opening level.

The long lower wick and lack of an upper wick indicate that the market tested lower prices but found strong support, suggesting that selling pressure has diminished. This shift in sentiment often leads to a price rebound, particularly when confirmed by increased volume or other bullish indicators.

Traders look for confirmation on the next candle, ensuring that buyers maintain control before entering long positions.

36. Long-Legged Doji

The Long-Legged Doji candlestick pattern reflects significant uncertainty in the market, where neither buyers nor sellers establish dominance. This pattern is recognized by its long upper and lower wicks, indicating strong price fluctuations throughout the session. However, the open and close prices remain nearly the same, showing that despite volatility, the market failed to move decisively in either direction.

This pattern can form at both the top and bottom of a trend, serving as a potential indicator of a trend reversal or a continuation depending on the next price movement. The extended wicks represent a tug-of-war between buyers and sellers, each attempting to push the price in their favor but ultimately failing to gain control.

A study published in the Journal of Behavioral Finance by Dr. David Aronson and his research team, titled “The Efficacy of Candlestick Patterns in Financial Markets”, found that the Long-Legged Doji has a 57% probability of forecasting market reversals.

37. Bullish Spinning Top

The Bullish Spinning Top candlestick pattern suggests a possible transition from a downtrend to an uptrend. It is characterized by a small real body with long upper and lower shadows, showing that while prices fluctuated significantly during the session, the open and close remained near the same level.

This formation signals market indecision, where sellers initially push prices lower, but buyers counteract the move, leading to a recovery by the session’s close. The equal battle between bulls and bears suggests a weakening of bearish momentum, potentially paving the way for a trend reversal to the upside.

38. Bearish Spinning Top

The Bearish Spinning Top candlestick pattern suggests a potential reversal from an uptrend to a downtrend. Like its bullish counterpart, this pattern features a small real body with long upper and lower wicks, reflecting uncertainty and indecision in the market.

This pattern emerges when buyers attempt to push the price higher, but sellers fight back, causing the price to close near its opening level. The wide price fluctuations and lack of a clear close higher indicate that bullish momentum is weakening, signaling that a trend reversal to the downside may be imminent.

39. Tri-Star Pattern

The Tri-Star candlestick pattern is a unique formation that signals a possible shift in market direction. This pattern consists of three consecutive doji candles, reflecting extreme market indecision. It can appear in both bullish and bearish variations, depending on its location on the price chart. When found at the bottom of a downtrend, it suggests a potential bullish reversal, whereas at the top of an uptrend, it signals a possible bearish shift.

The formation of three consecutive doji candles indicates a fierce struggle between buyers and sellers, where neither side gains control. This prolonged uncertainty weakens the existing trend, making a reversal more likely.

40. Long Wicks

The Long Wick candlestick pattern is characterized by a candlestick with an extended wick (shadow) on either the top or bottom, suggesting that the market attempted to push the price to an extreme level before reversing. This pattern indicates strong rejection of higher or lower prices and often signals potential trend reversals or shifts in momentum.

The psychology behind long wicks lies in the battle between buyers and sellers. If a candlestick forms a long upper wick, it suggests that buyers initially pushed the price higher, but sellers regained control, forcing it back down. This is considered a bearish signal, as it shows weakening buying pressure.

Conversely, if a long lower wick appears, it implies that sellers drove the price down, but buyers fought back, closing the session near the opening level. This can indicate a bullish reversal, as buyers are stepping in at lower price levels.

Types of Candlestick Patterns and Their Signals

There are around 40 major candlestick patterns, each providing insight into potential market reversals, continuations, or indecision. Below is a categorized table of these patterns, classified by single, double, and triple candle formations based on their structure and function.

Top 40 Most Popular Candlestick Patterns:

How to Trade with Candlestick Patterns

Trading with the help of candlestick patterns is quite easy if you follow a simple algorithm of actions. It should be borne in mind that the above patterns are not often used by themselves. Practice and observation show that candlestick patterns not supported by other indicators have a much lower winrate than those, for example, supported by increased trading volumes. So, what a typical trading process with the help of candlestick patterns looks like:

1. Find a candlestick pattern on the chart. First, as obvious as it may seem, you need to analyze the chart and find a similarity to one of the patterns you have learned. Don’t be wishful thinking, only act with exact matches.
2. Analyze the context. You need to understand what the chart looked like before the pattern appeared. Was the trend downward or upward? 
3. Look at the indicators. Pay attention to key additional indicators: trading volume, MACD, MMAs, and so on.
4. Remember risk management. Candlestick patterns have a clear structure, which allows you to competently place stop-loss and take-profit levels. 

Trading with Candlestick Patterns

Candlestick charts are widely used across various financial markets, helping traders analyze price movements and make informed trading decisions. These charts are essential tools for equities, forex, cryptocurrencies, futures, and options trading, offering insights into market trends, momentum shifts, and potential reversals.

Equity Trading with Candlestick

Candlestick charts are a go-to resource for stock traders, particularly intraday and swing traders, as they provide a visual representation of price fluctuations over time. These charts help identify key support and resistance levels, making it easier to spot trend reversals and confirm trade signals.

Forex Trading with Candlesticks

In forex markets, candlestick patterns are extensively used to interpret currency price action and identify trends in currency pairs. Forex traders use these patterns to gauge market sentiment, spot reversals, and determine entry and exit points for trades.

Crypto Trading with Candlesticks

Cryptocurrency traders heavily rely on candlestick charts to analyze price swings and market trends. Since crypto markets operate 24/7, candlestick formations provide real-time insights into market sentiment and potential trend reversals.

Futures & Options Trading with Candlesticks

Futures and options traders utilize candlestick patterns to identify momentum shifts, recognize trend reversals, and optimize trade entries and exits. Candlestick charts help in analyzing the underlying asset’s price movements, enabling traders to adapt their strategies accordingly.

According to the “2022 Derivatives Market Study” by the Futures Industry Association (FIA), multi-candlestick formations like Dragonfly Doji, Bearish Engulfing, and Piercing Line hold significant statistical relevance in predicting trend shifts in futures and options markets, with a 70% accuracy rate.

Tips and Indicators

Candlestick patterns are a powerful tool across stocks, forex, crypto, and derivatives trading, offering traders a structured way to analyze market behavior. Whether you’re looking for reversal signals, trend confirmations, or breakout opportunities, candlestick charts provide actionable insights that enhance trading decisions.

While candlestick patterns provide valuable insights into market sentiment and potential reversals, combining them with other technical indicators can significantly improve trade accuracy. Traders often use moving averages, RSI, Bollinger Bands, and VWAP alongside candlestick formations to strengthen their trading strategies.

Using Moving Averages with Candlesticks

Moving averages help traders identify dynamic support and resistance levels by smoothing out price fluctuations over time. When combined with candlestick patterns, they provide confirmation of trend direction and potential reversal points.

Example: If a Bullish Engulfing pattern forms near the 50-day moving average, it can signal a strong buying opportunity as the price respects a key support level.

Confirming Overbought & Oversold Conditions with RSI

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. When combined with candlestick analysis, it helps traders confirm whether an asset is overbought (above 70) or oversold (below 30).

Example: If an Inverted Hammer forms at the bottom of a downtrend while RSI is below 30, it strengthens the case for a potential bullish reversal.

Identifying Market Volatility with Bollinger Bands

Bollinger Bands consist of three lines: the upper band, lower band, and a moving average in the middle. These bands expand and contract based on market volatility. Candlestick formations that interact with Bollinger Bands can signal potential breakouts or trend reversals.

Example: A Shooting Star forming near the upper Bollinger Band suggests a possible price reversal, as the market may be reaching an overextended level.

Using VWAP to Spot Intraday Support & Resistance

The Volume-Weighted Average Price (VWAP) is commonly used by intraday traders to identify key support and resistance zones based on volume. When a candlestick pattern aligns with VWAP levels, it can provide higher probability trade setups.

Example: A Bearish Engulfing forming just below VWAP signals that sellers are taking control, reinforcing the potential for further downside.