Candlestick Patterns
The candlestick patterns traders watch, and what each one suggests.
Doji
Open and close are nearly equal. Signals indecision. It matters most after a strong move.
Hammer
Small body at the top, long lower shadow, after a fall. Buyers pushed price back up. Possible bullish reversal.
Hanging man
Looks like a hammer but appears after a rise. Warns that buyers may be tiring.
Shooting star
Small body at the bottom, long upper shadow, after a rise. Sellers rejected higher prices. Possible bearish reversal.
Inverted hammer
Long upper shadow after a fall. Buyers tried to push up. Needs confirmation by the next candle.
Bullish engulfing
A large green candle fully covers the previous red candle after a fall. Possible bullish reversal.
Bearish engulfing
A large red candle fully covers the previous green candle after a rise. Possible bearish reversal.
Morning star
Three candles: a long red, a small indecisive one, then a long green. Bullish reversal pattern.
Evening star
Three candles: a long green, a small indecisive one, then a long red. Bearish reversal pattern.
Piercing line
After a red candle, a green candle opens lower and closes above the midpoint of the red one. Mild bullish sign.
Dark cloud cover
After a green candle, a red candle opens higher and closes below the midpoint of the green one. Mild bearish sign.
Three white soldiers
Three long green candles in a row, each closing higher. Strong buying.
Three black crows
Three long red candles in a row, each closing lower. Strong selling.
Harami
A small candle inside the body of the previous large candle. Momentum may be slowing.
Patterns are probabilities, not promises. Use them with levels, volume and a stop loss.