All 29 Candlestick Chart Patterns in the Stock Market-Explained

Candlesticks are utilized to find patterns of trading that aid technical analysts in setting their trades.

Candlestick patterns are employed to predict the direction of price fluctuations.

The patterns for candlesticks are made by placing candles in an orderly manner.

Sometimes, powerful signals may be provided with only one candlestick.

On this page, we’ll look at all 29 candlestick patterns. But before that, let’s talk about how to interpret candlestick charts.

How do I Read Candlestick charts? Prabhakar Singh

The candlestick chart was developed in Japan more than 100 years prior to the time the West had invented chart charts with points and figures. In the 17th century Homma, a Japanese man dubbed Homma realized that since there was a correlation between price and rice supply and demand and other commodities, markets were highly influenced by the emotional state of traders.

The daily chart of candlesticks display the security’s open, low, high, and closing cost for each day. The candlestick’s large or rectangle portion is referred to as”the “real body” which shows the connection between closing and opening prices.

The real body displays the price variation between the opening and closing of the day’s trading.

If the actual body is completely filled, whether either red or black, then it is a sign that the close will be lower than open. This is known as a bearish candle. The candle indicates that when prices were opened and the bears drove the prices lower and then ended lower than the initial price.

If the body’s real shape is not empty, white, or green, it indicates that the closing price was higher than the opening, which is known as the candle that is bullish. This indicates that when the market was opened and the bulls drove the prices higher and closed higher than the initial price.

These thin lines between and below the body are referred to as shadows or wicks that represent the high and low values in the trade session.

The upper shadow represents the highest price, while the lower shadow shows the lower prices achieved during the trading session.

Before we get started on learning about various candlestick charts there are some assumptions that must be considered that are unique to candlestick charts.

1. Strength is symbolized by a green or bullish candle while weakness is represented by a red or bearish candle. It is important to ensure that when they buy it’s the day of the green candle and when they sell and sell, make sure that it’s a red candle day.
2. The definition in the textbook of patterns outlines certain criteria however, one must mention that there may be slight variations to the pattern, based on specific market conditions.
3. It is important to look for a previous trend. If you’re looking at the bullish reversal pattern then the previous trend should be bullish. If you are seeking an inverse pattern that is bearish, then the prior trend must be bullish.

29 Types of Candlestick Patterns:

The candlestick patterns are classified into:

• Continuation Patterns

• Bullish Reversal Patterns

• Bearish Reversal Patterns

Below is a list of 29 different types of candlestick Patterns, which are categorized into the categories mentioned above:

Bullish Reversal Candlestick Patterns:

The bullish reversal pattern of candlesticks indicates that the downtrend that is currently in place will reverse into an upward trend.

Therefore, traders must be wary of their short-term positions when a pattern of a bullish reversal on the chart occurs.

Below are the various kinds of candlestick patterns that are bullish:

1. Hammer:

Hammer is one candlestick pattern that forms at the top of a downtrend. It indicates a bullish reversal.

The actual body of this candle is very small and situated at the top, with lower shadows that should be greater than twice the body. The candlestick chart pattern is only a small upper shadow.

The reason for this candle pattern is that prices were opened and sellers drove lower the costs.

The buyers suddenly entered the market, pushing prices higher, and ended the trading session higher than the price that was opened.

The result was the creation of a bullish pattern, which indicates that buyers are now back in the market and that downtrend could be over.

The trader can take an open position when the next day a bullish candle is created and they can set an order to stop the loss at the lowest of Hammer.

Below is an illustration of Hammer candlestick patterns:

2. Inverted Hammer:

An Inverted Hammer is created near the top of the downtrend. This signals a bullish reversal.

The true body is near the bottom and there is an upper shadow. It is the reverse pattern of the Hammer Candlestick pattern.

This pattern develops when the closing and opening prices are close to one in the same direction, and the upper shadow must be greater than double the body.

3. Bullish Engulfing:

Bullish Engulfing is an asymmetrical candlestick chart pattern created following a downtrend, indicating the possibility of a bullish reversal.

It is created by two candles, with the second candlestick wrapping around the initial candlestick. The first candle, which is a bearish one which indicates the continuation of the downward trend.

A second candlestick can be described as a bullish candle that completely covers the first candle. It also shows that bulls are back on the scene.

Traders may enter into an open position when the next day, a bullish candle is created and they can set an order to stop the loss at the bottom of the next candle.

Below is an illustration that shows Bullish Engulfing Candlestick Pattern:

4. The Morning Star:

Morning Star Morning Star can be described as a multi-candlestick chart pattern developed following a downward trend, which indicates an upward reversal of a bullish trend.

It’s comprised of 3 candlesticks. The first one is a bearish candle, the second one is a Doji, and the third is a bullish candle.

The first candle indicates the continuation of the trend down. The second candle, which is a Doji signifies uncertainty within the market. The third candle that is bullish indicates that the bulls are now back in the market, and a reversal is expected to occur.

The second candle must be totally separate from the actual bodies of the first and third candles.

Traders may enter into an open position when the following day a bullish candle appears and they can set a stop-loss on the low in the candle’s second.

Here is an illustration Morning Star Candlestick Charts Pattern:

5. Three White Soldiers:

Three White Soldiers Three White Soldiers is multiple candlestick patterns created following a downtrend, indicating the possibility of a bullish reversal.

The candlestick charts consist of three bullish long bodies that do not have long shadows and are open inside the actual body of the candle that was previously inside the pattern.

6. White Marubozu:

It is also known as the White Marubozu is a single candlestick pattern that forms following a downtrend, indicating an upward reversal of a bullish trend.

The candlestick is a long bullish body that has no lower or upper shadows. This suggests that bulls are putting pressure on buyers and the market may be to the bulls.

When this candle is, sellers must be careful and close their shorting positions.

7. Three Inside Up:

Inside Up: The three Inside Up is a multi-candlestick pattern that forms after the downtrend has ended, indicating a possibility of a bullish reversal.

It is composed of three candlesticks, with the first being a long bearish candle, and the third being a small candle, which is expected to be in the same range as the first candlestick.

The third candlestick must be an extended bullish candlestick that confirms the bullish reverse.

The relation between the first and second candlesticks should follow the bullish harami candlestick pattern.

The trader can enter an investment in a long position following the conclusion in this pattern of candlesticks.

8. Bullish Harami:

Bullish Harami Bullish Harami is a multiple candlestick chart pattern that forms after a downtrend and indicates an upward trend reverse.

It comprises two charts of candlesticks, the first being a large bearish candle and the other one being a smaller bullish candle, which is within the range of the first candlestick.

The bearish candle’s first candle indicates that the trend is continuing bearish trend, and the second candle indicates that the bulls are returning to the scene.

Traders may take an option to take a position in the long term following the conclusion of the candlestick patterns.

9. Tweezer Bottom:

The Tweezer Bottom candlestick pattern is an inverse candlestick pattern that is bullish which is created after the conclusion of the downward trend.

It is made up of two candlesticks, with the first one being bearish, and the second one is a bullish candlestick.

The candlesticks form nearly or exactly the same low. When you see the Tweezer Bottom candlestick pattern created, the previous trend is a downward trend.

The bearish candlestick gets created, which appears to be an extension of the downward trend. On the following day, the bearish candle’s low is the level of support.

The lower candles that have almost identical lows signify the importance of the support. They can also indicate that the downtrend could be reversed and form an upward trend. In this case, the bulls get involved and push the price up.

This bullish reversal will be confirmed the following day when the bullish candle has been created.

10. Piercing Pattern:

The piercing pattern is a multi-candlestick chart pattern that is formed after the downtrend has ended, indicating the possibility of a bullish reversal.

Two candles make up the pattern The first candle is a bearish candle that indicates the continuation of the trend down.

This second candle can be described as a bullish candle that widens the gap but closes over half of the body of the first candle This indicates that bulls are returning in the market, and an inverse bullish trend is likely to happen.

Traders may enter into long positions if following day a bullish candle appears and then place an order to stop the loss at the bottom in the candle’s second.

Following is an instance example of a Piercing Candlestick The pattern:

11. Three Outside Up:

The three Outside Up is multiple candlestick patterns that form after an uptrend, which indicates an upward trend reverse.

It’s comprised of three candlesticks, with the first being a small bearish candle. The third candlestick is a larger bullish candle, which will overshadow the first one.

The third candlestick must be an extended bullish candlestick that confirms the bullish reverse.

The relationship between both candlesticks on the charts must be that part of that of the Bullish Engulfing pattern of candlesticks.

Traders may take on a position of long-term trading following the end of this pattern of candlesticks.

12. On-Neck Pattern:

The pattern of the neck occurs in the course of a downtrend. A large bearish candle with a real body follows another smaller bearish candle that is bodied and gaps down from the open but closes at the closing of the candle prior to it.

The pattern is known as necklines since the closing prices for the two candles are almost the same across both candles, creating a horizontal neckline.

13. Bullish Counterattack-

The counterattack pattern of the bull is an upward-facing reversal pattern for bulls which predicts the likely end of the current downtrend in the stock market. The candlestick pattern is a two-bar pattern that is seen during a downtrend in the market. The pattern must meet the following criteria to qualify as considered a bullish counterattack.

There has to be a solid market downtrend to trigger to form the counter-attack bullish pattern.

The candle that is first must be a long, black candle with a body.

The second candle should be long (ideally that it is the same size as the first) however, it must be a white candle with an actual body. The second candle should be closed at the end of the initial candle.

Bearish Candlestick Pattern:

Patterns of bearish reversal candles indicate that the trend will reverse into a downtrend.

So, traders need to be wary of their long positions when bearish reversal candlestick patterns have developed.

Below are the different kinds of bearish reversal chart patterns:

14. Hanging man:

Hanging Man is an individual candlestick pattern that forms at the top of an uptrend. It also is a sign of the bearish reversal.

The actual body of the candle is tiny and is situated on top of the candle with the shadow below which ought to be greater than two times the body. This candlestick pattern does not have a very little shadow on the upper.

The reason for this candle pattern is that the price was opened, and the seller pulled down the price.

The buyers suddenly flooded into the market and drove the prices higher, but they failed in their efforts since the prices ended lower than the price that was initially set.

This led to the formation of bearish patterns and indicates that sellers are back in the market and that the uptrend could be coming to an end.

The trader can open into a short-term position if the following day, a bearish candle has been created and they can set a stop-loss on the highest that is Hanging Man.

Here is an illustration of the Hanging Man Candlestick Design:

15. Dark cloud cover:

Dark Cloud Cover is multiple candlestick patterns that are created following the upward trend, which indicates the bearish reversal.

It is made up of two candles, with the second candle being an ebullient candle that indicates that the trend will continue to rise.

A second candle, a bearish one, is able to open a gap, but it closes at more than 50 percent of the body of the first candle which indicates that bears are back on the market and a bearish reversal is expected to happen.

The trader can open short positions if the following day bearish candle forms and they can set a stop-loss at the top that the next candle.

Following is an example of a Dark Cloud candlestick pattern:

16. Bearish Engulfing:

Bearish Engulfing can be described as multiple candlestick patterns that form following an uptrend, indicating the possibility of a bearish reversal.

It is created by two candles, with the second candlestick engulfing the initial candlestick. The first candle, being bullish indicates the continuation of the trend.

The second chart of candlesticks is a bearish long candle that completely covers the first candle. This chart shows that bears have returned to the market.

Traders may enter short positions if the following day, a bearish candle is created and they can set an order to stop the loss at the top that the next candle.

17. The Evening Star:

The Evening Star is multiple candlestick patterns that form after the uptrend, which is a sign of an inverse bearish trend.

It’s made up of 3 candlesticks. The first is a bullish candle, the second a Doji, and the third a bearish candle.

The first candle is a continued uptrend. the second candle, which is a Doji, which indicates uncertainty within the market, while the third candle which is bearish indicates that bears are back on the market and that a reversal is likely to occur.

The second candle must be entirely separate from the actual bodies of the first and third candles.

The trader can take long positions if a bearish candle has been created the following day and they can set a stop-loss on the high in the candle’s second.

Below is an illustration from this pattern: Evening Star Candlestick Pattern:

18. Three Black Crows:

Three Black Crows Three Black Crows are multiple candlestick patterns that are created after an upward trend, indicating an inverse bearish sign.

These candlesticks consist of three bearish, long bodies, which don’t have long shadows and can be seen through the body of the candle that was previously according to the pattern.

19. Black Marubozu:

It is the Black Marubozu is a single candlestick pattern, which forms after an uptrend that indicates an inverse bearish trend.

The candlestick chart shows an extended bearish body that has no shadows on the upper or lower sides which indicates that bears are pushing down selling pressure and the markets could become too bearish.

As the candle is forming, candle, buyers must be cautious and stop their position of purchase.

20. Three Inside Down:

Three Inside Down Three Inside Down is a multiple candlestick pattern, which forms following an uptrend, which indicates the reverse of a bearish trend.

It is comprised of three candlesticks. The first one is a bullish long candle, and the third is a smaller bearish, which is expected to be within the range of that the initial candlestick.

The third chart of candlesticks could be a bearish long candlestick, confirming the bearish reverse.

The relation between the first and second candlesticks should be in that bearish Harami candlestick design.

Traders may trade short positions following the end of this candlestick pattern.

21. Bearish Harami:

It is also known as the Bearish Harami is a multiple candlestick pattern that is created following the upward trend, indicating a bearish reversal.

It is comprised of two candlesticks, with the first one being an enormous bullish candle, then an additional smaller bearish candle, which is within the range of the first chart of candlesticks.

The first candle of bullish candles confirms the trend of bullishness. The second candle indicates that bears are back in the market.

Traders may opt to take a short position following the end of this candlestick pattern.

22. Shooting Star:

Shooting Star is formed at the bottom of the uptrend and is a bearish reversal signal.

In the candlestick charts in this chart, the actual body is near the bottom and the upper shadow is long. shadow. It is the reverse of the Hanging Man Candlestick pattern.

The pattern appears by the fact that the closing and opening prices are close to one in the same direction and the shadow on the upper side must be greater than two times the actual body.

23. Tweezer Top:

The Tweezer Top pattern is a bearish reversal candlestick pattern that forms at the close of the uptrend.

It is made up of two candlesticks. The one with the bullish inscription and the other one with a bearish candlestick. The two candlesticks have a similar high.

If you see the Tweezer Top candlestick pattern created, the previous trend is an upward trend. A bullish candlestick will be formed that appears to be the continuation of the current uptrend.

The next day, the highest of the bearish second-day candle highest indicates a resistance level. The bulls are able to move prices, however, currently, they’re not ready to purchase at higher prices.

The highest-end candles that have almost the same height signify the power of the resistance. They could indicate that the uptrend may reverse to create a downtrend. The bearish reversal will be confirmed the next day when the bearish candle forms.

24. Three Outside Down:

Three Outside Down Three Outside Down is multiple candlestick patterns, which form following an uptrend, which indicates the bearish reversal.

It is made up of three candlesticks, with the first one being a small bullish candle, with the third candlestick being a larger bearish candle that should be able to cover that first one.

The third candlestick must be a bearish long candlestick, confirming the reverse of bearish.

The relationship between the first and the second candlestick should be in that of the Bearish Engulfing candlestick design.

The trader can choose to trade short positions following the end of this candlestick pattern.

25. Bearish Counterattack-

The bearish counterattack candlestick pattern is the bearish reversal pattern that is seen during an upward trend in the market. It forecasts that the current market trend will end and a new downtrend will dominate the market.

Continuation Candlestick Patterns:

26. Doji:

Doji pattern is an indecision candlestick pattern that is created when the closing and opening prices are nearly equal.

It occurs when the bears and the bulls are fighting for control of prices but no one is able to gain control over the prices.

The candlestick design resembles the cross shape with a small realistic body as well as long shadows.

27. Spinning Top:

The pattern of the spinning top candlestick is the same as the Doji signaling indecisiveness on the market.

One of the main differences between spin tops and Doji is their shape The actual body of spinning is bigger when compared to Doji.

28. Falling Three Methods:

“The “falling three methods” is a bearish five-candle pattern that indicates an end, however, not a reversal of the current downtrend.

The candlestick pattern consists of two candlestick charts that are in the direction of the current trend i.e in the direction of the downtrend from the starting point to the end with three counter-trend candlesticks in between.

The pattern of the candlestick is crucial because it shows traders that bulls aren’t strong enough to stop the trend.

29. Rising Three Methods:

“Rising three methods “rising three methods” is an upward-looking, five-candle continuation pattern that indicates an end, but not a reversal of the current trend.

The pattern of candlesticks is comprised of two candlesticks that are long that are in the direction of the trend i.e upward trend in this instance. At the beginning and at the end, there are three counter-trend candlesticks that are shorter between them.

The candlestick pattern is significant because it shows traders that bears aren’t strong enough to stop the trend.