Candlestick patterns are an essential tool for traders looking to gain a deeper understanding of market movements and identify potential trading opportunities.
These patterns, which are formed by the interaction of the open, high, low, and close prices of a security over a given period of time, can provide valuable insights into market sentiment and help traders make more informed decisions.
In this blog post, we’ll take a closer look at all candlestick patterns and how you can use them to trade like a pro.
All Bullish Candlestick Patterns
Below we have collected all candlestick patterns that are found in forex.
Disclaimer: Every single candlestick in this guide is designed solely for forex trading. Due to the liquidity in the foreign exchange markets gapping rarely happens. So we do not include the candle formations that occur when gapping.
In total (including the gapping patterns) there are approximately 84 different patterns as per the technical analysis book: (read the reviews here)
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With that being said, every candlestick mentioned below will appear in every asset class.
Enjoy!
Single Candlestick Patterns
Hammer Candlestick Pattern
A Bullish Hammer is a candlestick pattern that can occur in a downtrend and signals a potential reversal to an uptrend.
It is characterized by a single candle with a long lower shadow and a small body, typically near the top of the candle.
It’s called a “hammer” pattern because it kind of looks like a hammer on a chart, with a long handle and a small head. It’s also known as a pin bar in some trading circles.
The long lower shadow indicates that the price of the asset fell significantly during the period represented by the candle, but then recovered and closed near the opening price.
This suggests that the downward momentum in the market may be slowing and that buyers are starting to enter the market.
Inverted Hammer
The Bullish Inverted Hammer is a pattern that appears during a downtrend and may signal a potential uptrend.
It’s made up of one candle: which is a short one with a long upper shadow. (Opposite to the hammer pattern)
The long upper shadow on the candle shows that the price of the asset rose a lot during that period, but then fell back down and closed close to the low.
This could mean that the downward momentum in the market is slowing and buyers are starting to enter.
Dragonfly Doji
The Bullish Dragonfly Doji is a candlestick pattern that appears as a single candle on a chart and indicates a potential trend reversal from bearish to bullish.
This pattern is similar to the Bullish Hammer formation, but the Bullish Dragonfly Doji has no body (meaning the opening and closing prices are the same) while the Bullish Hammer has a small body.
This pattern is considered to be a reliable indicator of a bullish trend reversal and suggests that traders should be cautious about opening short positions.
If the market opens higher on the next candle, it may be a sign that short position holders will close their positions and the bearish trend is reversing.
Two Candlestick Patterns
Bullish Engulfing Pattern
The bullish Engulfing Pattern is a two-candle bullish reversal pattern that is commonly seen in forex trading. It typically appears after a downtrend, signalling a potential change in trend direction.
The pattern is made up of two candlesticks, with the first being a small black candlestick and the second being a large white candlestick.
The white candlestick should completely engulf the body of the previous bar’s black candlestick, meaning that it opens below the previous day’s low and closes above the previous day’s high.
This is a strong indication that the buyers have taken control of the market and are pushing the price higher. The Engulfing Pattern is a bullish pattern that suggests the trend may be reversing from bearish to bullish.
Bullish Railway Track
The bullish railway tracks pattern is a technical analysis chart pattern that can occur in the financial markets, including forex, stocks, and commodities.
It is made up of two candlesticks that are almost the same length and resemble parallel railway tracks. The first candlestick is bearish, while the second candlestick is bullish.
The pattern is formed when there is a sudden change in market sentiment, as traders who initially enter into a short position (betting on the price going down) realize that they are on the wrong side of the market and quickly exit their trades.
This can lead to a sudden increase in buying pressure, resulting in the formation of the long bullish candlestick.
Bullish Harami
The Bullish Harami pattern is a two-candle formation that signals a potential trend reversal from bearish to bullish. It gets its name from the Japanese word “harami,” which means “pregnant.”
In this pattern, the first candle is a long black candle, which is considered the “mother,” while the second candle is a shorter white candle, representing the “child.”
This formation is typically seen during a downward trend in the market.
Bullish Harami Cross
The Bullish Harami Cross is a pattern that consists of two candles: a long black candle and a Doji. I
t is considered a bullish pattern, meaning that it indicates that the market may be reversing from a bearish trend to a bullish trend.
The Bullish Harami Cross is somewhat reliable, but it is always a good idea to wait for confirmation before making any trading decisions.
This pattern occurs when the market opens higher than its closing on the previous day, after a long black candle. The narrow trading range creates the Doji, which reflects uncertainty in the market.
Piercing Line
The piercing line candlestick pattern is a two-candle reversal pattern that is typically found at the end of downtrends. It is known for its relatively high accuracy rate and is characterized by the second candle “piercing” at least 50% of the previous candle’s body.
This means that it closes above the midpoint of the previous day’s candle. This pattern is called the “piercing line” because the signal candle pierces the previous candle’s body by at least 50%. It is worth noting that in the stock market, the piercing candle often gaps down, but this is not always the case in the forex market due to its higher liquidity and longer trading hours.
Instead, you may see a lower wick form immediately after the opening, which gives the impression of a downward price movement like a gap.
The piercing line pattern is thought to indicate that short sellers have been quickly and aggressively halted and reversed by a surge in buying pressure.
This strong buying pressure absorbs the selling pressure and pushes the price back above 50% of the previous day’s candle, signalling the intention of buyers to push the price higher. As a result, this pattern can provide traders with insight into a shift in trading bias and the opportunity to take advantage of it.
Bullish Doji Star
A bullish Doji Star is a two-candle bullish reversal pattern that is commonly seen in forex trading. It typically appears after a period of a downtrend, signalling a potential change in trend direction. T
The pattern is made up of two candlesticks, with the first being a long black candlestick and the second being a Doji.
The Doji should have a small body with upper and lower shadows that are approximately the same length, indicating indecision in the market.
The Doji should also be positioned within the body of the previous day’s long white candlestick, indicating that the uptrend may be losing momentum.
Matching Low
The Matching Low is a two-candle pattern that consists of two consecutive candles with the same low prices at the low of the market structure.
This pattern suggests that short positions are being opened, but it also indicates that a reversal may occur shortly.
The Matching Low is a moderate indicator of a potential trend reversal and should be treated with caution.
This formation indicates a short-term support and is characterized by a weakening supply on the market.
Three Candlestick Patterns
Three White Soldiers
The three white soldiers pattern is a bullish reversal candlestick pattern that occurs at the end of a downtrend. It is a powerful pattern that consists of three large bullish candlesticks that appear when the bears (sellers) are exhausted.
This pattern typically occurs when the selling pressure behind the downtrend starts to weaken and momentum slows down. It is followed by a strong sell candlestick, which indicates a surge in seller volume.
However, given the overall weakening of the downtrend and the surge in seller volume, this can be confusing for unprepared traders who may expect the market to continue moving lower.
In reality, the three white soldiers pattern indicates that buyers are starting to enter the market and grow in strength.
They may be taking profits from the recent downtrend and taking over orders from sellers who are exiting their positions. As a result, the next two soldier candles will see the reversal take full effect and the market begin a new uptrend.
Morning Star
The Morning Doji is a three-candle pattern that signals the end of an uptrend. It consists of a long black candle followed by a small-bodied candle, and a third white bullish candle that closes within the body of the first black candle.
This pattern is highly reliable and is considered bullish, meaning that it indicates that the market may be reversing from a bearish trend to a bullish trend.
To recognize the Morning Doji pattern, you should look for a market that is in a downtrend, with a long black candle on the first candle, a bullish small-bodied candle formed for the second candle, and a strong white candle on the third candle but closes within the first candle’s body – this confirms the reversal.
The small-bodied candle reflects a decreasing number of sellers, while the strong white candle signals a bullish market.
Morning Doji Star
The Morning Doji Star is a three-candle pattern that signals the end of an uptrend. It consists of a long black candle followed by a Doji, and a third candle that closes within the body of the first candle.
This pattern is highly reliable and is considered bullish, meaning that it indicates that the market may be reversing from a bearish trend to a bullish trend.
To recognize the Morning Doji Star pattern, you should look for a market that is in a downtrend, with a long black candle on the first candle, a Doji formed for the second candle, and a strong white candle on the third candle but closes within the first candle’s body – this confirms the reversal.
The Doji reflects a decreasing number of sellers, while the strong white candle signals a bullish market.
In an ideal Bullish Morning Doji Star formation, there is a gap both before and after the Doji candle, although this is not always the case. The pattern is still strong even without the second gap.
Bullish Tri-Star
The Bullish Tri Star is a three-candle pattern that signals a potential trend reversal from a bearish trend to a bullish trend.
It consists of three Dojis, with the middle Doji being a Doji Star.
This pattern is considered moderately reliable and is a useful tool for traders looking to stay attuned to market shifts.
To recognize the Bullish Tri Star pattern, you should look for a market that is in a downtrend, with all three candles being Dojis. In forex, these appear as three candles open and closing at the same levels consecutively.
The differences are that the first doji has the lowest low, the second doji is a star, and the third doji has the highest high.
The appearance of a Doji in a long uptrend can make investors uncertain, and the second Doji’s gap below the first one further weakens the current trend.
The narrow trading ranges of the Dojis indicate a weakening trend and may suggest a potential trend reversal.
The third day’s Doji, with its higher trading range, provides a high chance for a reversal, but a confirmation is still needed.
Bullish Stick Sandwich
The Bullish Stick Sandwich is a three-candle pattern in the markets that typically indicates a potential trend reversal.
On the first candle of this pattern, the asset opens lower and closes lower, forming a bearish candle.
On the second candle, the asset opens higher and closes near its daily high, suggesting an upward trend.
On the third candle, the asset opens at a three-candle high but then falls due to short-position owners protecting their capital, eventually closing near the first candle’s closing price.
Bullish Three Inside Up
In the Bullish Three Inside Up, also known as the Confirmed Bullish Harami, traders may see a potential trend reversal from bearish to bullish.
This pattern is made up of three candles, with the first two forming a Bullish Harami.
On the second candle, the trading range is narrow and the close is within the body of the first candle.
In order to confirm the trend reversal on the third candle, the close must be above the opening price of the first candle.
Bullish Three Outside Up
The Bullish Three Outside Up, also known as the Confirmed Bullish Engulfing formation, is a pattern in the forex market that is highly reliable in indicating a potential trend reversal from bearish to bullish.
This pattern is made up of three candles, with the first two forming a Bullish Engulfing pattern in which the second candle’s range completely engulfs the range of the first candle.
On the third candle, the close must be above the close of the second candle in order to confirm the trend reversal.
Four Candlestick Patterns
Bullish Three Line Strike
The three-line strike candlestick pattern is characterized by the presence of three bearish candles, each one closing at a lower price than the previous one with a similar body size. The fourth candle is a bullish candle that completely engulfs the three previous bearish candles.
This pattern reflects the market’s trend over the past four trading sessions. During the first three sessions, the sellers had a strong presence and pushed the price lower, indicating their desire to continue driving the price down and their control over the market. However, in the fourth session, there was a sudden increase in buyers, indicating that support has been found and that these buyers want to enter the market.
The buyers were so dominant that they erased the negative impact of the previous three sessions, demonstrating a significant influx of new buyers into the market. This suggests that the market may be shifting in favour of the buyers.
Five Candlestick Patterns
Rising Three Methods
The Bullish Rising Three Methods is a trend continuation pattern that signals a potential weakening of the current trend.
It consists of a long white candle on the first candle, followed by three shorter decreasing candles over the next three candles.
These smaller candles, which are usually black, reflect the resistance of the trend and may suggest a potential trend reversal. The formation ends with another long white candle on the fifth candle, with an opening price higher than the closing price of the first candle.
This pattern is typically seen in an upward trend and indicates a temporary pause in the buying activity, reflected in the low volume of the three inclining black candles. The volume increases again on the fifth candle with the emergence of the long white candle, signalling a continuation of the upward trend.
Bullish Hikkake
The bullish Hikkake pattern is essentially what forms if a bullish harami fails after the first two candlesticks and is found at the top of a downtrend.
What happens after the bullish harami set-up is that two candlesticks would follow and create two bearish candles.
Then a fifth candlestick would form and it will engulf the entire pattern and go higher, closing above the previous 4 candlestick’s highs.
What this pattern indicates is that sellers are still participating at these prices and are not willing to give up. Eventually, the buyers overpower them and bring the price higher, thus creating a bullish reversal.
All Bearish Candlestick Patterns
Single Candlestick Patterns
Hanging Man
A Hanging Man candlestick pattern is a bearish reversal pattern that is formed when the market is in an uptrend. It is called a “Hanging Man” because it looks like a little man hanging from a tree.
The Hanging Man pattern is formed when the open, high, and close are roughly the same price, and the low is significantly lower than the other three prices. This creates a long lower shadow and a small body at the top of the candlestick. The long lower shadow indicates that the bears tried to push the price down, but the bulls were able to push it back up to the opening price.
The Hanging Man pattern is a bearish reversal pattern because it shows that the bulls are losing their strength. It indicates that the uptrend may be coming to an end and that the bears may take control of the market.
Shooting Star
A Shooting Star candlestick pattern is a bearish reversal pattern that is formed when the market is in an uptrend. It is called a “Shooting Star” because it looks like a little star falling from the sky.
The Shooting Star pattern is formed when the open, low, and close are roughly the same price, and the high is significantly higher than the other three prices.
This creates a long upper shadow and a small body at the bottom of the candlestick. The long upper shadow indicates that the bulls tried to push the price up, but the bears were able to push it back down to the opening price.
The Shooting Star pattern is a bearish reversal pattern because it shows that the bulls are losing their strength. It indicates that the uptrend may be coming to an end and that the bears may take control of the market.
Gravestone Doji
A gravestone doji is a type of candlestick pattern that appears on a chart for a stock or other asset.
It’s called a “doji” because the opening and closing prices are the same or very close, which creates a small or non-existent body on the chart.
The gravestone doji has a long upper wick and no lower wick, which creates a shape that looks like a gravestone.
This pattern is generally seen as a bearish reversal pattern, which means that it may indicate a potential top in an uptrend.
It suggests that even though the asset started the period at a high price, sellers were able to push the price down to the opening level, but buyers then pushed the price back up again.
This can be a sign that sellers are starting to gain strength and may be able to push the price down further in the future.
Two Candlestick Patterns
Bearish Engulfing Pattern
A bearish engulfing pattern is a common bearish reversal candlestick pattern that can be seen on a chart.
It is formed by two candlesticks: the first candlestick is typically a bullish candlestick that has a small body and a long upper wick, while the second candlestick is a bearish candlestick that has a large body and completely engulfs the body of the first candlestick.
This pattern indicates that the sellers have taken control of the market and are pushing the price down.
Bearish Railway Track
The bearish railway tracks pattern is a candlestick pattern that can occur in the financial markets, including forex, stocks, and commodities.
It is made up of two candlesticks that are almost the same length and resemble parallel railway tracks.
The first candlestick is bullish, while the second candlestick is bearish.
The pattern is formed when there is a sudden change in market sentiment, as traders who initially enter into a long position (betting on the price going up) realize that they are on the wrong side of the market and quickly exit their trades.
This can lead to a sudden increase in selling pressure, resulting in the formation of a long bearish candlestick.
Bearish Harami
A bearish harami is a two-candlestick reversal pattern that can be found on a chart. It is considered to be a bearish pattern because it indicates that the sellers are taking control of the market.
The pattern is formed when a large bullish candlestick is followed by a smaller bearish candlestick, with the bearish candlestick’s body completely contained within the bullish candlestick’s body.
This pattern indicates that the bulls were in control at the beginning of the period, but the bears were able to push the price down by the end of the period.
Traders often interpret this pattern as a sign that the uptrend is coming to an end and that the price is likely to continue moving downward.
As such, it is often seen as a signal to sell the asset or to take profits if you are already holding a short position.
Bearish Harami Cross
A bearish harami cross is a three-candlestick pattern that can be found on a chart.
It is considered to be a bearish pattern because it indicates that the sellers are taking control of the market.
The pattern is formed when a large bullish candlestick is followed by a small bearish doji (a candlestick with an open and close that are at the same price), with the doji’s body completely contained within the bullish candlestick’s body.
This is then followed by a third bearish candlestick, which confirms the reversal by closing below the low of the doji.
Traders often interpret this pattern as a sign that the uptrend is coming to an end and that the price is likely to continue moving downward.
Bearish Doji Star
A bearish doji star is a type of candlestick pattern that is formed when the opening and closing prices of an asset are almost equal, but the asset’s price has fallen significantly during the trading day.
This creates a pattern that looks like a cross or a plus sign, and it is often seen as a potential reversal pattern.
However, the bearish doji star is considered a neutral pattern, and it may not necessarily indicate a bearish trend.
Matching High
The matching high is a two-candle pattern that indicates the end of an uptrend.
It is characterized by two consecutive candles that have the same closing price, despite being positive. This pattern forms when market sentiment is mostly positive and buyers are pushing prices up.
However, as the market becomes overbought, some investors start to close their positions to take profits, leading to a wave of selling pressure that causes prices to drop.
The market recovers but fails to surpass the previous close, causing more investors to sell and leading to a bearish trend.
Three Candlestick Patterns
Three Black Crows
The Bearish Three Black Crows is a trend reversal pattern that suggests a potential shift from a bullish trend to a bearish trend. It consists of three consecutive black candles that form a “stair-like” pattern, with each candle’s opening price higher than its closing price.
It indicates that the buying pressure is decreasing and the selling pressure is increasing, suggesting that the trend may be reversing.
Evening Star
The Bearish Evening Doji Star is a three-candle pattern that signals a potential trend reversal from bullish to bearish.
It begins with a long white candle on the first day, followed by a horizontal line or Doji candle on the second candle, which creates a gap in the upward trend.
The formation is completed on the third day with a black candle that closes within the range of the first candle.
This pattern is typically seen during an upward trend and is considered a strong bearish signal, with high reliability.
It indicates that the buying pressure is decreasing and the selling pressure is increasing, suggesting that the trend may be reversing.
Evening Doji Star
The Bearish Evening Doji Star is a three-candle pattern that signals a potential trend reversal from bullish to bearish.
It begins with a long white candle on the first day, followed by a horizontal line or Doji candle on the second candle, which creates a gap in the upward trend.
The formation is completed on the third day with a black candle that closes within the range of the first candle.
This pattern is typically seen during an upward trend and is considered a strong bearish signal, with high reliability.
It indicates that the buying pressure is decreasing and the selling pressure is increasing, suggesting that the trend may be reversing.
Three Inside Down
The Bearish Three Inside Down, also known as the Confirmed Bearish Harami formation, is a three-candle pattern that signals a potential trend reversal from bullish to bearish. It consists of a Bearish Harami formation, followed by a black candle on the third candle that closes at a lower price than the previous day’s close.
This pattern is typically seen during an upward trend and is considered a moderate bearish signal, with moderate reliability.
It indicates that the buying pressure is decreasing and the selling pressure is increasing, suggesting that the trend may be reversing. The confirmation of the trend reversal on the third day adds strength to the signal.
Three Outside Down
The Bearish Three Outside Down, also known as the Confirmed Bearish Engulfing formation, is a three-candle pattern that signals a potential trend reversal from bullish to bearish.
It consists of a Bearish Engulfing formation, followed by a black candle on the third candle that closes at a lower price than the previous day’s close.
This pattern is typically seen during an upward trend and is considered a strong bearish signal, with high reliability. It indicates that the buying pressure is decreasing and the selling pressure is increasing, suggesting that the trend may be reversing.
The confirmation of the trend reversal on the third day adds strength to the signal, making it a more reliable indicator of a reversal compared to the Bearish Engulfing pattern alone.
Four Candlestick Patterns
Bearish Three Line Strike
The bearish three-line strike candlestick pattern is characterized by the presence of three bullish candles, each one closing at a higher price than the previous one with a similar body size. The fourth candle is a bearish candle that completely engulfs the three previous bullish candles.
This pattern reflects the market’s trend over the past four trading sessions.
During the first three sessions, the sellers had a strong presence and pushed the price lower, indicating their desire to continue driving the price higher and their control over the market.
However, in the fourth session, there was a sudden increase in sellers, indicating that resistance has been found and that these sellers want to enter the market.
The sellers were so dominant that they erased the gains of the previous three sessions, demonstrating a significant influx of new sellers into the market. This suggests that the market may be shifting in favour of the sellers.
Five Candlestick Patterns
Falling Three Methods
The Falling Three Methods is a trend continuation pattern that signals a potential weakening of the current trend.
It consists of a long white candle on the first day, followed by three shorter bullish candles over the next three candles.
These smaller candles, which are usually white, reflect the support of the trend and may suggest a potential trend reversal. The formation ends with another long black candle on the fifth candle, with an opening price lower than the closing price of the first candle.
This pattern is typically seen in an upward trend and indicates a temporary pause in the selling activity, reflected in the low volume of the three inclining black candles. The volume increases again on the fifth candle with the emergence of the long black candle, signalling a continuation of the downtrend trend.
Bearish Hikkake
The bearish Hikkake pattern is essentially what forms if a bearish harami fails after the first two candlesticks and is found at the top of an uptrend.
What happens after the bearish harami set up is that two candlesticks would follow and create two bullish candles.
Then a fifth candlestick would form and it will engulf the entire pattern and go lower, closing below the previous 4 candlestick’s lows.
What this pattern indicates is that buyers are still participating at these prices and are not willing to give up. Eventually, the sellers overpower them and bring the price lower, thus creating a bearish reversal.
All Candlestick Patterns Covered
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