35 Powerful Candlestick Chart Patterns Every Trader Should Know
35 Powerful Candlestick Chart Patterns Every Trader Should Know
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08/10/2022, 13:28 35 Powerful Candlestick Chart Patterns Every Trader Should Know
The candlesticks are used to identify trading patterns that help technical analyst set up their
trades.
These candlestick patterns are used for predicting the future direction of the price movements.
The candlestick patterns are formed by grouping two or more candlesticks in a certain way.
In this blog, we will discuss all 35 powerful candlestick patterns, but before that, let us discuss how
to read candlestick charts.
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Table Of Contents
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How to Read Candlestick charts?
1. Hammer:
2. Piercing Pattern:
3. Bullish Engulfing:
9. Tweezer Bottom:
32. Mat-Hold-
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Bottomline:
This real body shows the price range between the open and close of that day’s trading.
When the real body is filled, black or red then it means that the close is lower than the open and is
known as the bearish candle. It shows that the prices opened, the bears pushed the prices down
and closed lower than the opening price.
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If the real body is empty, white or green then it means that the close was higher than the openMento
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known as the bullish candle. It shows that the prices opened, the bulls pushed the prices up and
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closed higher than the opening price.
The thin vertical lines above and below the real body is knowns as the wicks or shadows which
represents the high and low prices of the trading session.
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The upper shadow shows the high price and lower shadow shows the low prices reached during
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the trading session.
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Before we jump into learning about different candlestick charts, there are few assumptions which
need to be kept in mind that are specific to the candlestick charts.
1. Strength is represented by a bullish or green candle and weakness by a bearish or red candle.
One should ensure that whenever they are buying it is a green candle day and whenever they
are selling, ensure that it’s a red candle day.
2. The textbook definition of a patterns states certain criteria, but one should state that there
could be minor variations to the pattern depending on certain market conditions.
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3. One should look for a prior trend. If you are looking at a bullish
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trend should be bearish and if you are looking for a bearish reversal pattern then the prior
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trend should be bullish.
Below is the list of 35 Types of Candlestick Patterns which is categorised in the above categories:
Thus, the traders should be cautious about their short positions when the bullish reversal
candlestick chart patterns are formed.
1. Hammer:
Hammer is a single candlestick pattern that is formed at the end of a downtrend and signals a
bullish reversal.
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The real body of this candle is small and is located at the top with a lower shadow which should be
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more than twice the real body. This candlestick chart pattern has no or little upper shadow.
The psychology behind this candle formation is that the prices opened, and sellers pushed down
the prices.
Suddenly the buyers came into the market and pushed the prices up and closed the trading
session more than the opening price.
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This resulted in the formation of bullish pattern and signifies that buyers are back in the market and
downtrend may end.
Traders can enter a long position if next day a bullish candle is formed and can place a stop-loss
at the low of Hammer.
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Two candles form it, the first candle being a bearish candle which indicates the continuation of the
downtrend.
The second candle is a bullish candle which opens the gap down but closes more than 50% of the
real body of the previous candle, which shows that the bulls are back in the market and a bullish
reversal is going to take place.
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Traders can enter a long position if the next day a bullish candle is formed and can place a stop-
loss at the low of the second candle.
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3. Bullish Engulfing:
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Bullish Engulfing is a multiple candlestick chart pattern that is formed after a downtrend indicating
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a bullish reversal.
It is formed by two candles, the second candlestick engulfing the first candlestick. The first candle is
a bearish candle that indicates the continuation of the downtrend.
The second candlestick is a long bullish candle that completely engulfs the first candle and shows
that the bulls are back in the market.
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Traders can enter a long position if next day a bullish candle is formed and can place a stop-loss
at the low of the second candle.
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It is made of 3 candlesticks, the first being a bearish candle, the second a Doji and the third being a
bullish candle.
The first candle shows the continuation of the downtrend. The second candle being a doji indicates
indecision in the market. The third bullish candle shows that the bulls are back in the market and
reversal will take place.
The second candle should be completely out of the real bodies of the first and third candles.
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Traders can enter a long position if the next day a bullish candle is formed and can place a stop-
loss at the low of the second candle.
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These candlestick charts are made of three long bullish bodies which do not have long shadows
and are open within the real body of the previous candle in the pattern.
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6. White Marubozu:
The White Marubozu is a single candlestick pattern that is formed after a downtrend indicating a
bullish reversal.
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This candlestick has a long bullish body with no upper or lower shadows which shows that the bulls
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are exerting buying pressure and the markets may turn bullish.
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At the formation of this candle, the sellers should be caution and close their shorting position.
a small bullish candle which should be in the range the first candlestick.
The third candlestick should be a long bullish candlestick confirming the bullish reversal.
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The relationship of the first and second candlestick should be of the bullish harami candlestick
pattern.
Traders can take a long position after the completion of this candlestick pattern.
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8. Bullish Harami: Get Course Info Program
The Bullish Harami is multiple candlestick chart pattern which
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indicating bullish reversal.
It consists of two candlestick charts, the first candlestick being a tall bearish candle and second
being a small bullish candle which should be in the range of the first candlestick.
The first bearish candle shows the continuation of the bearish trend and the second candle shows1
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Traders can take a long position after the completion of this candlestick pattern.
It consists of two candlesticks, the first one being bearish and the second one being bullish
candlestick.
Both the candlesticks make almost or the same low.When the Tweezer Bottom candlestick pattern
1
is formed the prior trend is a downtrend.
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A bearish tweezer candlestick is formed which looks like the continuation of the ongoing
downtrend. On the next day, the second day’s bullish candle’s low indicates a support level.
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signal that the downtrend may get reversed to form an uptrend. Due to this the bulls step into
action and move the price upwards. Today at 1:08 PM
This bullish reversal is confirmed the next day when the bullish candle is formed.
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In this candlestick, the real body is located at the end and there is a long upper shadow. It is the
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inverse of the Hammer Candlestick pattern.
This pattern is formed when the opening and closing prices are near to each other and the upper
shadow should be more than twice the real body.
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It consists of three candlesticks, the first being a short bearish candle, the second candlestick being
1
The third candlestick should be a long bullish candlestick confirming the bullish reversal.
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The relationship of the first and second candlestick chart should be of the Bullish Engulfing
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candlestick pattern.
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Traders can take a long position after the completion of this candlestick pattern.
The pattern is called a neckline because the two closing prices are the same or almost the same
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across the two candles, forming a horizontal neckline.
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There must be a strong downtrend in the market for the formation of the bullish counterattack
pattern.
1
The first candle must be a long black candle
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The second candle must also be a long (ideally, equal in size to the first candle) but a white
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candle.
Thus, the traders should be cautious about their long positions when the bearish reversal
candlestick patterns are formed.
Below are the different types of bearish reversal candlestick chart patterns:
The real body of this candle is small and is located at the top with a lower shadow which should be
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more than the twice of the real body. This candlestick pattern has no or little upper shadow.
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The psychology behind this candle formation is that the prices opened and seller pushed down the
prices.
Suddenly the buyers came into the market and pushed the prices up but were unsuccessful in
doing so as the prices closed below the opening price.
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This resulted in the formation of bearish pattern and signifies that seller are back in the market and
uptrend may end.
Traders can enter a short position if next day a bearish candle is formed and can place a stop-loss
at the high of Hanging Man.
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Below is an example of Hanging Man Candlestick Pattern: Get Course Info Program
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It is formed by two candles, the first candle being a bullish candle which indicates the continuation
of the uptrend.
The second candle is a bearish candle which opens gap up but closes more than 50% of the real
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body of the previous candle which shows that the bears are back in the market and bearish
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reversal is going to take place.
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Traders can enter a short position if the next day a bearish candle is formed and can place a stop-
loss at the high of the second candle.
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It is formed by two candles, the second candlestick engulfing the first candlestick. The first candle
being a bullish candle indicates the continuation of the uptrend.
The second candlestick chart is a long bearish candle that completely engulfs the first candle and
shows that the bears are back in the market.
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Traders can enter a short position if next day a bearish candle is formed and can place a stop-loss
at the high of the second candle.
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It is made of 3 candlesticks, first being a bullish candle, second a doji and third being a bearish
candle.
The first candle shows the continuation of the uptrend, the second candle being a doji indicates
indecision in the market, and the third bearish candle shows that the bears are back in the market
and reversal is going to take place. 1
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The second candle should be completely out of the real bodies of first and third candle.
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Traders can enter a long position if next day a bearish candle is formed and can place a stop-loss
at the high of the second candle.
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These candlesticks are made of three long bearish bodies which do not have long shadows and
open within the real body of the previous candle in the pattern.
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This candlestick chart has a long bearish body with no upper or lower shadows which shows that
the bears are exerting selling pressure and the markets may turn bearish. Trading Mento
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At the formation of this candle, the buyers should be caution
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It consists of three candlesticks, the first being a long bullish candle, the second candlestick being a
small bearish which should be in the range the first candlestick. Trading Mento
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The third candlestick chart should be a long bearish candlestick confirming the bearish reversal.
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The relationship of the first and second candlestick should be of the bearish Harami candlestick
pattern.
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Traders can take a short position after the completion of this candlestick pattern.
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It consists of two candlesticks, the first candlestick being a tall bullish candle and second Mento
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small bearish candle which should be in the range of the first candlestick chart.
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The first bullish candle shows the continuation of the bullish trend and the second candle shows
that the bears are back in the market.
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Traders can take a short position after the completion of this candlestick pattern.
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This pattern is formed when the opening and closing prices are near
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other and the upper
shadow should be more than the twice of the real body.
It consists of two candlesticks, the first one being bullish and the second one being bearish
candlestick. Both the tweezer candlestick make almost or the same high.
When the Tweezer Top candlestick pattern is formed the prior trend is an uptrend. A bullish
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candlestick is formed which looks like the continuation of the ongoing uptrend.
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On the next day, the high of the second day’s bearish candle’s high indicates a resistance level.
Bulls seem to raise the price upward, but now they are not willing to buy at higher prices.
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The top-most candles with almost the same high indicate the strength of the resistance and also
signal that the uptrend may get reversed to form a downtrend. This bearish reversal is confirmed
on the next day when the bearish candle is formed.
It consists of three candlesticks, the first being a short bullish candle, the second candlestick being
a large bearish candle which should cover the first candlestick.
The third candlestick should be a long bearish candlestick confirming the bearish reversal. 1
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The relationship of the first and second candlestick should be of the Bearish Engulfing candlestick
pattern.
Traders can take a short position after the completion of this candlestick pattern.
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25. Bearish Counterattack–
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The bearish counterattack candlestick pattern is a bearish reversal pattern that appears during an
uptrend in the market. It predicts that the current uptrend in the market will make and the new
downtrend will take over the market.
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26. Doji:
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Doji pattern is a candlestick pattern of indecision which is formed when the opening and closing
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prices are almost equal.
It is formed when both the bulls and bears are fighting to control prices but nobody succeeds in
gaining full control of the prices.
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The candlestick pattern looks like a cross with very small real body and long shadows.
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The only difference between spinning top and doji is in their formation, the real body of the spinning
1
is larger as compared to Doji.
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The candlestick pattern is made of two long candlestick charts in the
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downtrend at the beginning and end, with three shorter counter-trend candlesticks in the middle.
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The candlestick pattern is important as it shows traders that the bulls still do not have enough
power to reverse the trend.
The candlestick pattern is made of two long candlesticks in the direction of the trend i.e uptrend in
this case. at the beginning and end, with three shorter counter-trend candlesticks in the middle.
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The candlestick pattern is important as it shows traders that the bears still do not have enough
power to reverse the trend.
The third candlestick is a bearish candle that closes in the gap formed between these first two
bullish candles.
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This candlestick pattern consists of three candles, the first candlestick is a long-bodied Mento
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candlestick, and the second candlestick is also a bearish candlestick formed after a gap down.
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The third candlestick is a bullish candle that closes in the gap formed between these first two
bearish candles.
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32. Mat-Hold-
A mat hold pattern is a candlestick formation indicating the continuation of a prior trend.
There can be either bearish or bullish mat hold patterns. A bullish pattern begins with a large
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These candles must stay above the low of the first candle. The fifth candle is a large candle that
moves to the upside again. The pattern occurs within an overall uptrend.
high trading volatility. It is a trend continuation candlestick pattern and it is an indication of the
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For example below we can see a list of stocks in which Bullish Engulfing pattern was formed:
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In this course, Candlestick Made Easy traders will understand variousInfo
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If you are interested in learning about different candlestick patterns in Tamil, then you can also
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Bottomline:
One should remember that the candlestick patterns that we have discussed above should always
be used with other technical indicators as sometimes the signals generated by these patterns can
be false.
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As a beginner investor, I liked your approach to candlestick education which imparts knowedge
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Thank you yesterday i made 21 trades 3000 eur each and only lost 2 it was really helpful.
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Just great learning with it. Please share more possible patterns if same are there.
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good information
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Right on. It’s more informative and easy to understand. Thanks a lot such a nice guideline.
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Great knowledge piece to understand candle stick patterns. My doubts on types & pattern of
candles are clear now.
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heyyyy……thank you very much for this information. you made this in a very simple way it is very
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as a beginner, its very very useful & effective in the details. i really thanks for helping me.
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Absolutely brilliant contents with simplicity and no difficult jargon , easy to understand for any
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