Identifying Candlestick Patterns

Reversal & Continuation

Reversal Candlesticks

 Bullish Engulfing  Bearish Engulfing

 Hammer / Inverted Hammer  Hanging Man / Shooting Star
 Three white soldiers  Three crows
 Bullish Harami  Bearish Harami
 Piercing Pattern  Dark Cloud Cover
 Tweezer Top  Tweezer Top
 Morning Star  Evening Star
Bullish engulfing
 The bullish engulfing pattern is formed of
two candlesticks.
 The first candle is a short red body that is
completely engulfed by a larger green
candle.
 form at the bottom of downtrends /
Support levels.
 It covers previous candle upper & lower
shadows.
 If appears at support levels it is a early
sign of “Bullish trend reversal.
Hammer & Inverted Hammer
(Bullish)
 Hammer CandleStick
 A Hammer & Inverted Hammer have a
short body and long lower wick
 It found at the bottom of the
Downtrend / Support levels.
 The colour of the candle can be different.
However Green candle indicates stronger
bull market than Red Hammers.
 Inverse Hammer Candlestick
 Inverse hammer upper wick is long and
lower wick is short
 The inverse hammer suggests that buyers
will soon have control of the market.
Piercing Line Candlestick
 The piercing line is also a two-stick
pattern, made up of a long red candle,
followed by a long green candle.
 At second day the market opens gap down
and push the market upside.
 Second candle has to close at least 50% of
the previous red candle.
 Strong Red candle on the previous day
 Green candle must close more than Half
of the previous day red candle.
Morning star
 Morning star is a Three-stick pattern.
 One short candle between one Red candle
& one Green candle.
 Day 1- A long Red Candle
 Day 2 – A short Red / Green Candle
 Day 3 – A long Green Candle
Three white soldiers
 The three white soldiers pattern occurs
over three days.
 It forms three long Green candles with
Small wicks.
 It’s open and close progressively higher
than the previous day.
 It forms at the bottom of the
downtrend / support levels.
Bullish Harami (Pregnant)
 Harami is formed with two candlestick.
 First Candle is a Long Red candle &
second is a short Green candle open &
close inside the Long red candle.
 On day 1 of the pattern (P1), a red candle
with a new low is formed.
 On day 2 of the pattern (P2), the market
opens at a price higher than the previous
day’s close.
 P2’s closing price is just below the
previous days (P1) open price.
 It seems to be a pregnant – P1 Mother
candle & P2 Baby Candle.
Confirmation
P1 – Open = 868, High = 874, Low = 810, Close
= 815
P2 – Open = 824, High = 847, Low = 818, Close
= 835
Bearish Engulfing
 The bullish engulfing pattern is formed of
two candlesticks.
 The first candle is a short green body that
is completely engulfed by a larger Red
candle.
 form at the bottom of
Uptrend/Resistance levels.
 It covers previous candle upper & lower
shadows.
 If appears at Resistance levels it is a early
sign of “Bearish” trend reversal.
Hanging Man / Shooting Star
 The hanging man is the bearish equivalent
of a hammer
 it has the same shape but forms at the
end of an uptrend.
 It has a longer lower wick & short red
body.
 The colour of the candle can be different.
However Red candle indicates stronger
Bear market than Green Hammers.
 Shooting Star
 The shooting star is the same shape as the
inverted hammer
 but is formed in an uptrend: it has a
small lower body, and a long upper wick.
 Usually, the market will gap slightly
higher on opening and rally to an intra-
day high before closing at a price just
above the open – like a star falling to the
ground.
Evening Star
 Evening star is a Three-stick pattern.
 One short candle between one Long
Green candle & one Long Red candle.
 Day 1- A long Green Candle
 Day 2 – A short Red / Green Candle
 Day 3 – A long Red Candle
Three black crows
 The three black crows pattern occurs
over three days.
 It forms three long Red candles with
Small wicks / no wicks.
 It’s open and close progressively lower
than the previous day.
 It forms at the bottom of the uptrend /
resistance levels.
Dark cloud cover
 The dark cloud cover candlestick pattern
indicates a bearish reversal
 It comprises two candlesticks: a red
candlestick which opens above the
previous green body, and closes below its
midpoint.
The bearish harami
 The market is in an uptrend, placing the
bulls in absolute control.
 On P1, the market trades higher and
makes a new high and closes positively
forming a Green candle day.
 On P2 the market unexpectedly opens
lower & continues to trade lower to an
extent where it manages to close
negatively forming a red candle day.
P1 – Open = 124, High = 129, Low = 122, Close
= 127
P2 – Open = 126.9, High = 129.70, Low, = 125,
Close = 124.80
Continuation Candlesticks

 Doji (Bullish / Bearish Trend)

 Spinning Top (Bullish / Bearish Trend)
 Three falling method (Bearish Trend)
 Three Rising Method (Bullish Trend)
Doji