CANDLE STICK

PATTERN
Six Bullish Candle Stick Patterns
6 Bullish Candle Stick

 Hammer
 Inverse Hammer
 Bullish Engulfing
 Piercing Line
 Morning Star
 Three White Soldier
 Hammer
 The hammer candlestick pattern
is formed of a short body with a
long lower wick, and is found at
the bottom of a downward trend.
 A hammer shows that although
there were selling pressures
during the day, ultimately a
strong buying pressure drove the
price back up. The color of the
body can vary, but green
hammers indicate a stronger bull
market than red hammers.
INVERSE HAMMER

 A similarly bullish pattern is

the inverted hammer. The
only difference being that
the upper wick is long, while
the lower wick is short.
 It indicates a buying
pressure, followed by a
selling pressure that was not
strong enough to drive the
market price down. The
inverse hammer suggests
that buyers will soon have
control of the market
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.
 Though the second day opens
lower than the first, the
bullish market pushes the
price up, culminating in an
obvious win for buyers.
Piercing line

 The piercing line is also a two-stick

pattern, made up of a long red
candle, followed by a long green
candle.

 There is usually a significant gap

down between the first
candlestick’s closing price, and the
green candlestick’s opening. It
indicates a strong buying pressure,
as the price is pushed up to or
above the mid-price of the
previous day.
Morning Star

 The morning star candlestick

pattern is considered a sign of
hope in a bleak market
downtrend. It is a three-stick
pattern: one short-bodied
candle between a long red and
a long green. Traditionally, the
‘star’ will have no overlap with
the longer bodies, as the
market gaps both on open and
close.
 It signals that the selling
pressure of the first day is
subsiding, and a bull market is
on the horizon.
Three White Soldier

 The three white soldiers pattern

occurs over three days. It
consists of consecutive long
green (or white) candles with
small wicks, which open and
close progressively higher than
the previous day.
 It is a very strong bullish signal
that occurs after a downtrend,
and shows a steady advance of
buying pressure.
6 Bearish Candle Stick

 Bearish candlestick patterns usually form after an

uptrend, and signal a point of resistance. Heavy
pessimism about the market price often causes
traders to close their long positions, and open a
short position to take advantage of the falling
price.
6 Bearish Candle Stick

 Hanging Man
 Shooting Star
 Bearish Engulfing
 Evening Star
 Three Black Crows
 Dark cloud cover
Hanging Man

 The hanging man is the bearish

equivalent of a hammer; it has the
same shape but forms at the end of
an uptrend.
 It indicates that there was a
significant sell-off during the day,
but that buyers were able to push
the price up again. The large sell-off
is often seen as an indication that
the bulls are losing control of the
market.
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.
Bearish Engulfing

 A bearish engulfing pattern

occurs at the end of an uptrend.
The first candle has a small
green body that is engulfed by a
subsequent long red candle.
 It signifies a peak or slowdown of
price movement, and is a sign of
an impending market downturn.
The lower the second candle
goes, the more significant the
trend is likely to be.
Evening Star

 The evening star is a three-

candlestick pattern that is the
equivalent of the bullish morning
star. It is formed of a short candle
sandwiched between a long green
candle and a large red candlestick.
 It indicates the reversal of an
uptrend, and is particularly strong
when the third candlestick erases
the gains of the first candle.
Three Black Crows

 The three black crows candlestick

pattern comprises of three
consecutive long red candles
with short or non-existent wicks.
Each session opens at a similar
price to the previous day, but
selling pressures push the price
lower and lower with each close.
 Traders interpret this pattern as
the start of a bearish downtrend,
as the sellers have overtaken the
buyers during three successive
trading days.
 Dark cloud cover

 The dark cloud cover candlestick

pattern indicates a bearish reversal –
a black cloud over the previous day’s
optimism. It comprises two
candlesticks: a red candlestick which
opens above the previous green
body, and closes below its midpoint.
 It signals that the bears have taken
over the session, pushing the price
sharply lower. If the wicks of the
candles are short it suggests that the
downtrend was extremely decisive.
Four Continuation Candlestick
Patterns

 If a candlestick pattern doesn’t indicate a change

in market direction, it is what is known as a
continuation pattern. These can help traders to
identify a period of rest in the market, when there
is market indecision or neutral price movement.
DOJI

 When a market’s open and close

are almost at the same price point,
the candlestick resembles a cross
or plus sign – traders should look
out for a short to non-existent body,
with wicks of varying length.
 This doji’s pattern conveys a
struggle between buyers and
sellers that results in no net gain
for either side. Alone a doji is
neutral signal, but it can be found
in reversal patterns such as the
bullish morning star and bearish
evening star.
Spinning top

 The spinning top candlestick pattern has a

short body centred between wicks of equal
length. The pattern indicates indecision in
the market, resulting in no meaningful
change in price: the bulls sent the price
higher, while the bears pushed it low again.
Spinning tops are often interpreted as a
period of consolidation, or rest, following a
significant uptrend or downtrend.
 On its own the spinning top is a relatively
benign signal, but they can be interpreted
as a sign of things to come as it signifies
that the current market pressure is losing
control.
Falling three methods

 Three-method formation patterns

are used to predict the
continuation of a current trend,
be it bearish or bullish.
 The bearish pattern is called the
‘falling three methods’. It is
formed of a long red body,
followed by three small green
bodies, and another red body –
the green candles are all
contained within the range of the
bearish bodies. It shows traders
that the bulls do not have enough
strength to reverse the trend.
Rising three methods

 The opposite is true for the

bullish pattern, called the ‘rising
three methods’ candlestick
pattern. It comprises of three
short reds sandwiched within
the range of two long greens.
The pattern shows traders that,
despite some selling pressure,
buyers are retaining control of
the market.