Candlestick patterns are among the most powerful tools in technical analysis, offering traders visual insights into market sentiment and potential price movements. Originating in 18th-century Japan with rice trader Munehisa Homma, candlestick charting was later introduced to the West by Steve Nison in his seminal 1991 book Japanese Candlestick Charting Techniques. Today, these patterns remain essential for traders across equities, forex, cryptocurrencies, futures, and options.
Each candlestick represents four key data points: open, high, low, and close (OHLC). The body reflects the range between open and close, while the wicks (or shadows) show the full extent of price movement. Green or white bodies indicate bullish closes (higher than open), while red or black denote bearish closes.
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Understanding Candlestick Pattern Categories
Candlestick patterns fall into four primary categories:
- Bullish Reversal Patterns: Signal a shift from downtrend to uptrend.
- Bearish Reversal Patterns: Indicate a potential top and downward reversal.
- Continuation Patterns: Suggest the current trend will persist after consolidation.
- Indecision Patterns: Reflect market uncertainty and possible turning points.
Let’s explore each category in depth.
Bullish Reversal Patterns
These patterns form at the end of a downtrend and suggest buyers are gaining control.
1. Bullish Engulfing
A small red candle is fully "engulfed" by a larger green one. This signals strong buying pressure and a potential trend reversal. Studies show a 65% success rate in predicting bullish moves.
2. Bullish Harami
A small green candle appears within the range of a prior red candle. It indicates weakening selling pressure and buyer hesitation, with a 54% reversal success rate.
3. Tweezer Bottom
Two or more candles share identical lows, forming strong support. This pattern suggests sellers failed to push prices lower, with a 61% accuracy rate.
4. Morning Star
A three-candle pattern: bearish → small body/doji → strong bullish. It marks a clear shift in momentum and has a 65% success rate.
5. Morning Star Doji
Similar to the Morning Star, but the middle candle is a doji, emphasizing indecision. Research shows a 68% success rate in forecasting reversals.
6. Bullish Abandoned Baby
Features a gap down to a doji, followed by a gap-up bullish candle. This rare pattern has a 66% success rate, indicating strong sentiment shift.
7. Three Outside Up
A bearish candle followed by an engulfing bullish candle and another bullish close above the second candle’s high. Highly reliable with a 70% success rate.
8. Three Inside Up
The opposite of Three Outside Up—bullish momentum builds within the range of the first bearish candle. Confirmed with third candle breakout; 64% effective.
9. Bullish Kicker
A gap up from a bearish to a strong bullish marubozu candle. Shows sudden buying dominance—68% success rate.
10. Piercing Line
A bullish candle opens below the prior close but closes above its midpoint. Indicates strong recovery—60% success rate.
11. Hammer
Single candle with long lower wick and small body at top. Forms after a decline, signaling rejection of lower prices—62% accuracy.
12. Inverted Hammer
Looks like an upside-down hammer. Long upper wick shows buyers attempted to push higher—65% success rate as reversal signal.
Bearish Reversal Patterns
These appear at market tops and warn of impending downside.
13. Bearish Engulfing
A large red candle swallows a prior green one—strong sell signal with 72% reliability.
14. Bearish Harami
Small red candle inside prior green range—suggests loss of bullish momentum (63% success).
15. Tweezer Top
Two candles with matching highs—resistance confirmed (61% reversal accuracy).
16. Evening Star
Bullish → doji → bearish candle sequence—clear top formation (69% effective).
17. Evening Star Doji
Evening Star with doji middle—stronger signal due to increased indecision (68% success).
18. Bearish Abandoned Baby
Gap up to doji, then gap down to bearish candle—rare but powerful (78% success rate).
19. Three Outside Down
Bullish candle engulfed by bearish one, followed by lower close—67% effective.
20. Three Inside Down
Bearish continuation within prior bullish range—confirms downtrend (64% accuracy).
21. Hanging Man
Looks like hammer but forms after uptrend—bearish warning (59% success).
22. Bearish Kicker
Gap down from bullish to strong bearish marubozu—sudden sentiment shift (70% reliable).
23. Dark Cloud Cover
Bearish candle opens above high but closes below midpoint of prior green candle—65% success.
24. Shooting Star
Single candle with long upper wick after uptrend—rejection of highs (59% accuracy).
25. Three Black Crows
Three consecutive long red candles—strong bearish momentum (78% success rate).
Continuation Patterns
These suggest the trend will resume after brief pause.
26. Rising Three
Uptrend interrupted by three small red candles within prior green range—final green confirms continuation (74% effective).
27. Falling Three
Downtrend pause with three small green candles—bearish resumption confirmed (72% success).
28. Tasuki Gap
Gap in trend direction, followed by partial fill without closing gap—bullish or bearish continuation (57% intraday success).
29. Mat Hold
Five-candle pattern: strong trend → gap → three against-trend candles → trend resumes (70% success for bullish version).
30. Inside Bars
Smaller candle fully within prior range—consolidation before breakout.
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31. Three White Soldiers
Three strong green candles with higher closes—bullish momentum (82% reversal accuracy).
32. Marubozu
Candle with no wicks—full control by buyers (bullish) or sellers (bearish)—69% directional accuracy.
Indecision Patterns
Reflect market equilibrium and potential turning points.
33. Doji
Open ≈ close, long wicks—equal buying/selling pressure (55% reversal signal strength).
34. Gravestone Doji
Long upper wick, no lower wick—bulls fail at top (61% bearish reversal rate).
35. Dragonfly Doji
Long lower wick—bears fail at bottom (60% bullish reversal accuracy).
36. Long-Legged Doji
Extremely long wicks both sides—high volatility and indecision (57% reversal chance).
37–38. Bullish & Bearish Spinning Top
Small body, long wicks—market hesitation; 54% and 53% success rates, respectively.
39. Tri-Star
Three consecutive dojis—rare but strong reversal signal (62% accuracy).
40. Long Wicks
Rejection of extreme prices; long lower wick = support, long upper = resistance.
How to Trade Candlestick Patterns
Always consider:
- Context: Is it aligned with the broader trend?
- Volume: Increasing volume validates pattern strength.
- Confirmation: Wait for next candle to confirm signal.
- Risk Management: Use stop-loss orders and proper position sizing.
For example, after a Three Black Crows, place stop-loss above first candle’s high and target key support levels.
Frequently Asked Questions
What are the most reliable candlestick patterns?
Patterns like Morning Star, Evening Star, Engulfing, and Three White Soldiers/Black Crows have high historical success rates (65–78%).
Can candlestick patterns be used in crypto trading?
Yes—cryptocurrencies exhibit strong price momentum, making patterns like Hammer, Shooting Star, and Doji highly effective.
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Do candlestick patterns work on all timeframes?
They work across timeframes, but signals on daily and 4-hour charts are more reliable than on 5-minute charts due to reduced noise.
How do I confirm a candlestick pattern?
Use volume, moving averages, RSI, or MACD to confirm strength and avoid false signals.
Should beginners rely solely on candlesticks?
No—combine with support/resistance, trendlines, and indicators for higher-probability trades.
What is the average success rate of candlestick patterns?
Studies show an average of 50–60%, rising to over 70% when combined with confirming indicators.
Final Thoughts
Mastering these 40 powerful candlestick patterns equips traders with a visual language to interpret market psychology. While no pattern guarantees success, combining them with sound risk management and confirmation tools significantly improves trading edge across all financial markets.