candlestick chart

Candlestick Patterns

🕯️ Candlestick Patterns – Complete Guide (From Basic to Advanced)

Start with a short, reader-friendly intro that explains what candlestick patterns are and why traders use them:

Candlestick patterns are one of the most powerful tools in technical analysis. They visually represent market psychology – showing who’s in control, buyers or sellers. By understanding these patterns, traders can identify potential reversals, continuations, and market indecision zones.

candlestick

📘 Basic Candlestick Patterns

These are single-candle formations that help identify simple market signals.

  1. Doji – Indicates market indecision; price opens and closes at nearly the same level.
  2. Hammer – Bullish reversal signal after a downtrend.
  3. Inverted Hammer – Bullish reversal signal with upper wick dominance.
  4. Shooting Star – Bearish reversal signal after an uptrend.
  5. Spinning Top – Indicates indecision; small body with long wicks.
  6. Marubozu – Strong momentum candle without wicks (shows dominance of buyers/sellers).

🔄 Double Candlestick Patterns

These two-candle formations show short-term shifts in market sentiment.

  1. Bullish Engulfing – Large green candle fully engulfs a smaller red one; bullish reversal.
  2. Bearish Engulfing – Large red candle engulfs a smaller green one; bearish reversal.
  3. Tweezer Bottom – Two candles with equal lows; bullish reversal.
  4. Tweezer Top – Two candles with equal highs; bearish reversal.
  5. Piercing Pattern – Bullish reversal where green candle closes above mid of previous red candle.
  6. Dark Cloud Cover – Bearish reversal where red candle closes below mid of previous green candle.

📊 Triple Candlestick Patterns

These three-candle setups often confirm strong reversals or continuations.

  1. Morning Star Pattern – Bullish reversal after a downtrend (red → small → green).
  2. Evening Star – Bearish reversal after an uptrend (green → small → red).
  3. Three White Soldiers – Strong bullish continuation pattern.
  4. Three Black Crows – Strong bearish continuation pattern.
  5. Three Inside Up – Bullish reversal pattern confirming an uptrend.
  6. Three Inside Down – Bearish reversal pattern confirming a downtrend.

📈 Advanced Candlestick Patterns

These patterns combine multiple concepts and often require confirmation with volume or support/resistance.

  1. Rising Three Methods – Bullish continuation within an uptrend.
  2. Falling Three Methods – Bearish continuation within a downtrend.
  3. Abandoned Baby – Rare but strong reversal (gap between Doji and previous candle).
  4. Deliberation Pattern – Early warning of potential trend exhaustion.
  5. Separating Lines – Continuation signal confirming the existing trend.
  6. Mat Hold Pattern – Variation of the “Rising Three Methods,” indicates strong momentum continuation.

🧠 How to Use Candlestick Patterns Effectively

  • Always confirm with volume or trend direction.
  • Combine with support/resistance zones or indicators like RSI or MACD.
  • Avoid trading based only on a single pattern — look for confluence.

❓ FAQ Section

Q1. Are candlestick patterns reliable?

They are useful, but not 100% reliable. Always use them with confirmation tools.

Q2. Which is the most powerful candlestick pattern?

The Bullish/Bearish Engulfing and Morning/Evening Star patterns are among the most reliable.

Q3. How many candlestick patterns exist?

Over 50+ patterns are recognized, but only around 20–25 are commonly used by professional traders.

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