35 Powerful Candlestick Patterns in the Stock Market
- 21 Aug 2024
- 34 mins read
- By: BlinkX Research Team
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Candlestick chart patterns are technical tools that outperform typical open, high, low, and close (OHLC) bars or simple lines connecting closing price dots. Candlestick Patterns create patterns that anticipate price direction once finished. Candlestick patterns are used to anticipate future price changes. Candlestick designs are created by arranging two or more candlesticks together. Candlestick chart patterns work best daily. The theory is that each candle represents a complete day's worth of news data and price activity, which is why candlestick patterns benefit long-term or swing traders more.
In this article, we will go over all 35 powerful candlestick patterns, but first, let us learn how to interpret candlestick charts.
35 Candlestick Patterns
Candlestick patterns which include bullish and bearish reversal, and continuation formation have become essential for the investors and traders that help predict market movements. Below are 35 powerful candlesticks patterns presented in a table.
Pattern Type | Pattern Name | Description |
Bullish Reversal Pattern | Hammer | This happens when the price trade gets lower from its original price but gets too close near the opening price, with a lower shadow at least twice the size of the body. |
Piercing Pattern | This is made by two candles after a downtrend, where the second bullish candle closes more than 50% compared to the earlier bearish candle. | |
Bullish Engulfing | Two candles where the second bullish candle engulfs the body of the previous bearish candle, indicating a trend reversal. | |
The Morning Star | Three-candle pattern indicating a bullish reversal: bearish first candle, doji second, and bullish third candle. | |
Three White Soldiers | Three consecutive long bullish candles indicating a reversal of a downtrend. | |
White Marubozu | A single long bullish candle with no shadows, indicating strong buying pressure and a potential trend reversal. | |
Three Inside Up | A three-candle pattern: bearish first candle, small bullish second candle within the first, and a long bullish third candle confirming reversal. | |
Bullish Harami | Two candles where the first bearish candle is followed by a smaller bullish candle within the range of the first, signalling a reversal. | |
Tweezer Bottom | Two candles with equal bottoms, signalling a reversal of a downtrend. | |
Inverted Hammer | Appears at the bottom of a downtrend with a small body, long upper wick, and short lower wick, indicating potential reversal. | |
Three Outside Up | Three candles: bearish first, bullish second engulfing the first, and a third confirming bullish reversal. | |
On Neck Pattern | After a downtrend, a long bearish candle followed by a small bullish candle closing near the previous close. | |
Bullish Counterattack | Two-candle pattern predicting a reversal in a downtrend, with the second bullish candle closing above the first bearish candle's close. | |
Bearish Reversal Pattern | Hanging Man | Forms at the end of an uptrend with a small body and long lower shadow, indicating a bearish reversal. |
Dark Cloud Cover | Two-candle pattern with a bearish second candle closing below the midpoint of the first bullish candle, signalling reversal. | |
Bearish Engulfing | Two candles where the second bearish candle engulfs the first bullish candle, indicating a trend reversal. | |
The Evening Star | Three-candle pattern: bullish first candle, doji second, and bearish third candle indicating reversal. | |
Three Black Crows | Three consecutive long bearish candles signalling a reversal of an uptrend. | |
Black Marubozu | A single long bearish candle with no shadows, indicating strong selling pressure and potential reversal. | |
Three Inside Down | Three candles: long bullish first, small bearish second within the first, and a long bearish third confirming reversal. | |
Bearish Harami | Two candles where the first bullish candle is followed by a smaller bearish candle within the range of the first, signalling a reversal. | |
Shooting Star | Forms at the end of an uptrend with a small body and long upper wick, indicating a bearish reversal. | |
Tweezer Top | Two candles with equal tops, signalling a reversal of an uptrend. | |
Three Outside Down | Three candles: short bullish first, large bearish second engulfing the first, and a third confirming bearish reversal. | |
Bearish Counterattack | Two-candle pattern predicting a reversal in an uptrend, with the second bearish candle closing below the first bullish candle's close. | |
Continuation Pattern | Doji | Indicates indecision with opening and closing prices almost equal, showing market uncertainty. |
Spinning Top | Similar to Doji but with a larger body, indicating market indecisiveness. | |
Falling Three Methods | Five-candle bearish continuation pattern with two long bearish candles and three short bullish candles in between. | |
Rising Three Methods | Five-candle bullish continuation pattern with two long bullish candles and three short bearish candles in between. | |
Upside Tasuki Gap | Three-candle bullish continuation pattern with two long bullish candles and a gap up between them. | |
Downside Tasuki Gap | Three-candle bearish continuation pattern with two long bearish candles and a gap down between them. | |
Mat Hold | Continuation pattern with a large bullish/bearish candle, followed by smaller candles countering the trend, then a large candle resuming the trend. | |
Rising Window | Two bullish candles with a gap between them, indicating strong buyer momentum. | |
Falling Window | Two bearish candles with a gap between them, indicating strong seller momentum. | |
High Wave | Indecision pattern with long upper and lower wicks and small bodies, indicating market uncertainty. |
Table of Contents
- 35 Candlestick Patterns
- Candlestick Patterns
- Bearish Candlestick Pattern
- Continuation Candlestick Pattern
- How to Read Candlestick Charts?
Candlestick Patterns
These all are bullish candlestick patterns:
1. Hammer Candlestick Pattern:
A Hammer candlestick pattern is a price pattern in candlesticks that occurs when a securities trade much lower than its initial price but rises within a period close to the opening price. This design is known as the hammer candlestick pattern. In this design, we see a hammer-shaped candlestick with a lower shadow that is at least double the size of the actual body. The candlestick body reflects the difference between the starting and closing prices. The shadow depicts the peak and low periods.