Candlestick Patterns Dictionary
Master Japanese candlestick patterns for better trade timing
Understanding Candlestick Anatomy
Candlestick Components
- Body: Area between open and close prices
- Upper Shadow: Line from body top to high price
- Lower Shadow: Line from body bottom to low price
- Color: Green/white (bullish) or Red/black (bearish)
Pattern Categories
- Single: One candle patterns (hammer, doji)
- Double: Two candle patterns (engulfing, harami)
- Triple: Three candle patterns (morning star, evening star)
- Complex: Multiple candle formations
Bullish Reversal Patterns
Hammer
Single CandleSmall body at top with long lower shadow, appears at bottom
Psychology:
Sellers pushed price down but buyers regained control
Confirmation:
Next candle closes above hammer high
Key Points:
- Lower shadow 2x body length
- Little to no upper shadow
- Appears after downtrend
- Color less important
Inverted Hammer
Single CandleSmall body at bottom with long upper shadow
Psychology:
Buyers testing resistance, potential reversal
Confirmation:
Required - next candle bullish
Key Points:
- Upper shadow 2x body length
- Small lower shadow
- At market bottoms
- Needs confirmation
Bullish Engulfing
Double CandleLarge green candle engulfs previous red candle
Psychology:
Complete shift from selling to buying pressure
Confirmation:
Pattern itself is confirmation
Key Points:
- Second body engulfs first
- Appears in downtrend
- Larger engulfing = stronger
- Volume increase ideal
Piercing Pattern
Double CandleGreen candle opens below red, closes above midpoint
Psychology:
Buyers overcome gap down to show strength
Confirmation:
Close above pattern high
Key Points:
- Opens below previous low
- Closes above 50% of red candle
- In downtrend
- Volume confirms
Morning Star
Triple CandleLarge red, small body/doji, large green sequence
Psychology:
Indecision after selling leads to reversal
Confirmation:
Third candle provides confirmation
Key Points:
- Middle candle gaps down
- Third candle recovers losses
- Very reliable pattern
- Worth waiting for
Three White Soldiers
Triple CandleThree consecutive green candles with higher closes
Psychology:
Sustained buying pressure building
Confirmation:
Pattern completion confirms
Key Points:
- Each opens within previous body
- Consistent size candles
- Small upper shadows
- Strong trend reversal
Bullish Harami
Double CandleSmall green candle within previous large red body
Psychology:
Selling pressure diminishing
Confirmation:
Break above pattern high
Key Points:
- Second candle inside first
- Shows indecision
- Needs confirmation
- Common pattern
Dragonfly Doji
Single CandleDoji with long lower shadow, no upper shadow
Psychology:
Sellers rejected strongly at lows
Confirmation:
Next candle bullish
Key Points:
- Open = Close = High
- Long lower shadow
- At support levels best
- Rare pattern
Bearish Reversal Patterns
Shooting Star
Single CandleSmall body at bottom with long upper shadow at tops
Psychology:
Buyers pushed higher but sellers took control
Confirmation:
Next candle closes below star low
Key Points:
- Upper shadow 2x body
- Little lower shadow
- After uptrend
- Opposite of hammer
Hanging Man
Single CandleHammer-shaped candle at market tops
Psychology:
Selling pressure emerging despite recovery
Confirmation:
Required - bearish follow-through
Key Points:
- Same as hammer shape
- Appears at tops
- Needs confirmation
- Often ignored mistakenly
Bearish Engulfing
Double CandleLarge red candle engulfs previous green candle
Psychology:
Complete shift from buying to selling
Confirmation:
Pattern itself confirms
Key Points:
- Second body engulfs first
- In uptrend
- Larger = stronger signal
- High volume ideal
Dark Cloud Cover
Double CandleRed candle opens above green, closes below midpoint
Psychology:
Sellers overcome gap up showing weakness
Confirmation:
Break below pattern low
Key Points:
- Opens above previous high
- Closes below 50% of green
- In uptrend
- Penetration depth matters
Evening Star
Triple CandleLarge green, small body/doji, large red sequence
Psychology:
Buying exhaustion leads to reversal
Confirmation:
Third candle confirms
Key Points:
- Middle candle gaps up
- Third candle erases gains
- Mirror of morning star
- Very reliable
Three Black Crows
Triple CandleThree consecutive red candles with lower closes
Psychology:
Sustained selling pressure building
Confirmation:
Pattern completion
Key Points:
- Each opens within previous
- Consistent sized candles
- Small lower shadows
- Strong reversal signal
Bearish Harami
Double CandleSmall red candle within previous large green body
Psychology:
Buying pressure weakening
Confirmation:
Break below pattern low
Key Points:
- Second inside first body
- Shows indecision
- Common pattern
- Needs confirmation
Gravestone Doji
Single CandleDoji with long upper shadow at market tops
Psychology:
Buyers rejected strongly at highs
Confirmation:
Bearish next candle
Key Points:
- Open = Close = Low
- Long upper shadow
- At resistance best
- Opposite of dragonfly
Neutral/Indecision Patterns
Doji
Single CandleOpen and close are virtually equal
Psychology:
Complete indecision between buyers and sellers
Significance:
Potential reversal or continuation pause
Key Points:
- Open = Close
- Various shadow lengths
- Location matters most
- Needs other confirmation
Spinning Top
Single CandleSmall body with shadows on both sides
Psychology:
Indecision, neither side in control
Significance:
Trend weakness or pause
Key Points:
- Small real body
- Shadows roughly equal
- Color less important
- Common pattern
High Wave
Single CandleSmall body with very long shadows both sides
Psychology:
Extreme volatility and indecision
Significance:
Major indecision point
Key Points:
- Very long shadows
- Small body
- Shows volatility
- Often at turning points
Inside Bar
Double CandleCandle completely within previous candle range
Psychology:
Consolidation and reduced volatility
Significance:
Breakout pending
Key Points:
- High and low inside previous
- Compression pattern
- Breakout trade setup
- Multiple inside bars stronger
Complex Multi-Candle Patterns
Three Inside Up
Bullish harami followed by strong green candle
Three Inside Down
Bearish harami followed by strong red candle
Three Outside Up
Bullish engulfing followed by higher close
Three Outside Down
Bearish engulfing followed by lower close
Tweezer Tops
Two candles with same high at resistance
Tweezer Bottoms
Two candles with same low at support
Candlestick Trading Best Practices
Pattern Recognition Tips
- • Location matters more than pattern shape
- • Confirm patterns with volume
- • Multiple timeframe confirmation
- • Combine with support/resistance
- • Wait for pattern completion
Common Mistakes
- • Trading patterns in isolation
- • Ignoring the trend context
- • Not waiting for confirmation
- • Over-relying on single candles
- • Ignoring failed patterns
Remember:
Candlestick patterns are most effective when combined with other technical analysis tools like support/resistance, trend lines, and volume analysis. No pattern works 100% of the time.