Candlesticks (1)


Dragonfly
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Dragonfly doji

 ▲
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:rare
  • The long lower shadow suggests that the forces of supply and demand are nearing a balance and that the direction of the trend may be nearing a major turning point.
  • A dragonfly doji pattern is a relatively difficult chart pattern to find
  • When it is found within a defined trend it is often deemed to be a reliable signal that the trend is about to change direction.
Raindrops
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Raindrops

▼ 
Type: reversal
Strength: confirmation needed
Outcome: downtrend to uptrend
Occurrance:moderate to rare
  • If the short body appears after and below the long body, then the long body must be a downside red candle.
  • Stars and raindrops form part of a more complicated pattern, usually a reversal pattern, but need to be examined in a wider context.
Hammer
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Hammer

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:frequently to moderate
  • A hammer is a very important indicator of reversal trend and it is named such because the market is attempting to hammer out a market bottom.
  • How to recognise a Hammer: The hammer appears during a downtrend only.
  • The body of the hammer has a long shadow on the underside - at least 2-3 times the length of the body and little if any shadow on the upside.
Hammer
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Hammer

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:frequently to moderate
  • A hammer is a very important indicator of reversal trend and it is named such because the market is attempting to hammer out a market bottom.
  • How to recognise a Hammer: The hammer appears during a downtrend only.
  • The body of the hammer has a long shadow on the underside - at least 2-3 times the length of the body and little if any shadow on the upside.
Engulfing
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Engulfing

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:moderate
  • When a green body engulfs that of a red body from the preceding period, this is an indicator of a bullish trend.
Harami
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Harami

 ▲
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:frequently to moderate
  • A Harami is the reverse of engulfing.
  • It indicates a turnabout and a trend reversal.
Harami cross
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Harami cross

 ▲
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:moderate to rare
  • The Harami Cross is a significant indicator of trend reversal, particularly when it occurs after a long body in a downtrend.
  • It is the same as the Harami, except that the second candle is a Doji.
  • The Doji candlestick fits within the longer body of the preceding trading period.
  • The longer body is part of a sustained directional trend.
Inverted hammer
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Inverted hammer

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:moderate
  • (1) Setup Candle: The first candle is bearish and preferably occurs at the end of a significant push downwards in price.
  • (2) Signal Candle: The second candle is an upside down or -inverted- hammer candle occurring at the bottom of the move. It consists of a comparatively short body with a comparatively long tail.
  • (3) Confirmation Candle: the third candle is a push up in price represented by a bullish body.
  • The inverted hammer usually occurs at the bottom of a downtrend and can indicate a trend reversal.
  • It is only evident on a downtrend.
  • The body of the hammer is green and the opposite colour of the larger body preceding it, which is red.
Piercing line
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Piercing line

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:moderate
  • The higher day-two closes into the first day candlestick body, the higher the chance of the downtrend bottoming out.
  • If the second day candle does not trade above the midpoint of the first day body, traders typically feel it safer to wait for confirmation on the third day.
  • The opening price of the green body is below the close point of the red body and the green body pierces the mid-point of the preceding trading (red) period.
Doji Shooting star
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Doji shooting star

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:rare
  • A Doji Shooting Star is a trend reversal indicator.
  • In a downtrend, a long red body is followed by a doji (a period with the same opening and closing price) - this is a bullish Doji Star.
  • The Doji is gapped below or above the long body.
Morning star
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Morning star

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Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:moderate to rare
  • A Morning Star is a bullish indicator and points to a trend reversal.
  • 1) a long red body during a downtrend
  • 2) a star with a short green body that is gapped away from the red body and finally
  • 3) a long green body, which is the confirmation of the trend reversal
Darkcloud cover
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Dark cloud cover

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:rare
  • The dark cloud must have a closing price that is:
  • 1) within the price range of the previous day, but
  • 2) below the mid-point between open and closing prices of the previous day.
  • The Dark Cloud Cover representation is a bearish pattern and an indicator of trend reversal.
  • It occurs in an uptrend only.
  • The red body pierces the mid-point of the preceding green body.
Morning doji star
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Morning doji star

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:rare
  • 1) a long red candle
  • 2) a Doji which is gapped below the red candle period
  • 3) a long green candle which follows the Doji. The close price of the green candle pierces above the mid-point of the red candle body
Pin bar (r)
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Pinbar (reversal)

 ▲
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:frequently
  • The open and close of the pin bar are near one end of the bar, the closer to the end the better.
  • The shadow or tail of the pin bar sticks out (protrudes) from the surrounding price bars, the longer the tail of the pin bar the better.
  • The pin bar tail has to be two/thirds the total pin bar length or more and the rest of the pin bar should be one/third the total pin bar length or less.
  • The end opposite the tail is sometimes referred to as the nose
  • In a bullish pin bar reversal setup, the pin bars tail points down because it shows rejection of lower prices or a level of support. This setup very often leads to a rise in price.
Inside bar
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Inside bar

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:moderate
  • This is more about what price is NOT doing as the candle is forming.
  • This is a direct play on short-term market sentiment looking to enter before the big moves.
  • After price has trended down for an extended period of time the pause in price movement (inside bar) precedes a reversal.
  • The inside bar is looked at for a short-term trade (or swing) in the counter-trend direction (with the goal of holding the trade for less than 10 bars).
  • Perhaps an extremely pertinent report is being issued soon, or perhaps the market had just made a stratospheric leap and traders are tepid about bidding price much higher or lower.
  • Look at for future increase in volatility.

Gravestone
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Gravestone doji

 ▼
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate to rare
  • This pattern is commonly used to suggest that the direction of the trend maybe be nearing a major turning point.
  • (It can also be found at the end of a downtrend, but this version is much more rare.)
Stars
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Stars

▲ 
Type: reversal
Strength: confirmation needed
Outcome: uptrend to downtrend
Occurrance:moderate to rare
  • The three candlestick star patterns are commonly interpreted as market reversal signals. Since all three patterns are market reversal signals, a simple forex trading strategy is to enter the market in the reversal direction indicated by the pattern, selling with a stop order placed above the high of the pattern in the case of an evening star or shooting star, or buying with a stop loss placed below the low of a morning star pattern.
  • A star occurs when a short body candlestick gaps above a long body candlestick.
  • When the short body appears after and above the long body period, the long body must be an upside green candle.
  • Stars and raindrops form part of a more complicated pattern, usually a reversal pattern, but need to be examined in a wider context.
Paper umbrella
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Paper umbrella

▲ 
Type: reversal
Strength: strong /confirmation
Outcome: uptrend to downtrend
Occurrance:frequently
  • The paper umbrella resembles a hanging man or hammer on first glance, but the one difference is the strict requirement that the body be much smaller than the lower shadow.
  • This can be a strong reversal indicator. Both umbrellas indicate a bearish trend reversal.
  • The color is not important. However its place on the trend is. Though the red body is more bearish than the green body.
  • If a green or red paper umbrella appears at the end of an uptrend, it is a signal that the uptrend is ending and the pattern is called a hanging man.
  • The bigger the distance between the real body of the paper umbrella and the opening of the next candle the more likely it is a hanging man pattern.
Paper umbrella
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Paper umbrella

▲ 
Type: reversal
Strength: strong / confirmation needed
Outcome: uptrend to downtrend
Occurrance:frequently
  • The paper umbrella resembles a hanging man or hammer on first glance, but the one difference is the strict requirement that the body be much smaller than the lower shadow.
  • This can be a strong reversal indicator. Whether the body is green or red, both umbrellas indicate a bearish trend reversal.
  • If a green or red paper umbrella appears at the end of a downtrend, it is a signal that the downtrend is ending and the pattern is called a hammer.
  • The color of the paper umbrella means that the red body is more bearish than the green body.
  • Also if the body is red, the more bearish it is and more likely the trend will reverse giving you a hanging man.
Hanging man
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Hanging man

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate
  • If the pattern appears in a chart with an upward trend indicating a bearish reversal, it is called the hanging man.
  • It occurs during an uptrend only and it is a very good indicator of a trend reversal to a bearish market.
  • The hanging man market period is preceded by uptrend periods.
  • The colour of the body is not important to the trend reversal.
Hanging man
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Hanging man

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate
  • If the pattern appears in a chart with an upward trend indicating a bearish reversal, it is called the hanging man.
  • It occurs during an uptrend only and it is a very good indicator of a trend reversal to a bearish market.
  • The hanging man market period is preceded by uptrend periods.
  • The colour of the body is not important to the trend reversal, other than a red hanging man is more bearish than a green hanging man.
Engulfing
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Engulfing

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate
  • When a red body engulfs the green body of the preceding trading period, then this is an indicator of a bearish trend.
Harami
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Harami

 ▼
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:frequently to moderate
  • A Harami is the reverse of engulfing.
  • It indicates a turnabout and a trend reversal.
Harami cross
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Harami cross

 ▼
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate to rare
  • It is the same as the Harami, except that the second candle is a Doji.
  • The Doji candlestick fits within the longer body of the preceding trading period.
  • The longer body is part of a sustained directional trend.
Shooting star
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Shooting star

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate
  • It happens during an uptrend.
  • The star body indicates that the market price opened and rallied upwards, before falling back significantly by the close.
Darkcloud cover
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Dark cloud cover

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:rare
  • The dark cloud must have a closing price that is:
  • 1) within the price range of the previous day, but
  • 2) below the mid-point between open and closing prices of the previous day.
  • The Dark Cloud Cover representation is a bearish pattern and an indicator of trend reversal.
  • It occurs in an uptrend only.
  • The red body pierces the mid-point of the preceding green body.
Doji Shooting star
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Doji shooting star

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:rare
  • A Doji Shooting Star is a trend reversal indicator.
  • During an uptrend, when a long green body is followed by a Doji, then this is a bearish Doji Star.
  • The Doji is gapped below or above the long body.
Evening star
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Evening star

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate to rare
  • This pattern is a good indicator of a trend reversal and is a bearish sign.
  • 1) a long green candle
  • 2) a shorter star candle where the price goes higher and finally
  • 3) a long red candle in the final trading period
Evening doji star
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Evening doji star

▲ 
Type: reversal
Strength: strong
Outcome: Uptrend to downtrend
Occurrance:rare
  • 1) a long green candle
  • 2) a Doji which gaps above the long green candle body
  • 3) a long red body which follows the Doji and whose close price pierces the mid-point of the long green body
Pin bar (r)
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Pinbar (reversal)

 ▼
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:frequently
  • The open and close of the pin bar are near one end of the bar, the closer to the end the better.
  • The shadow or tail of the pin bar sticks out (protrudes) from the surrounding price bars, the longer the tail of the pin bar the better.
  • The pin bar tail has to be two/thirds the total pin bar length or more and the rest of the pin bar should be one/third the total pin bar length or less.
  • The end opposite the tail is sometimes referred to as the nose
  • In a bearish pin bar reversal setup, the pin bars tail points up because it shows rejection of higher prices or a level of resistance. This setup very often leads to a drop in price.
Inside bar
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Inside bar

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate
  • This is more about what price is NOT doing as the candle is forming.
  • This is a direct play on short-term market sentiment looking to enter before the big moves.
  • After price has trended up for an extended period of time the pause in price movement (inside bar) precedes a reversal.
  • The inside bar is looked at for a short-term trade (or swing) in the counter-trend direction (with the goal of holding the trade for less than 10 bars).
  • Perhaps an extremely pertinent report is being issued soon, or perhaps the market had just made a stratospheric leap and traders are tepid about bidding price much higher or lower.
  • Look at for future increase in volatility.
Outside bar
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Outside bar (engulfing)

▼ 
Type: reversal
Strength: strong
Outcome: downtrend to uptrend
Occurrance:moderate
  • The longer timeframes often increasing the potential reliability of the signal
  • Bullish Outside Vertical Bar, go long.
  • Outside vertical bars function as -triggers- to initiate trades in the direction of the longer-term, extended trends
Outside bar
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Outside bar(engulfing)

▲ 
Type: reversal
Strength: strong
Outcome: uptrend to downtrend
Occurrance:moderate
  • The longer timeframes often increasing the potential reliability of the signal
  • Bearish Outside Vertical Bar, go short
  • Outside vertical bars function as -triggers- to initiate trades in the direction of the longer-term, extended trends

Long periods
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Long periods

▲ ▲
Type:general
Strength:strong
Outcome:continuation
Occurrance:frequently
  • The longer the body, the more volatile the swing between the open and close rates.
  • Long candle bodies tell us that the sentiment is stronger than usual. A long bullish candle shows the bulls in control.
  • Short wicks attached to a long body add to the signals strength.
Long wicks
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Long wicks

▲ ▲
Type: General
Strength: Strong
Outcome: Continuation
Occurrance:frequently
  • If the longer wick was below the body of the candle, price has a tendency to move up.
  • A long wick at the bottom of the candle signifies that sellers were able to push the price down significantly and that is what creates the long wick.
  • However, the sellers numbers were not great enough to keep the price at that low level. The buyers were able to push price back up from that low level thereby showing strength.
  • Since the buyers triumphed in that sense, there exists the potential that their strength will carry forward and given that strength the price may rise.
Marubozu
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Marubozu

▲ ▲
Type: general
Strength: strong
Outcome: continuation
Occurrance:frequently
  • Marubozu candles are a very strong indication of a continuation.
  • It generally comes at the start of a continuation bullish trend, or a bullish reversal pattern.
  • Since the bulls had so much power when forming the Marubozu that power can be expected to carry through to the next candle.
Pin bar (c)
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Pinbar (continuation)

▲ ▲
Type: general
Strength: intermediate
Outcome: continuation
Occurrance:moderate
  • This set up is very similar to a Pin Bar Reversal in many ways, what we look for is a good Pin Bar to appear in an already existing trend or at a minimum to appear as part of a power move or a move where there is excellent price momentum.
  • It must be part of the current trend and does not appear as a reversal pattern. (Pay attention to the Tenkan sen.)
  • Is best when rejecting a significant price action level like previous support and resistance or a pivot point

Long periods
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Long periods

▼ ▼
Type: general
Strength: strong
Outcome: continuation
Occurrance:frequently
  • The longer the body, the more volatile the swing between the open and close rates.
  • Long candle bodies tell us that the sentiment is stronger than usual. A long bearish candle shows the bears in control.
  • Short wicks attached to a long body add to the signals strength.
Long wicks
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Long wicks

▼ ▼
Type: general
Strength: strong
Outcome: continuation
Occurrance:frequently
  • If the longer wick was on top of the body, price has a tendency to move down.
  • A long wick at the top of the candle signifies that buyers were able to push the price up significantly and that is what creates the long wick.
  • However, the buyers numbers were not great enough to keep the price at that high level. The sellers were able to push price back down from that high level thereby showing strength.
  • Since the sellers triumphed in that sense, there exists the potential that their strength will carry forward and given that strength the price may fall.
Marubozu
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Marubozu

▼ ▼
Type: general
Strength: strong
Outcome: continuation
Occurrance:frequently
  • Marubozu candles are a very strong indication of a continuation.
  • It generally comes at the start of a continuation bearish trend, or a bearish reversal pattern.
  • Since the bears had so much power when forming the Marubozu that power can be expected to carry through to the next candle.
Pin bar (c)
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Pinbar (continuation)

▼ ▼
Type: general
Strength: intermediate
Outcome: continuation
Occurrance:moderate
  • This set up is very similar to a Pin Bar Reversal in many ways, what we look for is a good Pin Bar to appear in an already existing trend or at a minimum to appear as part of a power move or a move where there is excellent price momentum.
  • It must be part of the current trend and does not appear as a reversal pattern. (Pay attention to the Tenkan sen.)
  • Is best when rejecting a significant price action level like previous support and resistance or a pivot point

Short periods
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Short periods

► ◄
Type: general
Strength: intermediate
Outcome: indecisive
Occurrance:frequently
  • Short bodies suggest little buying or selling pressure and imply more indecision.
Short periods
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Short periods

► ◄
Type: general
Strength: intermediate
Outcome: indecisive
Occurrance:frequently
  • Short bodies suggest little buying or selling pressure and imply more indecision.
Spinning tops
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Spinning tops

► ◄
Type: indecision / reversal
Strength: confirmation needed
Outcome: indecisive
Occurrance:frequently
  • They imply market indecision and the trend is neither bullish nor bearish.
  • If a spinning top formation is found after a prolonged uptrend, it suggests that the bulls are losing interest and that a reversal may be in the cards.
Spinning tops
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Spinning tops

► ◄
Type: indecision / reversal
Strength: confirmation needed
Outcome: indecisive
Occurrance:frequently
  • They imply market indecision and the trend is neither bullish nor bearish.
  • If a spinning top formation is found after a prolonged downtrend, it suggests that the bears are losing interest and that a reversal may be in the cards.
Long-legged
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Long-legged doji

 (u/d) ▼  ► (ind) ◄   (d/u) 
Type: indecision / reversal
Strength: confirmation needed
Outcome: uptrend to downtrend / downtrend to uptrend / indecisive
Occurrance:Moderate to Rare
  • They are the most significant when they occur during a strong uptrend or downtrend.
  • It is often used to signal indecision about the future direction of the underlying asset.
  • The long-legged doji suggests that the forces of supply and demand are nearing equilibrium and that a shift in the direction of the trend may be coming.
4-price
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4-price doji

► ◄
Type: indecision
Strength: strong
Outcome: indecisive
Occurrance:rare
  • This would be the ultimate indecision since the high, low, open and close (all four prices represented) by the candle were exactly the same.
  • It is a very unique pattern signifying once again indecision or an extremely quiet market.
High wave
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High wave

► ◄
Type: indecision
Strength: intermediate
Outcome: indecisive
Occurrance:moderate
  • Spinning Tops and High Waves candles, with their small real body, appear in a market where supply and demand are almost the same, it shows a lack of consensus among the traders.
  • Indicates an early sign of a possible shift in the current uptrend or downtrend
  • The size of both shadows are particularly long, but are not required to be the exact same length
  • Ignore in a trading range: price is pausing before breaking out; Caution is recommended when encountering such candles
  • Long upper shadows imply selling pressure while long lower shadows imply buying pressure.