Candlestick patterns are the trader's alphabet. Once you learn to read them, the charts start speaking to you. Here are the 10 most powerful patterns that have stood the test of time.
Bullish Patterns (Signals Price May Go Up)
1. Hammer
What it looks like: A small body at the top with a long lower wick (at least 2x the body length).
What it means: Sellers pushed the price down, but buyers fought back fiercely and closed near the high. When this appears after a downtrend, it can signal a reversal.
2. Bullish Engulfing
What it looks like: A small red candle followed by a larger green candle that completely "engulfs" the previous candle's body.
What it means: Buyers have overwhelmed sellers with conviction. The bigger the engulfing candle, the stronger the signal.
3. Morning Star
What it looks like: A three-candle pattern—a long red candle, followed by a small-bodied candle (the "star"), followed by a long green candle.
What it means: The market is transitioning from bearish to bullish. The small star represents indecision before buyers take control.
4. Piercing Line
What it looks like: A red candle followed by a green candle that opens below the previous low but closes more than halfway up the red candle's body.
What it means: Bulls are staging a comeback and pushing into bearish territory.
5. Three White Soldiers
What it looks like: Three consecutive long green candles, each opening within the previous candle's body and closing higher.
What it means: Strong, sustained buying pressure. This is a powerful bullish continuation signal.
Bearish Patterns (Signals Price May Go Down)
6. Shooting Star
What it looks like: A small body at the bottom with a long upper wick (the opposite of a hammer).
What it means: Buyers pushed prices up, but sellers crushed the rally. After an uptrend, this can signal a reversal.
7. Bearish Engulfing
What it looks like: A small green candle followed by a larger red candle that completely engulfs the previous body.
What it means: Sellers have taken control with force. Watch for this at the top of uptrends.
8. Evening Star
What it looks like: The opposite of the morning star—a long green candle, a small star, then a long red candle.
What it means: The party is over. Bulls are exhausted, and bears are taking the wheel.
9. Dark Cloud Cover
What it looks like: A green candle followed by a red candle that opens above the previous high but closes more than halfway down.
What it means: Bears are invading bullish territory with strength.
10. Three Black Crows
What it looks like: Three consecutive long red candles, each opening within the previous body and closing lower.
What it means: Sustained, aggressive selling. A powerful bearish continuation signal.
Important Context
Here's the truth that many beginners miss: Patterns alone don't guarantee anything.
A hammer at a major support level after a long downtrend is far more significant than a hammer in the middle of nowhere. Always consider:
- Trend: Is this pattern appearing at a logical reversal point?
- Volume: Is the pattern backed by strong trading volume?
- Support/Resistance: Is there a key level nearby?
Practice Recognition
The best way to internalize these patterns is through repetition. At ChartMini, you can scroll through thousands of historical charts and spot these patterns in real market conditions—without risking real money.
Train your eyes to recognize these formations, and they'll become second nature. Happy trading!