16 Candlestick Patterns For Successful Trading

Some candlestick patterns could be employed to anticipate a possible trend reversal. However, this only sometimes works out as the market could be unpredictable. This candlestick pattern could show that the current market trend will likely continue because of the rest period.

Bearish Flag Chart Pattern

Dragonfly Doji visually looks like a “T,” with a long lower shadow. Bullish Marubozu is a candlestick with no upper or lower shadows, opening at the low and closing at the high. Bullish Marubozu confirms strong buying sentiment without any visible seller resistance. A bearish marubozu boasts a crimson candle without shadows, closing at rock-bottom, telegraphing all-seller energy through it. It signals runaway bearish chiseling or potential run-up awareness.

• This sequence demonstrates a clear change in sentiment, from bearish dominance to bullish strength.
• In this guide, we’re diving into 16 must-know candlestick charts that every OG trader should vibe with—and how to flex them in the wild world out there.
• However, as seen above, when this candlestick is combined with two other candles, it could result in a reversal, such as with the evening star and morning star.
• The goal isn’t to memorize shapes — it’s to understand their meaning in context.
• A long wick shows rejection or indecision, while a large body reveals conviction.
• For crypto markets in particular, candlesticks remain invaluable.

Bearish reversal candlestick patterns show that sellers are in control, or regaining control of a movement. Bullish reversal candlestick patterns show that buyers are in control, or regaining control of a movement. At the end of the day, understanding candlestick 16 candlestick patterns patterns is only one piece of the puzzle.

Bearish Harami 🍼

For this reason, traders often prioritize it over the standard Morning Star. Japanese traders considered the Doji variation a more powerful form of the Morning Star due to its psychological clarity. In Western markets, it is now viewed as one of the most convincing three-candle reversal setups.

LiberatedStockTrader’s backtesting found Morning Star patterns achieved 63% winning trades with average returns of 0.47% over 10 sessions. TradingWolf notes 65–70% accuracy when confirmed with high volume or occurring after extended downtrends. Tweezer Bottom is a two-candle pattern where both candles share nearly identical lows. It forms as sellers lose strength and price action contracts, with buyers gently pushing but not overtaking. Bullish Harami comprises a small bullish candle entirely within the prior larger bearish body. In practical use, it signals hesitation in the downtrend, with buyers beginning to counteract the selling pressure.

This pattern illustrates a struggle between buyers and sellers, with neither side gaining dominance, as the price closes close to its opening level. In the evening star pattern, the first candle shows strong buying momentum, which stalls as the second candle forms, indicating indecision or a pause. At the end of this pattern, the market should close at or near the top of the period, with minimal to no noticeable upper or lower wick on the bullish candle. This indicates strong buying momentum and a potential reversal in the downtrend. In this pattern, buyers (bulls) initially push the price higher during a downtrend, gaining control early in the session.

AMINA License, Wintermute & 21Shares Analysis: Crypto Market Insights

• They are an indicator for traders to consider opening a long position to profit from any upward trajectory.
• These visual signals help traders see when buyers might take control after a downtrend.
• The only difference being that the upper shadow is long, at least twice the length of the body, while the lower shadow is short.

A bullish, engulfing candlestick pattern consists of two different candles. The first candle is a red or black bear candle that appears as part of the downtrend. Let’s take a look at the six most common bullish candlestick patterns below. This pattern consists of three consecutive long bearish candles with lower closes each day. It shows a strong reversal from bullish to bearish sentiment, often confirming a developing downtrend.

It’s immediately followed by three smaller green or white bull candles and another long red or black bear candle. This could signify that, depending on the current market trend, either buyers or sellers are losing control. Before this pattern forms, the market surge continues in the first session before stalling in the second session. By the third session, a retracement had begun as more traders closed their long positions and sellers started opening their short positions.

If the close is higher than the open, the candle appears green or white, meaning buyers were stronger. Bullish candlestick patterns are classified as single, double, or triple based on candle count. This pattern has been described in Japanese candlestick studies as a signal of bullish dominance despite short-term hesitation. Rising three indicates temporary consolidation before the trend resumes upward.

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The Black Marubozu candlestick pattern is formed by one single candle. The Three Black Crows candlestick pattern is formed by three candles. The Dark Cloud Cover candlestick pattern is formed by two candles. The Bearish Engulfing candlestick pattern is formed by two candles. The Shooting Star candlestick pattern is formed by one single candle.

This two-candle pattern starts with a bearish candle followed by a bullish one that opens below the prior low but closes above its midpoint. If the next candle closes above the wick’s high, it often signals buyers gaining control. It’s not as strong as a normal hammer but can still mark a change when it appears near support. They are more effective in trending or oversold markets but unreliable in sideways, low-volume conditions. According to a Bulkowski study, common bullish reversal patterns such as the Morning Star show accuracy rates between 60–70% when paired with trend confirmation.

This indicates that buyers came in strong, starting at the previous candle’s close, but eventually, the price rose and closed above the previous candle’s high. However, the reversal failed to take hold, and the bears (sellers) came in and ensured its price remained approximately the same where it began. With that said, the bears (sellers) could not maintain the downturn, which could indicate a possible shift in momentum to the upside.

Each candlestick captures four key data points—the open, high, low, and close—providing valuable insight into market behaviour within that period. It is formed of a long red body, followed by three small green bodies, and another red body – the green candles are all contained within the range of the bearish bodies. It shows traders that the bulls do not have enough strength to reverse the trend.

It is considered especially effective when paired with high volume or strong momentum. Traders interpret it as evidence that the market has found a base and further downside is unlikely. Its reliability improves when the second candle shows smaller selling pressure or a slight bullish tilt. Bullish Belt Hold is a single bullish candle that opens with a gap down but closes near the high of the session. Bullish belt hold shows that despite initial weakness, buyers dominated throughout the day. Traders treat it as more trustworthy than the basic Harami because the third candle provides proof of bullish continuation.