Candlestick patterns help you spot reversals and continuations—here are the top ones every trader should know!

Here’s a guide to essential candlestick patterns.

What Is a Candlestick?

• Body: Shows open and close—green/white = close > open; red/black = close < open.
• Wicks/Shadows: Show high and low—upper wick = high, lower wick = low.

Bullish Reversal Patterns (Signal Price May Rise)

1. Hammer: Small body, long lower wick, little/no upper wick—forms after a downtrend; buyers step in.
2. Bullish Engulfing: Small red candle followed by a large green candle that “engulfs” it—forms after a downtrend; buyers take over.
3. Morning Star: Three candles—long red, small body (gap down), long green (gap up)—strong reversal signal.
4. Doji: Body is tiny (open ≈ close)—shows indecision; can be bullish or bearish depending on context.

Bearish Reversal Patterns (Signal Price May Fall)

1. Shooting Star: Small body, long upper wick, little/no lower wick—forms after an uptrend; sellers step in.
2. Bearish Engulfing: Small green candle followed by a large red candle that engulfs it—forms after an uptrend; sellers take over.
3. Evening Star: Three candles—long green, small body (gap up), long red (gap down)—strong reversal signal.
4. Doji: Same as above—indecision after uptrend can be bearish.

Continuation Patterns (Signal Trend Continues)

1. Bullish Flag: Price consolidates in a small range (flag) after a strong uptrend—breaks out upward.
2. Bearish Flag: Price consolidates after a strong downtrend—breaks down downward.
3. Triangle: Price consolidates in a triangle—breaks out in the direction of the prior trend.

Pattern	Type	What It Means
Hammer	Bullish Reversal	Price may rise after downtrend
Bullish Engulfing	Bullish Reversal	Strong reversal up
Morning Star	Bullish Reversal	Three-candle strong reversal
Shooting Star	Bearish Reversal	Price may fall after uptrend
Bearish Engulfing	Bearish Reversal	Strong reversal down
Evening Star	Bearish Reversal	Three-candle strong reversal
Flag	Continuation	Trend continues
Triangle	Continuation	Trend continues

How to Use Candlestick Patterns

• Combine with other analysis: Don’t trade candlesticks alone—use with support/resistance, trend, and indicators.
• Look at the trend: Reversal patterns work best at the end of a trend.
• Use higher time frames: Daily/weekly charts are more reliable than 1-minute.

Common Mistakes with Candlesticks

• Trading every pattern: Not all patterns work—confirm with other analysis.
• Ignoring the trend: A bullish pattern in a downtrend is less reliable.
• Using only candlesticks: They’re a tool, not a complete strategy.

Frequently Asked Questions

What’s the best candlestick pattern?

Bullish/bearish engulfing and morning/evening stars are strong and reliable.

How many candlestick patterns should I learn?

Start with 5-10 of the most common ones—don’t overwhelm yourself.

Are candlestick patterns still effective?

Yes—especially when combined with other analysis.

Final Thoughts

Candlestick patterns are powerful—learn the key ones, combine with other tools, and practice on a demo!