• : June 5, 2018
  • : Prashant Shah

A candle for a particular time period is built using four prices: Open, High, Low and Close. If Close is higher than Open, it is a bullish candle (green). If Close is lower than the Open, the candle is bearish (red).

Candlestick Patterns

The price area between Open and Close is known as body. the wicks are known as shadows. 

Candlestick Patterns

Below are most of the candlestick pattern explained via images:

Bullish Engulfing

Candlestick patterns


Two-candle Reversal pattern: In a downtrend, when a candle with a large green body engulfs previous red body candle.

Bearish Engulfing

Candlestick patterns

Two-candle Reversal pattern: In an uptrend, when a large red body candle engulfs previous green body candle.

The Colour of the second candle should opposite of the previous candle unless body of first candle is so small that it is almost a doji. Some factors that would increase the likelihood that an engulfing pattern would turn out to be an important reversal indicator:
  • If the first day of the engulfing pattern has a very small body and the second day has a very long real body.
  • If there is heavy volume on the second candle of the engulfing pattern.
  • If the second candle of the engulfing pattern engulfs more than one real body.
 
Bullish Harami

Candlestick patterns

Two-candle Reversal pattern: A small green body candle contained within a prior relatively long red body candle.

Bearish Harami

Candlestick patterns


Two-candle Reversal pattern: A small red body candle contained within a prior relatively long green body candle.

‘Harami’ is an old Japanese word for ‘pregnant’. The long candlestick is ‘the mother’ candlestick and the small candlestick as the ‘baby’ or ‘foetus’. The smaller the second real body, more important the pattern.

Piercing pattern

Candlestick patterns

Two-candle reversal pattern: Second candle opens lower and closes above the mid-point of prior day body.
 
Dark cloud cover
 
Candlestick patterns

Two-candle reversal pattern: Second candle opens higher and closes below the mid-point of prior day body.

Degree of flexibility should be less with piercing pattern; it should close more than the midpoint of prior body. Close above the high of dark-cloud cover or below the low of piercing formation negates the pattern.

Hammer or Hanging Man

Candlestick patterns

It is a single candle pattern with no or a very little upper shadow. Lower shadow should be more than twice the height of the body.           

When it appears in uptrend, it is known as Hanging man and when appeared in downtrend, it is known as Hammer.

Longer the shadow, more potent it is, especially in case of Hanging man patterns. Next day’s open would provide confirmation to the pattern. Hanging man gets negated when price goes above the high of a pattern and Hammer gets negated when price goes below low of the pattern.

Inverted Hammer or Shooting Star

Candlestick patterns

It is a single candle pattern with no or a very little lower shadow. Lower (Think it should be upper pls check) shadow should be more than twice the height of the body.       

When it appears in uptrend, it is known as Shooting star and when appeared in downtrend, it is known as Inverted Hammer. Next day’s open would provide confirmation to the pattern. Shooting star gets negated when price goes above the high of a pattern and Inverted Hammer gets negated when price goes below low of the pattern.

Hammer and Shooting star are considered as strong signals than Inverted hammer and Hanging man.

Doji

Candlestick patterns

Doji is a one candle pattern, in which the opening and closing prices are the same.

Some flexibility can be applied to the requirement of same opening and closing prices. If they are within a few ticks of each other, it can still be viewed as doji. We have applied some flexibility in TradePoint.

A Doji represents indecision. It can be a significant warning of reversal. Confirmation from other technical indicators would increase the chances of reversal. Doji at top is more important than at bottom. Dojis also work as important support and resistance areas.

Doji Star

Candlestick patterns

Doji star is a Doji candle that gaps away from the large body preceding it.

Long-legged Doji

Candlestick patterns

Doji candlestick pattern with long upper and lower shadows

Rickshaw Man Doji

Candlestick patterns

Doji candlestick pattern where close is at the centre point of the candle.

High-wave line

Candlestick patterns

Non-doji candlestick pattern with very long upper and lower shadows.

The Gravestone Doji

Candlestick patterns

Doji formation where opening and closing prices are the bottom of the day.

Longer the upper shadow, more bearish it is. Grave stone Doji is more bearish than shooting star.  Gravestone Doji is considered as very bearish sign when appears in uptrend, combination of Doji and shooting star.

Butterfly / Dragonfly / Umbrella Doji

Candlestick patterns

Doji formation where opening and closing prices are the top of the day.

Butterfly Dojis are considered as very bullish sign when appears in downtrend, combination of Doji and hammer.


Bullish Window / Gap

Candlestick patterns

Low of current candle is higher than high of the previous candle.

Bearish Window / Gap

Candlestick patterns

High of current candle is lower than low of previous candle.

3 session Unclosed Bullish Window

Candlestick patterns

It is a very bullish sign if a bullish window is not closed within 3 days.

3 session Unclosed Bearish Window

Candlestick patterns

Bearish window is not closed in last three candles. It is a very bearish sign if a bearish window is not closed within 3 days.

The Morning Star

Candlestick patterns

Three-candle Reversal pattern: First red candle followed by gapped down star pattern, followed by green real body pattern.

The Evening Star

Candlestick patterns

Three-candle Reversal pattern: First green candle followed by gapped up star pattern, followed by red real body pattern.

Gap or window between the candles is better. Larger the body of third candlestick pattern, better it is. If volume is lower in the first candle and higher in the third, this would provide volume confirmation to the price pattern.

Abandoned baby top

Candlestick pattern

Three-candle Reversal pattern: Doji star followed by gapped down bearish candle.
 
Abandoned baby bottom

Candlestick pattern

Three-candle Reversal pattern: Doji star followed by gapped up bullish candle.


Bullish Harami Cross

Candlestick patterns


Two-candle Reversal pattern: If second candle is Doji in bullish harami pattern, it is known as Bullish Harami cross.

Bearish Harrami Cross

Candlestick patterns

Two-candle Reversal pattern: If second candle is Doji in bullish harami pattern, it is known as Bullish Harami cross.

The Harami cross is more significant than Harami pattern.

Bullish Belt-Hold line (Yorikiri)

Candlestick patterns


A strong green real body candle with no or very little shadows.

Bearish Belt-Hold line (Yorikiri)

Candlestick patterns

A long red real body candle with no or very little shadows.

Upside Gap Two Crows

Candlestick pattern

Three-candle bearish reversal pattern: Two red candles after a green candlestick pattern, post gap up (body gap). Last candle engulfs the previous candle body.

Bullish Kicker

Candlestick patterns

Two-candle Reversal pattern: After long bearish candle in downtrend, price opens up and closes higher that results in a long green candle.

Bearish Kicker

Candlestick patterns

Two-candle Reversal pattern: After long bullish candle in uptrend, price opens down and closes lower, resulting in a long red candle.
 
Rain drop (PENDING)

Candlestick patterns

Two-candle Reversal pattern: After bearish candle in downtrend, price gaps down and forms Doji candlestick pattern.

Bullish Mat-Hold Pattern

Candlestick patterns

Multi-candle pattern: Upside gap two crows, followed by a strong green candlestick pattern that closes above highest high of the pattern.

Three Advancing Soldiers

Candlestick patterns

Three rising consecutive green candles are known as Three Advancing Soldiers. Each opening should be within the prior candle body. Ideal scenario is open at or near prior close.

Three Black Crows

Candlestick patterns

Three declining consecutive red candles are known as Three black crows.

Three lines should close at or near their lows. And each opening should be within the prior candle body. Ideal scenario is open at or near prior close.

Bullish Counter Attack line

Candlestick patterns

Two-candle pattern: In downtrend, red candle followed by green candle that closes at the same level.

Bearish Counter Attack line

Candlestick patterns
Two-candle pattern: In uptrend, green candle followed by red candle that closes at the same level.

Three River Bottom

Candlestick pattern

Three-candle pattern: A consecutive bearish candle followed by bullish candle, close of the middle candle is higher than the first candle. 

Upward Gap Tasuki

Candlestick patterns

Three-candle continuation pattern: Bullish pattern gets formed at a closing price of last red candle, pattern gets negated if price closes below second green candle close.

Downward Gap Tasuki

Candlestick patterns

Three-candle continuation pattern: Bearish pattern gets formed at a closing price of last green candle, pattern gets negated if price closes above second red candle close.

Bullish Separating lines

Candlestick patterns

Two-candle pattern: Two opposite colour candles with similar close. Second candle should be bullish belt-hold line.

Bearish Separating lines

Candlestick patterns

Two-candle pattern: Two opposite colour candles with similar close. Second candle should be bearish belt-hold line.

Up Gap Side-by-side Green lines

Candlestick patterns

Three-candle formation with two consecutive green candles followed after a gap. It is a bullish continuation candlestick pattern.

Down Gap Side-by-side Green lines

Candlestick patterns

Three-candle formation with two consecutive green candles after a bearish gap. It is a bearish continuation candlestick pattern.

Bullish Rising Three

Candlestick patterns

Multi-candle pattern where group of small candlestick patterns falls within the range of first candle. And last candle closes above the closing price of first candle.

Higher the volume on last candlestick pattern compared to small candlestick patterns, stronger the formation.

Bearish Falling Three

Candlestick patterns


Multi-candlestick pattern where group of small candlestick patterns falls within the range of first candle. And last candle closes above the closing price of first candle.

Higher the volume on last candlestick pattern compared to small candlestick patterns, stronger the formation.

Bullish Tri- Star

v
Similar to morning star candlestick pattern, but all candlesticks are Doji candlestick pattern.

Bearish Tri- Star

Candlestick patterns

Similar to evening star candlestick pattern, but all candlesticks are Doji candlestick pattern.

Three Inside up

Candlestick patterns

Bullish candlestick pattern that closes above bullish harami pattern.

Three Inside down

Candlestick patterns

Bearish candlestick pattern that closes below bearish harami pattern.

Three Outside up

Candlestick patterns


Bullish candlestick pattern that closes above bullish engulfing pattern.

Three Outside down

Candlestick patterns
Bearish candlestick pattern that closes below bearish engulfing pattern.

Ladder Bottom

Candlestick patterns

Bullish candlestick pattern with strong green body that closes higher after a series of bearish candlesticks.

Ladder Top

Candlestick patterns

Bearish candlestick pattern with strong red body that closes lower post series of bullish candlestick patterns.

Bullish Three line strike

Candlestick patterns

A green real body candle that engulfs series of three consecutive bearish candles.

Bearish Three line strike

Candlestick patterns

A red real body candle that engulfs series of three consecutive bullish candles.

Bullish In Neck line

Candlestick patterns
Price opens lower and closes slightly into the body of prior pattern.

Bearish In Neck line

Candlestick patterns

Price opens higher and closes slightly into the body of prior pattern.

Bullish On Neck line

Candlestick patterns

Price opens lower and closes near the low of prior session.

Bearish On Neck line

Candlestick patterns

Price opens higher and closes near the high of prior session.

Bullish sandwich

Candlestick patterns

Three-candle reversal pattern: Green candle between the two red candlesticks with similar close.

Bearish sandwich

Candlestick patterns

Three-candle reversal pattern: Rd candle between the two green candlestick pattern with similar close.

All above patterns can be scanned on EOD and Real-time basis in TradePoint. One can also create systems combining these patterns and indicators, our team can help you in building them. Pleaese write us at info@definedge.com for the query or fedback. 




--------------------------------------------------------------------------------------------------------------------------------------------------------------
Reading Reference & Further Study


Japanese Candlestick Charting Techniques: A Contemporary Guid to the Ancient Investment Techniques of the Far East by Steve Nison

Candlestick Charts: An introduction to using candlestick charts by Clive Lambert