Complete reference
Candlestick Patterns
Every pattern below is explained the same way: what it looks like, what the market had to do to print it, when it means something, and exactly where the stop goes. No signals and no invented win rates, just the mechanics.
A candlestick compresses four numbers, the open, high, low and close of a period, into a single shape. The body spans the open and close, and the shadows reach out to the extremes. A pattern is just one or more of those shapes arranged in a way that has historically described a recognisable shift in supply and demand.
That's the whole idea. Be clear about where it stops, though. A candlestick pattern tells you what just happened, in a compact and readable form. It doesn't tell you what happens next. The traders who lose money with candlesticks are almost always the ones who treated the second thing as though it followed from the first.
Used properly, a pattern does three useful jobs. It flags that the balance of pressure may be shifting, it gives you a precise trigger level, and, most valuably of all, it hands you a logical place to put your stop loss. That last one is why these are worth learning even if you never treat them as entry signals.
Bullish Reversal Candlestick Patterns
Bullish reversal patterns form at the end of a decline. Every one of them describes the same underlying event in its own way: sellers pushed price down and buyers absorbed everything they threw at it. What separates the patterns is how much evidence each gives you, and how wide a stop that evidence costs you.
- bullish 1 candle
Hammer Candlestick Pattern
That long tail marks a price where buyers absorbed everything the sellers had. The people who sold into those lows are trapped, and their buying back is the fuel.
- bullish 2 candles
Bullish Engulfing Pattern
Control of the market changed hands in one session, and the shorts who were comfortable the day before are now covering into it. The confirmation is built into the candle.
- bullish 1 candle
Inverted Hammer
Sellers were present all session and still could not close price at the lows. That is a smaller claim than a hammer makes, which is why this pattern needs more from its confirmation.
- bullish 3 candles
Morning Star
The middle candle is the handover. Sellers lose control without buyers yet taking it, and the third session answers the question the second one left open.
Bearish Reversal Candlestick Patterns
Bearish reversal patterns form at the end of an advance. They mark the sessions where buyers ran out of willing counterparties and supply took over. For most traders these are signals to exit longs and tighten stops. Very few people should be using them to open shorts.
- bearish 1 candle
Shooting Star Candlestick
Buyers drove price up all session and handed back every point by the close. The crowd that bought near the high is now holding losses, and their stops sit just below.
- bearish 2 candles
Bearish Engulfing Pattern
By the close, every long opened in the previous session is underwater and the stops beneath it are already firing. That forced selling is why these follow through fast.
- bearish 1 candle
Hanging Man Candlestick
In a healthy uptrend, dips stay shallow. A deep intraday sell-off that gets bought back means supply has arrived in size for the first time, and that is new information.
Indecision Candlestick Patterns
Indecision candles have almost no body, because the session opened and closed at nearly the same price. On their own they tell you nothing about direction. What they give you is a change in character: evidence that one-sided pressure has paused. You trade them through the candle that comes next, never on their own.
- neutral 1 candle
Doji Candlestick
Open and close land at the same price, so the body shrinks to a line. Dragonfly and gravestone are the two worth acting on; a short-shadowed one is usually a slow day.
- neutral 1 candle
Spinning Top Candlestick
Mark the high and the low; those are your decision levels now. Trends pause and continue far more often than they pause and turn, so wait for a close beyond one of them.
Candlestick pattern FAQs
What are candlestick patterns?
Candlestick patterns are recognisable shapes made by one or more price candles, each showing the open, high, low and close for a period. The shape tells you how the fight between buyers and sellers finished, which is why traders use them to judge whether pressure is building, easing or turning.
Which candlestick pattern is the most reliable?
Every pattern needs context to be worth anything. The ones that hold up best are multi-candle patterns with confirmation built in, so engulfing patterns, morning and evening stars, and the three-candle patterns. They earn their keep when they form at a level that already mattered, on above-average volume, against a clear prior trend.
Do candlestick patterns still work?
The shapes still form and still describe real supply and demand, because they're just a way of drawing price data. What's changed is how widely known they are, so trading them mechanically has very little edge left. They work best as a timing tool inside a plan that already had a reason to care about the level.
What timeframe works best for candlestick patterns?
Daily and weekly charts give the most dependable signals, because each candle is a full session of real participation. On 1-minute and 5-minute charts the same shapes form constantly and usually mean nothing. The higher the timeframe, the more weight the pattern carries.
How many candlestick patterns do I need to know?
Far fewer than most beginners think. Six or seven of them, meaning hammer, shooting star, bullish and bearish engulfing, doji, morning star and evening star, cover most of what you'll actually act on. Knowing six well enough to judge context beats recognising forty.