This is a quick summary of important candlestick patterns. It’s presumed that you know the basics of candles: if you don’t, see the article links in our Members Area.
Without further ado, let’s begin.
1. Bullish Marabuzo
Number of candles: 1.
Description: long green candle which opens near its low, and closes near its high.
Implications: BULLISH.
2. Bearish Marabuzo
Number of candles: 1.
Description: long red candle which opens near its high, and closes near its close.
Implications: BEARISH.
3. Doji
Number of candles: 1.
Description: candle which closes near where it opened.
Implications: REVERSAL.
4. Shooting Star
Number of candles: 1.
Description: candle which closes near where it opened, at the bottom of the period’s range.
Implications: BEARISH REVERSAL (in an uptrend).
5. Hammer
Number of candles: 1.
Description: candle which closes near where it opened, at the top of the period’s range.
Implications: BULLISH REVERSAL (in a downtrend).
6. Hanging Man
Number of candles: 1.
Description: candle which closes near where it opened, at the top of the period’s range.
Implications: BEARISH REVERSAL (in an uptrend) (only weak effectiveness)
7. Inverted Hammer
Number of candles: 1.
Description: candle which closes near where it opened, at the bottom of the period’s range.
Implications: BULLISH REVERSAL (in a downtrend) (only weak effectiveness)
8. Bullish Engulfing Pattern
Number of candles: 2.
Description: green candle with a lower open and a higher close than the previous candle.
Implications: BULLISH REVERSAL (in a downtrend)
9. Bearish Engulfing Pattern
Number of candles: 2.
Description: red candle with a higher open and a lower close than the previous candle.
Implications: BEARISH REVERSAL (in an uptrend)
10. Harami
Number of candles: 2.
Description: candle with a real body contained within the range of the prior real body (which must have moved in the direction of the prior trend).
Implications: REVERSAL (only weak effectiveness)
11. Dark Cloud Cover
Number of candles: 2.
Description: red candle with a higher open than the previous candle, but a close in the bottom half of that prior candle.
Implications: BEARISH REVERSAL (in an uptrend)
12. Piercing Pattern
Number of candles: 2.
Description: green candle with a lower open than the previous candle, but a close in the top half of that prior candle.
Implications: BULLISH REVERSAL (in a downtrend)
13. Morning Star
Number of candles: 3.
Description: long red candle followed by a small-bodied candle which gaps lower. The third candle closes in the top half of the first candle.
Implications: BULLISH REVERSAL (in a downtrend)
14. Evening Star
Number of candles: 3.
Description: long green candle followed by a small-bodied candle which gaps higher. The third candle closes in the bottom half of the first candle.
Implications: BEARISH REVERSAL (in a downtrend)
Graham Neary MSTA (graham@futurestechs.co.uk)