Candlestick patterns are one of the fastest ways to read what buyers and sellers are doing on a price chart. This cheat sheet groups the most useful patterns into bullish reversals, bearish reversals and indecision signals, with a one-line rule for each and links to our full guides.
Important: no candlestick pattern works on its own. Always look at the trend, nearby support and resistance, and volume before acting. Educational content only, not financial advice.
How to Read a Single Candlestick
Each candle shows four prices for a period: open, high, low and close. The thick part is the body (open to close) and the thin lines are the wicks or shadows (the high and low). A green (or white) candle closed higher than it opened. A red (or black) candle closed lower.
- Long body: strong buying or selling pressure.
- Small body: indecision.
- Long wick: price was pushed away from that level and rejected.
Bullish Reversal Patterns
These appear after a downtrend and suggest buyers may be taking control.
- Hammer: small body at the top, long lower wick at least twice the body. Sellers pushed price down but buyers recovered. Hammer candlestick guide.
- Inverted hammer: small body at the bottom, long upper wick. Needs a bullish candle next day for confirmation. Inverted hammer guide.
- Bullish engulfing: a large green candle fully covers the prior red candle’s body. Bullish engulfing guide.
- Piercing line: a green candle opens below the prior low and closes above the midpoint of the prior red candle. Piercing pattern guide.
- Morning star: three candles: a long red, a small-bodied candle, then a long green that closes well into the first candle.
- Three white soldiers: three consecutive long green candles, each closing higher.
- Dragonfly doji: open, high and close at the same level with a long lower wick.
Bearish Reversal Patterns
These appear after an uptrend and suggest sellers may be taking over.
- Hanging man: looks like a hammer but appears at the top of an uptrend. Hanging man guide.
- Shooting star: small body at the bottom with a long upper wick after a rally.
- Bearish engulfing: a large red candle fully covers the prior green candle’s body.
- Dark cloud cover: a red candle opens above the prior high and closes below the midpoint of the prior green candle. Dark cloud cover guide.
- Evening star: a long green, a small-bodied candle, then a long red candle.
- Three black crows: three consecutive long red candles, each closing lower.
- Gravestone doji: open, low and close at the same level with a long upper wick.
Indecision Patterns
- Doji: open and close are nearly equal. The market is undecided. Doji guide.
- Spinning top: small body with wicks on both sides.
- Harami: a small candle contained within the prior large candle’s body.
Hammer vs Hanging Man
They look identical. The difference is location: a hammer forms after a decline, a hanging man after an advance. See our side-by-side hammer vs hanging man comparison.
How to Trade Candlestick Patterns Safely
- Identify the trend first. A bullish reversal pattern in an uptrend means little.
- Find a key level. Patterns at support or resistance are more reliable.
- Wait for confirmation. Let the next candle confirm the direction before entering.
- Check volume. Higher volume on the signal candle adds weight.
- Place a stop-loss beyond the pattern’s high or low, and risk only a small percentage of your account per trade.
Do Candlestick Patterns Actually Work?
Patterns describe probability, not certainty. Many fail, especially in choppy markets. Use them as one input alongside trend, levels and risk management, as covered in our technical analysis for beginners and swing trading for beginners guides.
Frequently Asked Questions
What is the most reliable candlestick pattern?
No single pattern is reliable on its own. Engulfing patterns at major support or resistance, confirmed by volume, are commonly considered among the stronger signals.
How many candlestick patterns should I learn first?
Start with five or six: hammer, hanging man, engulfing, doji, morning star and evening star. Master those before adding more.
Do candlestick patterns work for day trading?
They can be used on any timeframe, but shorter timeframes produce more false signals. Confirmation and stop-losses matter even more.
Disclaimer: this article is for educational purposes only and is not financial advice. Trading involves risk of loss.
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