16 Candlestick Patterns Every Trader Must Read Quick Reference Manual

Candlestick is the “language” of traders. Learning to read it allows you to sense market reversals in advance. Today, I will summarize 16 of the most common patterns, distinguishing which are reversal signals and which are just the market “hesitating.”

What does a Candlestick look like?

Each Candlestick has three parts: Body (the price range from open to close), Shadows (the intraday high and low points), Color (green = up, red = down). Multiple Candlesticks combined can predict price trends.

6 Bullish Patterns (Bottom Signals)

Hammer candlestick

Small body, long lower shadow. Often appears at the end of a downtrend. Explanation: Although there is significant selling pressure during the day, the buying power is stronger in the end, pushing it up. A green hammer is a stronger signal than a red hammer.

Inverted Hammer

Small body, long upper shadow. Explanation: The buyer tested the high position, but the seller did not follow up, and in the end, the buyer won. The probability of a bullish market outlook is high.

Bullish Engulfing

Two Candlestick combination: the small red Candlestick is completely engulfed by the large green Candlestick. Although the opening price the next day is lower than the first day, the buyers eventually pushed the price up. This is a reversal signal.

Piercing Line

The red Candlestick is followed by a green Candlestick, with a downward gap in between. The green Candlestick closes above the midpoint of the red Candlestick. This indicates strong buying power.

Morning Star

Three Candlesticks: big red → small body → big green. The small Candlestick in the middle usually gaps. Indicates that selling pressure is weakening and buyers are about to take over.

Three White Soldiers

Three consecutive large green Candlesticks with very short upper and lower shadows, opening and closing higher each day. This is the strongest bullish signal, indicating that the buyers have not been pushed down after three days of continuous pressure.

6 Bearish Patterns (Top Signals)

Hanging Man

The opposite version of the hammer candlestick, but appears at the end of an uptrend. Although there is buying support, the long lower shadow indicates heavy selling pressure, which is a warning.

Shooting Star

The inverted hammer's opposite version, at the end of an uptrend. A long upper shadow indicates low trading volume at high prices, making it prone to reversal.

Bearish Engulfing

The large green Candlestick is completely engulfed by the large red Candlestick, usually at the top. This indicates that the sellers have launched a fierce attack.

Evening Star

The opposite version of three candlesticks: big green → small body → big red. The small candlestick in the middle usually has a gap. It is a signal for a top reversal.

Three Black Crows

Three consecutive large red Candlesticks with very short shadows, opening and closing lower each day. The sellers have bombarded for three days without being pushed down by a rebound, indicating a very strong bearish signal.

Overcast Clouds

Two candlesticks: a green candlestick followed by a red candlestick, with the red candlestick opening above the green candlestick and finally closing below the midpoint of the green candlestick. This indicates that the sellers have delivered a strong punch.

4 Neutral Patterns (Wait and See)

Doji

The opening price is approximately equal to the closing price, resembling a cross. This indicates that the buying and selling sides are balanced, with no clear direction in the short term. Viewed in isolation, it is neutral, but it is significant when appearing at the top or bottom.

Spindle Line

The body is very small, and the upper and lower shadows are about the same length. The market is hesitating, with neither bulls nor bears winning. This is common during periods of consolidation or adjustment.

Downward Continuation (Three Methods)

Big red Candlestick → three small green Candlesticks → big red Candlestick. The small green Candlesticks are all within the range of the big red Candlestick. This indicates that although there is a rebound, the downtrend is not over yet, continue to watch for bearish movements.

Uptrend Continuation (Three Methods)

Large Green Candlestick → Three Small Red Candlesticks → Large Green Candlestick. The Small Red Candlesticks are all within the range of the Large Green Candlestick. This indicates that although there is a pullback, the upward momentum is not over, and we continue to look bullish.

Core Recommendations

Candlestick patterns should not be used alone. It is best to combine them with other technical indicators (moving averages, MACD, support and resistance levels) for confirmation. Patterns are just a quick judgment tool, not a 100% accurate magic weapon.

The best way to learn in practice is to practice with real data; the more you look at it, the more you will naturally develop a sense for it.