Trading Academy

Essential Candlestick Patterns Every Trader Must Know

Candlestick charts are a 250-year-old Japanese trading tool that remain the most widely-used price representation in modern markets. Learn to read the 12 patterns that actually matter — and how to use them to time entries with precision.

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Doji: The Candle of Indecision

A Doji forms when the open and close are nearly identical, leaving a tiny or absent body. It means buyers and sellers fought to a draw. On its own it is neutral — but in the right context, it is one of the most important candles on the chart.

Dragonfly Doji: Sellers Tried, Buyers Took It Back

The Dragonfly Doji has a long lower wick and no upper wick — price was pushed sharply lower during the session but buyers fought back and closed at the high. At the bottom of a downtrend, this is one of the more reliable bullish reversal signals.

Gravestone Doji: Buyers Tried, Sellers Buried Them

The Gravestone Doji is the mirror of the Dragonfly — a long upper wick with no lower wick. Buyers pushed price sharply higher during the session, but sellers fought back and closed near the low. At the top of an uptrend, it is a warning.

Hammer: The Bullish Reversal Candle at the Bottom

A Hammer has a small body at the top and a long lower wick — sellers pushed price down hard during the session, but buyers stepped in and drove it back up. When it appears at the bottom of a downtrend, it is one of the most reliable bullish reversal signals in candlestick analysis.

Inverted Hammer: Buyers Testing the Waters at the Bottom

The Inverted Hammer has a long upper wick and a small body at the bottom. It appears at the end of a downtrend and shows buyers attempting to push higher — though sellers pushed back. It is a cautious bullish signal that requires strong confirmation.

Hanging Man: The Hammer's Bearish Twin at the Top

A Hanging Man looks exactly like a Hammer — small body, long lower wick. But it appears at the top of an uptrend, not the bottom. That single difference flips the meaning entirely: sellers pushed price down hard during the session. The buyers' recovery is a warning, not a comfort.

Spinning Top: The Indecision Candle

A Spinning Top has a small body with upper and lower wicks of roughly equal length. Neither buyers nor sellers dominated the session — the market ended near where it started after fighting in both directions. It signals indecision and often precedes a reversal or trend pause.

Marubozu: The Full Conviction Candle

A Marubozu is a candlestick with no wicks — open equals one extreme, close equals the other. One side dominated completely for the entire session. A Bullish Marubozu signals powerful buying momentum; a Bearish Marubozu signals relentless selling. Both are high-conviction continuation signals.

Engulfing Patterns: When One Candle Overwhelms Another

An Engulfing Pattern is a two-candle reversal signal where the second candle's body completely swallows the first. Bullish Engulfing appears at the bottom of a downtrend; Bearish Engulfing at the top of an uptrend. Both represent a decisive shift in who controls the market.

Piercing Line: The Bullish Partial Recovery

The Piercing Line is a two-candle bullish reversal pattern. After a bearish candle, the next session gaps lower but buyers recover more than halfway into the prior candle's body by the close. It signals that sellers are losing control and buyers are mounting a serious defence.

Dark Cloud Cover: The Bearish Shadow Over the Uptrend

Dark Cloud Cover is a two-candle bearish reversal pattern. After a bullish candle, the next session gaps higher but sellers drive it back to close below the midpoint of the prior candle's body. It signals that the rally is running out of buyers and a reversal may be near.

Tweezer Tops and Bottoms: When Price Rejects the Same Level Twice

Tweezer patterns form when two consecutive candles reach the same high or low but fail to close beyond it. A Tweezer Top shows double rejection at a high; a Tweezer Bottom shows double support at a low. The equal extremes signal a strong price level where the market has decided to turn.

Harami: The Contained Candle That Signals a Pause

A Harami forms when a small candle is completely contained within the body of the prior larger candle. The word means 'pregnant' in Japanese — the large candle is the mother, the small one the child. It signals a sudden loss of momentum and a potential trend reversal.

Kicker Patterns: The Most Powerful Two-Candle Reversal

The Kicker is considered the strongest two-candle reversal pattern in candlestick analysis. The second candle gaps sharply in the opposite direction and closes far away from the first — with no overlap between the two bodies. When this happens, the market has completely reversed course in a single session.

Candle StructuresAdvanced

Morning Star and Evening Star: Three-Candle Reversal Patterns

The Morning Star is a three-candle bullish reversal pattern that marks the end of a downtrend. Its bearish counterpart, the Evening Star, marks the end of an uptrend. Both are among the most reliable reversal patterns in candlestick analysis because they capture three distinct phases of a trend change.

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Abandoned Baby: The Rarest and Most Powerful Reversal

The Abandoned Baby is a three-candle reversal pattern similar to the Morning/Evening Star, but with one critical difference: the middle Doji candle gaps completely away from both its neighbours — above and below. No wicks touch. This isolation makes it one of the most reliable reversal signals in candlestick analysis.

Three White Soldiers and Three Black Crows

Three White Soldiers is a three-candle bullish pattern where three consecutive large green candles march progressively higher. Its bearish mirror, Three Black Crows, is three consecutive large red candles stepping lower. Both signal a powerful, sustained shift in market direction.

Candle StructuresAdvanced

Three Line Strike: The Counter-Trend Candle That Often Fails

The Three Line Strike is a four-candle pattern where three consecutive trend candles are followed by a single large candle in the opposite direction that engulfs all three. Despite the dramatic reversal appearance, it most often resolves as a continuation — making it a counter-intuitive pattern worth knowing.

Three Inside Up and Three Inside Down: Confirmed Reversals

Three Inside Up and Three Inside Down are three-candle reversal patterns built on the Harami. They add a confirmation candle that removes ambiguity — making them more reliable than the Harami alone. The third candle's close confirms whether the reversal is genuine.

Three Outside Up and Three Outside Down: Engulfing with Confirmation

Three Outside Up and Three Outside Down are three-candle patterns built on the Engulfing pattern. A bullish or bearish Engulfing is followed by a third candle that confirms the reversal direction. The added confirmation makes these among the most reliable candlestick reversal patterns available.