16 Candlestick Patterns Every Trader Must Master

Japanese candlestick patterns are your compass in the markets. Learn to read them and multiply your trading opportunities.

What do you see in a candlestick?

Each candlestick has 3 parts:

• The body: what went up or down
• The wicks (shadows): the highs and lows of the day
• The color: green (bullish) or red (bearish)

That’s it. With this, you can start interpreting the market.

Bullish patterns (6)

Hammer: small body with a long lower wick = sellers tried to push down, but buyers won. Reversal signal.

Inverted Hammer: opposite. Long upper wick = buying pressure that couldn’t be sustained. Buyers will take control soon.

Bullish Engulfing: a small red candle completely covered by a large green candle. The market quickly changed its mind.

Piercing Line: a long red candle followed by a long green candle with a gap. Buyers are aggressive.

Morning Star: three candles — large red, small in the middle, large green. Indicates a shift from bearish to bullish.

Three White Soldiers: three consecutive large green candles, each opening and closing higher. Strong upward trend.

Bearish patterns (6)

Hanging Man: like a hammer but at the end of an uptrend. Warning: sellers are waking up.

Shooting Star: long upper wick in an uptrend = failed attempt to go higher. Drop is imminent.

Bearish Engulfing: a small green candle engulfed by a large red candle. Optimism faded.

Evening Star: three candles — large green, small in the middle, large red. A bearish reversal is near.

Three Black Crows: three large red candles with short wicks. Sellers control for three days.

Dark Cloud Cover: a red candle opening above the previous green close and closing in its middle. Pessimism takes over.

Continuation patterns (4)

Doji: opens and closes at the same price = indecision between buyers and sellers.

Spinning Top: small body with equal wicks = market is thinking. Consolidation before movement.

Triple Bearish Formation: a long red candle, three small green candles, then another red. Buyers lack strength.

Triple Bullish Formation: three green candles surrounded by short red candles. Buyers continue to gain.

The final trick

These patterns are powerful, but never rely on just one. Combine them with other technical indicators, volume, and support/resistance levels. Candles give you speed, but confirmation makes you money.

Practice in a demo account before risking real money. Most traders go broke because they skip this step.