Candlestick Patterns

Pattern Type Description Formation Previous Trend Trade Possibility Fail Case Image

Small body with a long lower wick, occurs Watch for reversal to the upside. Consider buying if the next Fails if the price closes below the low of the hammer A candle with a small real body near the top and a
Hammer Bullish Near Support Downtrend
after a downtrend. candle confirms upward movement. candle. long lower wick.

Small body with a long upper wick, occurs Watch for reversal to the upside. Confirmation with a bullish Fails if the price closes below the low of the inverted A candle with a small real body near the bottom and a
Inverted Hammer Bullish Near Support Downtrend
after a downtrend. candle is key. hammer candle. long upper wick.

Large bullish candle engulfs a smaller Fails if the price reverses and closes below the engulfing A large green candle fully covers a small red candle
Bullish Engulfing Bullish Near Support Downtrend Watch for a strong upward move. Enter long on confirmation.
bearish candle. pattern. before it.

Three-candle pattern: bearish, indecision Watch for a trend reversal upward. Enter after the third candle Fails if the third candle fails to break above the first Three candles: red, small Doji, and a large green
Morning Star Bullish Near Support Downtrend
(Doji), then strong bullish candle. confirms buying momentum. candle's high. candle.

Small body with a long upper wick, occurs Watch for a reversal to the downside. Enter short if the next Fails if the price closes above the high of the shooting star A candle with a small real body near the bottom and a
Shooting Star Bearish Near Resistance Uptrend
after an uptrend. candle confirms. candle. long upper wick.

Large bearish candle engulfs a smaller Watch for strong downward movement. Enter short on Fails if the price reverses and closes above the engulfing A large red candle fully covers a small green candle
Bearish Engulfing Bearish Near Resistance Uptrend
bullish candle. confirmation. pattern. before it.

Three-candle pattern: bullish, indecision Watch for a trend reversal downward. Enter short after the third Fails if the third candle fails to break below the first Three candles: green, small Doji, and a large red
Evening Star Bearish Near Resistance Uptrend
(Doji), then strong bearish candle. candle confirms selling momentum. candle's low. candle.

Small body with wicks of equal length, Watch for confirmation of direction in the next candles (e.g., Fails if the price breaks out in one direction but reverses A candle with almost no body and equal upper and
Doji Neutral At Support/Resistance Any
shows indecision. reversal near support or resistance). immediately without follow-through. lower wicks.

Small body with long wicks, indicates Wait for confirmation of the trend direction before entering a Fails if the price moves in one direction but lacks volume or A candle with a small real body in the center and long
Spinning Top Neutral At Support/Resistance Any
market indecision. trade. momentum for continuation. wicks on both sides.

Chart Patterns
Pattern Type Description Formation Previous Trend Trade Possibility Fail Case Image

A peak (head) between two lower peaks Watch for a breakdown below the neckline. Short the asset after Fails if the price breaks above the head instead of breaking Three peaks: middle (head) is the highest, and a
Head and Shoulders Bearish Near Resistance Uptrend
(shoulders), signals a trend reversal. confirmation. below the neckline. neckline forms the support.

A dip (head) between two higher dips Watch for a breakout above the neckline. Enter long after Fails if the price breaks below the head instead of breaking Three dips: middle (head) is the lowest, and a neckline
Inverse Head & Shoulders Bullish Near Support Downtrend
(shoulders), signals a trend reversal. confirmation. above the neckline. forms the resistance.

Two peaks at a similar level, indicates a Watch for a breakdown below the support level between the Fails if the price breaks above the resistance level instead Two peaks at the same resistance level with a support
Double Top Bearish Near Resistance Uptrend
reversal from an uptrend. peaks. Enter short after confirmation. of breaking below support. line below.

Two troughs at a similar level, indicates a Watch for a breakout above the resistance level between the Fails if the price breaks below the support level instead of Two troughs at the same support level with a
Double Bottom Bullish Near Support Downtrend
reversal from a downtrend. troughs. Enter long after confirmation. breaking above resistance. resistance line above.

Higher lows converge with a horizontal Watch for a breakout above resistance. Enter long after Fails if the price breaks below the lower trendline instead An upward-sloping trendline converging with a
Ascending Triangle Bullish Near Resistance Uptrend
resistance line. confirmation. of breaking above resistance. horizontal resistance.

Lower highs converge with a horizontal Watch for a breakdown below support. Enter short after Fails if the price breaks above the upper trendline instead A downward-sloping trendline converging with a
Descending Triangle Bearish Near Support Downtrend
support line. confirmation. of breaking below support. horizontal support.