White Candlestick
White Candles are bullish, they signify that the closing is higher than the opening for that period. A candlestick will show the securities open, high, low, and close for the user-specified time. The high and low will be shown by the two wicks on each end of the body. The body comprises the distance between the period's open and closed prices. Thus, candlestick marks show the range of prices that the security has reported through a single period.
Black Candlestick
Black Candles are bearish, and they signify that the closing is lower than the opening for that period. This candlestick will show the securities open, high, low, and close for the user-specified time. The high and low will be shown by the two wicks on each end of the body. The body comprises the distance between the period's open and closed prices. Thus, candlestick marks show the range of prices that the security has reported through a single period.
Doji
1. Common Doji
A doji candlestick forms when a security open and close are virtually equal for the given period. This candle represents indecision on the side of both buyers and sellers. A doji represents a supply/demand equilibrium.
In a doji, the charted securities opening price is equal to its closing price. A doji is not significant, if the market is not clearly trending as non-trending markets are inherently indicative of indecision. If the doji forms in an uptrend or downtrend, this is normally seen as significant, as it is a signal that the buyers are losing conviction when formed in an uptrend and a signal that sellers are losing conviction if seen in a downtrend.
2. Long-legged Doji
The long-legged doji is a candlestick that consists of long upper and lower shadows and has approximately the same opening and closing price.
The candlestick signals indecision about the future direction of the underlying security. It is used by some traders to warn that indecision is entering the market after a strong advance. It may warn that a strong downtrend may be experiencing indecision before making a move to the upside. Long-legged doji may mark the start of a consolidation period, where the price forms for one or more long-legged Doji before moving into a tighter pattern or breaks out to form a new trend.
3. Gravestone Doji
A Gravestone Doji is a bearish reversal candlestick pattern that is formed when the open, low, and closing prices are all near each other with a long upper shadow. The long upper shadow suggests that the bullish advance at the beginning of the session was overcome by bears by the end of the session, which often comes just before a longer-term bearish downtrend. A gravestone doji pattern implies that a bearish reversal is coming. And this pattern can be used as a sign to take profits on a bullish position or enter a bearish trade.
4. Dragonfly Doji
Dragonfly Doji is a candlestick pattern that acts as an indication of investor indecision and a possible trend reversal. It is relatively easy to spot in a candlestick chart due to its unique "T" shape. The body of a candlestick is equal to the range between the opening and closing price, while the shadows, or wicks represent the daily highs and lows.
In the case of a dragonfly doji, the opening, closing, and daily high price are all approximately the same. Such a pattern can only occur when the market trades down and then reverse but does not move above the opening price. The appearance of a dragonfly doji after a price advance warns of a potential price decline. A move lower on the next candle provides confirmation. A dragonfly doji after a price decline warns the price may rise. If the next candle rises that provides confirmation.
5. The Bullish Engulfing Pattern
A bullish engulfing pattern is a candlestick chart pattern that forms when a small black candlestick is followed the next day by a large white candlestick, the body of which completely overlaps or engulfs the body of the previous day's candlestick. It is formed at the end of a downtrend. A white body is formed, that opens lower than the black candle and closes higher than the black candle.
This complete engulfing of the previous day's body represents overwhelming buying pressure dissipating the selling pressure. This pattern indicates that bulls have taken control of the market from the bears. For further confirmation the next candle needs to close higher than the bullish engulfing pattern, then the next leg of the uptrend will form. The stop loss for the long position, keep below the engulfing candle low.
6. Bearish Engulfing Pattern
A bearish engulfing pattern is a technical chart pattern that signals lower prices to come. The bearish engulfing pattern consists of two candlesticks, the first is white and the second black. The size of the white candlestick is relatively unimportant, but it should not be a doji, which would be relatively easy to engulf. The second should be a long black candlestick. The bigger it is, the more bearish the reversal. The black body must engulf the body of the first white candlestick. The pattern consists of an up, (white or green) candlestick followed by a large down, (black or red) candlestick that "engulfs" the smaller up candle.
The pattern can be important because it shows sellers have overtaken the buyers and are pushing the price more aggressively down than the buyers were able to push it up. This candle indicates that the slowdown in the recent uptrend and the possibility to shift the trend downwards. For more confirmation, the coming day the index needs to trade and sustain below the bearish engulfing pattern. The stop loss for the short position, keep above the engulfing candle high.
7. Bullish Harami
A bullish harami is a basic candlestick chart pattern indicating that a bearish trend in an asset or market may be reversing. The bullish harami candle pattern is a reversal pattern appearing at the bottom of a downtrend. It consists of a bearish candle with a large body, followed by a bullish candle with a small body enclosed within the body of the prior candle. As a sign of changing momentum, the small bullish candle ‘gaps’ up to open near the mid-range of the previous candle.
The bullish harami hints at a bullish reversal in the market. The bullish harami candlestick should not be traded in isolation but instead, should be considered along with other factors to achieve bullish harami confirmation. For confirmation, in the coming day the price should trade and sustain above the harami pattern high. And check other technical parameters too, before entering into a trade. The stop loss for the long position, keep below the long black candle low.
8. Bearish Harami
The Bearish Harami pattern is a reversal pattern appearing at the top of an uptrend. The bearish harami consists of two candlesticks and hints at a bearish reversal in the market. This pattern suggests prices may soon reverse to the downside.
The pattern consists of a long white candle followed by a small black candle. The opening and closing prices of the second candle must be contained within the body of the first candle. The bearish harami candlestick should not be traded in isolation but instead to check other technical parameters too, before entering into a trade. For confirmation, in the coming day, the price should trade and sustain below the harami pattern low. The stop loss for the short position, keep above the long whit candle high.
9. Hanging man
The hanging man and hammer patterns are trend reversal patterns that consist of the same type of candlestick. In other words, both the hanging man and the hammer pattern have the same shape, though one is bearish while the other is relatively bullish. What distinguishes the two is the nature of the trend that they appear in.
If this pattern appears in an uptrend, then it is known as the hanging man pattern, and if it appears in a downtrend, then it is known as the hammer pattern. Both are single candlestick patterns in which the candlestick consists of a real body that is located at the top of the candlestick with little or no upper shadow and a relatively long lower shadow, which should be at least twice the length of the real body. The colour of the hanging man or hammer candlestick is not important.
A hanging man is a bearish reversal candlestick pattern that occurs after an uptrend. The advance can be small or large but should be composed of at least a few price bars moving higher overall.
The candle must have a small real body and a long lower shadow that is at least twice the size of the real body. The hanging man candle can either be a green candle (bullish), or a red candle (bearish) although, the bearish candle provides a better indication of a weakening market.
When a hanging man forms in an uptrend it indicates that buyers have lost their strength. But it does not mean that the bulls have definitively lost control, but it may be an early sign that the momentum is decreasing and the direction of the index or stock may be getting ready to change. This pattern indicates that after selling the buyers managed to bring the price back to the open, the initial sell-off is an indication that a growing number of investors think the price has peaked.
For followers in candlestick trading, this pattern provides an opportunity to sell existing long positions or even go short in anticipation of a price decline. For more confirmation, the next candle needs to close under the body low, preferably at or below the tail.
10. Hammer
The hammer and hammer hanging man patterns are trend reversal patterns that consist of the same type of candlestick. In other words, both the hanging man and the hammer pattern have the same shape, though one is bearish while the other is relatively bullish. What distinguishes the two is the nature of the trend that they appear in. If this pattern appears in an uptrend, then it is known as the hanging man pattern, and if it appears in a downtrend, then it is known as the hammer pattern. Both are single candlestick pattern in which the candlestick consists of a real body that is located at the top of the candlestick with little or no upper shadow and a relatively long lower shadow, which should be at least twice the length of the real body.
The colour of the hanging man or hammer candlestick is not important.
A hammer occurs after a downtrend of a stock or index price, suggesting the market is attempting to determine a bottom. The hammer is a price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies within the period to close near the opening price. This pattern forms a hammer-shaped candlestick, in which the lower shadow is at least twice the size of the real body. Hammers are most effective when they have formed after three or more declining candles.
This pattern is a bullish one, but does not mean that the bulls have taken full control of a market, but indicate that the bulls are strengthening. For confirmation, the next candle should close above the closing price of the hammer candle. Ideally, this confirmation candle will show strong buying. Candlestick traders will typically look to enter long positions or exit short positions during or after the confirmation candle. For those taking new long positions, a stop loss can be placed below the low of the hammer's shadow.
11. Morning Star
The Morning Star Pattern is viewed as a bullish reversal pattern, usually occurring at the bottom of a downtrend. The pattern consists of three candlesticks: Large bearish candle on the first day. Small bullish or bearish candle on the second day and, long white candle on the third day. The first part of a Morning star reversal pattern is a large bearish red candle.
The second day begins with a bearish gap down. It is clear from the opening of day two, that bears are in control. However, bears do not push prices much lower. The candlestick on Day two is quite small and can be bullish, bearish, or neutral. Day three begins with a bullish gap up, and bulls are able to press prices even further upward, often eliminating the losses seen on Day one. For those taking long positions, a stop loss can be placed below the second-day candle.
12.Evening Star
The Evening Star is the exact opposite of the morning star. The Evening Star Pattern is viewed as a bearish reversal pattern, usually occurring at the top of an uptrend. The pattern consists of three candlesticks. The first candle is a large white, second candle a small white or black and, the third one is a long black candle; and it must close below the middle of the first candle. For those taking short positions, a stop loss can be placed above the second-day candle.
13. Inverted Hammer
The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential bullish reversal pattern. The Inverted Hammer formation is created when the open, low, and close are roughly the same price. There is a long upper shadow which should be at least twice the length of the real body. After a long downtrend, the formation of an Inverted Hammer is bullish because prices hesitated to move downward during the day.
Sellers pushed prices back to where they were at the open, but increasing prices shows that bulls are testing the power of the bears. When the low and the open are the same, a bullish, green Inverted Hammer candlestick is formed and it is considered a stronger bullish sign than when the low and close are the same (a red Inverted Hammer). For those taking long positions, a stop loss can be placed below the Inverted Hammer low.
14. A Shooting Star
In technical analysis, a shooting star formation is viewed as a bearish reversal candlestick pattern that typically occurs at the top of uptrends. The Shooting Star looks the same as the Inverted hammer, but instead of being found in a downtrend it is found in an uptrend and thus has different implications. The Shooting formation is created when the open, low, and close are roughly the same price. Also, there is a long upper shadow, generally defined as at least twice the length of the real body.
When the low and the close are the same, a bearish Shooting Star candlestick is formed. The long upper shadow of the Shooting Star implies that the market is tested to find where resistance and supply were located. When the market found the area of resistance, the highs of the day, bears began to push prices lower, ending the day near the opening price. Thus, the bullish advance upward was rejected by the bears.
15. Piercing Line
The piercing line pattern consists of two candlesticks, which indicates a potential bullish reversal. The piercing line pattern is seen as a bullish reversal candlestick pattern located at the bottom of a downtrend. This pattern involves two candlesticks with the second bullish candlestick opening lower than the preceding bearish candle. This is followed by buyers driving prices up to close above 50% of the body of the bearish candle.). For those who are taking long positions, a stop loss can be placed below the white candle low.
16. Dark Cloud Cover
The Dark Cloud Cover pattern is a candlestick pattern that signals a potential reversal to the downside. It appears at the top of an uptrend and involves a large green (bullish) candle, followed by a red (bearish) candle that creates a new high before closing lower than the midway point of the previous green candle. For those taking short positions, a stop loss can be placed above the black candle high.
17. Three Inside up Pattern
The three inside up pattern is a bullish reversal pattern composed of a large down candle, a smaller up candle contained within the prior candle, and then another up candle that closes above the close of the second candle. Three inside up pattern showing that the current down-trend has lost momentum and a move in the upside direction might be starting. For those taking long positions, a stop loss can be placed below the second candle low
18. Three Inside down Pattern
The three inside down pattern is a bearish reversal pattern composed of a large up candle, a smaller down candle contained within the prior candle, then another down candle that closes below the close of the second candle. Three inside down pattern showing that the current up trend has lost momentum and a move in the downside direction might be starting. For those taking short positions, a stop loss can be placed above the second candle high
19.Three White Soldiers
The three white soldiers’ pattern is a bullish candlestick formation on a trading chart that occurs at the bottom of a downtrend. As the name suggests, the pattern consists of three candles, which are green in colour. To identify the three white soldiers’ pattern, look for three consecutive green or white candlesticks. Each must open and close progressively higher than the first. The candlesticks should have big bodies and very small (or no) wicks. Traders believe that this formation signals an upcoming price reversal because of the strong buying pressure.
20.Three Black Crows
Three black crows is a bearish candlestick pattern used to predict the reversal of a current uptrend. The black crow pattern consists of three consecutive long-bodied candlesticks that have opened within the real body of the previous candle and closed lower than the previous candle. The three black crows pattern occurs when bears overtake the bulls during three consecutive trading sessions. The pattern shows on the pricing charts as three bearish long-bodied candlesticks with short or no shadows or wicks. Traders believe that this formation signals an upcoming price reversal because of the strong selling pressure.
