Candlestick Patterns Cheat Sheet
Candlestick Anatomy
Before reading patterns, understand the building blocks. Each candle tells you how buyers and sellers battled during that period.
| Element | Description | Significance |
|---|---|---|
| Body (green/white) | Close above open — bullish candle | Buyers dominated the session |
| Body (red/black) | Close below open — bearish candle | Sellers dominated the session |
| Upper Shadow (Wick) | Distance from body top to session high | Long upper wick = sellers pushed back from highs |
| Lower Shadow (Tail) | Distance from body bottom to session low | Long lower wick = buyers pushed back from lows |
| Doji (tiny body) | Open ≈ close — indecision | Neither side won; potential reversal signal |
Bullish Reversal Patterns
These patterns appear at the bottom of downtrends and signal a potential shift to the upside.
| Pattern | Structure | Reliability | Confirmation |
|---|---|---|---|
| Hammer | Small body at top, long lower shadow (2x+ body length), little or no upper shadow | High | Next candle closes above hammer’s body |
| Morning Star | Three candles: large red → small body (gap down) → large green closing above midpoint of first | Very High | Third candle’s close above first candle’s midpoint |
| Bullish Engulfing | Small red candle followed by a larger green candle that fully engulfs the red body | High | Higher volume on the engulfing candle |
| Piercing Line | Red candle followed by green candle that opens below the low and closes above the midpoint of the red body | Moderate | Strong volume and follow-through next day |
| Three White Soldiers | Three consecutive green candles, each opening within the prior body and closing near the high | Very High | Each candle should have a larger or equal body |
| Dragonfly Doji | Open, close, and high are at the same level with a long lower shadow | Moderate | Bullish candle on next session |
Bearish Reversal Patterns
These appear at the top of uptrends and signal a potential shift downward.
| Pattern | Structure | Reliability | Confirmation |
|---|---|---|---|
| Shooting Star | Small body at bottom, long upper shadow (2x+ body), little or no lower shadow | High | Next candle closes below shooting star’s body |
| Evening Star | Three candles: large green → small body (gap up) → large red closing below midpoint of first | Very High | Third candle’s close below first candle’s midpoint |
| Bearish Engulfing | Small green candle followed by a larger red candle that fully engulfs the green body | High | Higher volume on the engulfing candle |
| Dark Cloud Cover | Green candle followed by red candle that opens above the high and closes below the midpoint of the green body | Moderate | Volume confirmation and follow-through |
| Three Black Crows | Three consecutive red candles, each opening within the prior body and closing near the low | Very High | Increasing volume across the three candles |
| Gravestone Doji | Open, close, and low are at the same level with a long upper shadow | Moderate | Bearish candle on next session |
Continuation Patterns
| Pattern | Structure | Signal |
|---|---|---|
| Rising Three Methods | Long green, 3 small red candles within range, then another long green | Bullish continuation — uptrend resumes |
| Falling Three Methods | Long red, 3 small green candles within range, then another long red | Bearish continuation — downtrend resumes |
| Spinning Top | Small body with upper and lower shadows of roughly equal length | Indecision — wait for confirmation either way |
| Marubozu | Long body with no shadows (full-range candle) | Strong conviction — continuation in that direction |
Key Takeaways
- Candlestick patterns signal reversals or continuations based on the battle between buyers and sellers
- Morning Star and Evening Star are the most reliable multi-candle reversal patterns
- Engulfing patterns are the most reliable two-candle reversal signals
- Always confirm patterns with volume and next-candle follow-through
- Patterns at key support/resistance levels carry much more weight
Frequently Asked Questions
What are the most reliable candlestick patterns?
Morning Star, Evening Star, and Engulfing patterns rank highest in reliability studies. Three White Soldiers and Three Black Crows are also very reliable but occur less frequently. All perform best when confirmed by volume.
Do candlestick patterns work on all timeframes?
Yes, but longer timeframes (daily, weekly) produce more reliable signals than shorter ones (5-minute, 15-minute). Intraday patterns have more noise and generate more false signals. Most professional technical analysts rely on daily charts.
What’s the difference between a hammer and a hanging man?
They look identical — small body, long lower shadow. The difference is context: a hammer appears at the bottom of a downtrend (bullish reversal), while a hanging man appears at the top of an uptrend (bearish reversal). Same candle, opposite signals.
Should I combine candlestick patterns with other indicators?
Absolutely. Pair them with technical indicators like RSI for overbought/oversold confirmation, moving averages for trend direction, and volume for signal strength. This layered approach filters out most false signals.
How many candlestick patterns should I memorize?
Focus on 8–10 core patterns: Hammer, Shooting Star, Engulfing (both), Morning Star, Evening Star, Doji, Marubozu, and Three White Soldiers / Three Black Crows. These cover 90%+ of actionable signals you’ll encounter.