16 Candlestick Patterns Every Trader Must Know
Candlestick charts are one of the most powerful tools in technical analysis. They visually represent price movements over a specific time frame and help traders identify potential trend reversals, continuations, or indecision in the market. In this guide, you’ll learn 16 of the most important candlestick patterns that every trader should recognize.
What Are Candlestick Patterns?
| Candlestick patterns are combinations of one or more candlesticks on a chart that indicate a potential market movement. These patterns are used in stock trading, forex, crypto, and commodities markets. |
Bullish Candlestick Patterns
- Hammer – Signals a potential bottom and reversal.
- Inverse Hammer – Indicates buying strength after a downtrend.
- Bullish Engulfing – A large green candle engulfs the previous red one.
- Piercing Line – Strong reversal indicator after a downtrend.
- Morning Star – A three-candle pattern suggesting bullish reversal.
- Three White Soldiers – Three strong bullish candles in a row.
- Bullish Marubozu – No wicks, strong buying pressure.
- Dragonfly Doji – Suggests reversal when appearing at market bottoms.
Bearish Candlestick Patterns
- Bearish Engulfing – A large red candle consumes a smaller green one.
- Hanging Man – Indicates weakness after an uptrend.
- Shooting Star – Signals a bearish reversal after a bullish run.
- Dark Cloud Cover – A bearish candle closes below midpoint of previous bullish candle.
- Evening Star – A three-candle pattern that predicts a bearish reversal.
- Three Black Crows – Three long bearish candles indicate sustained selling.
- Bearish Marubozu – Strong downward momentum with no upper wicks.
- Gravestone Doji – Signifies potential market top and bearish pressure.
Final Thoughts
Understanding these candlestick patterns can greatly enhance your trading strategy. Combine these signals with volume, trendlines, and indicators for better confirmation and accuracy. Bookmark this post and refer back when analyzing charts!
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