STUDY MATERIAL
highest price
closing price
OPENING price
LOWEST price
highest price
OPENING price
OPENING price
LOWEST price
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Bullish Candlestick Pattern
Hammer Candlestick
Pattern
Piercing
Pattern
Bullish Engulfing
Pattern
Real Body
the second candle
engulfing the first
candle
Closing Should Be
More than 50% of
the previous
candlestick
Long Lower
Shadow
Morning Star
Pattern
Bullish Harami Candlestick
Pattern
Three White
Soldiers
Marubozu Candlestick
Pattern
Inverted Hammer Candlestick
Pattern
Bearish Candlestick Pattern
Hanging man Candlestick
Pattern
Dark cloud
cover
Bearish Engulfing
Pattern
the close must be
more than 50%
Evening Star
Pattern
Three Black Crows Candlestick
Pattern
Bearish Harami Candlestick
Pattern
Black Marubozu
Shooting Star Candlestick
Pattern
1. Hammer Candlestick Pattern
Bullish
Candlestick
Pattern
Real Body
Long Lower
Shadow
As we have discussed above, Hammer is formed after the
stock prices have been falling, indicating that the prices are
attempting to form a bottom.
Hammers signal that the bears have lost control over the
prices, indicating a potential reversal to an uptrend.
One should note that this candlestick should be formed
after three or more bearish candles as it gives more
confirmation.
Trading Example
Trading TF. 15M To 1D
2. Piercing Pattern
Closing Should Be
More than 50% of
the previous
candlestick
Investors must look at a few characteristics when they
trade with the piercing pattern:
Firstly, the trend should be downtrend, as the pattern is
a bullish reversal pattern.
Secondly, the length of the candlestick plays an
important role in determining the force with which the
reversal will take place.
The gap down between the bearish and bullish
candlesticks indicates how powerful the trend reversal
will be.
Fourthly, the bullish candlestick should close more than
the midpoint of the previous bearish candlestick.
Lastly, the bearish, as well as the bullish candlestick,
should have larger bodies.
Trading Example
Trading TF 4H To 1D
Piercing Pattern
3. Bullish Engulfing Pattern
The bullish engulfing candle signals reversal of a
downtrend and indicates a rise in buying pressure
when it appears at the bottom of a downtrend.
This pattern reverses the ongoing trend as more
buyers enter the market and move the prices up
further.
The pattern involves two candles, with the second
green candle that is completely engulfing the body of
the previous red candle.
Trading Example
Trading TF 5M To 1D
3. Bullish Engulfing
Pattern
4. Morning Star Pattern
When the market is in a bearish trend, most traders expect that it is going to continue down
further.
The current market sentiment is bearish, and traders are either shorting or out of the market
waiting for a bullish trend to start.
When the first candle of the morning star forms, this sentiment holds one.
When the second candle is formed, then the market seems to be another bearish day as the
candle gaps down.
As the market has gone down quite a lot, some traders may begin to think that it is going to
reverse.
They start assuming that reverse must be coming, as it has continued down for some time.
Due to this the buying pressure increases and it makes it harder for the bears to continue
pushing the prices down.
The market closes around where it opened, and thus creates a Doji candlestick pattern.
The third-day candle confirms that the bulls have taken control over the prices.
The market gaps up and more people are expecting the trend to get reverse.
Due to this sentiment, the third candle is a bullish candlestick.
Trading Example
Trading TF 5M To 1D
Morning Star
Pattern
5. Three White Soldiers
The three white soldiers pattern is a bullish reversal
candlestick pattern that occurs at the bottom of a
downtrend.
As the name suggests, this pattern consists of three
candlesticks that are green in color.
This candlestick pattern signals an upcoming uptrend
because of the strong buying pressure.
These candlesticks do not have long shadows and
open within the real body of the previous candle in
the pattern.
Trading Example
Trading TF 30M To
1D
Three White Soldiers
6. Marubozu Candlestick Pattern
A Marubozu is a single candlestick having a long real
body and with no shadows. This real body indicates a
strong movement that may be in any particular
direction either upside or downside. When a bullish
Marubozu
is formed, it indicates that the price opened, traded
higher, and finally closed in the mid of an attempt to
rise
further. Here the opening price is the same as the low
price and the closing price is the same as the high
price.
Trading Example
Trading TF 5M To 1D
Marubozu Candlestick
Pattern
7. Bullish Harami
A Bullish Harami candlestick is formed when a large
bearish red candle appears on Day 1 that is followed
by a smaller bearish candle on the next day.
One should note that the important aspect of the
bullish Harami is that prices should gap up on Day 2.
Trading Example
Trading TF 1D
Bullish Harami
8. Inverted Hammer
The Inverted Hammer is a signal of bullish reversal
after a downtrend.
It tells the traders that the bulls are now willing to buy
the stock at the fallen prices. After the downtrend,
there is pressure from the buyers in the market to
raise the stock prices.
It tells the sellers in the market to exit as they may be
a bullish reversal and tells the buyers to enter their
buying position as the bullish trend is about to start.
But remember to confirm this signal with other
technical indicators as it may sometimes fall signals.
You can also wait for the next trading day to confirm
the beginning of the bullish trend.
If in the next trading session the opening price is more
than the closing price of the inverted hammer
candlestick then you can enter the buy position
Trading Example
Trading TF 5M To 1D
Inverted Hammer
1. Hanging man
Bearish
Candlestick
Pattern
Traders should look at a few characteristics of this pattern
and take advantage of the formation of this pattern.
The long lower shadow of this pattern indicates that the
sellers have entered the market.
Usually, pattern with longer lower shadows seems to have
performed better than the Hanging Man with shorter lower
shadows.
This candlestick pattern can be either green or red but this
does not play a significant role in the interpretation of this
candlestick pattern.
The signal given by this pattern is confirmed when the
bearish candle is formed on the next day.
The traders should also analyze if the volume has increased
during the formation of this pattern.
Traders can enter a short position at the closing price of this
candlestick or at the opening price of the next bearish
candlestick.
Trading Example
Trading TF 5M To 1D
Hanging man
2. Dark cloud cover
the close must be
more than 50%
The Dark Cloud Cover pattern includes a large black candle
forming a “dark cloud” over the previous day’s candle.
The buyers push the price higher at the open, but then the
sellers take over later in the session and push the prices
down.
This shift from buying to selling signals that a price reversal
to the downside could be forthcoming.
Most traders consider the Dark Cloud Cover pattern useful
only when it occurs at the end of an uptrend
As the prices rise, the pattern becomes more important for
the reversal to the downside.
If the price action is choppy then the pattern is less significant
as the price remains choppy after this pattern.
Trading Example
Dark cloud cover
Trading TF 5M To 1D
3. Bearish Engulfing
The bearish engulfing pattern is the opposite of the bullish
pattern.
It signals a reversal of the uptrend and indicates a fall in
prices by the sellers who exert the selling pressure when it
appears at the top of an uptrend
This pattern triggers a reversal of the ongoing trend as more
sellers enter the market and they make the prices fall.
Trading Example
Bearish Engulfing
Trading TF 5M To 1D
4. Evening Star
An Evening Star is a candlestick pattern that is used by
technical analysts for analyzing when a trend is about to
reverse.
It consists of three candlesticks: a large bullish candlestick, a
small-bodied candle, and a bearish candlestick.
Evening Star patterns appear at the top of a price uptrend,
signaling that the uptrend is going to end.
Trading Example
Evening Star
Trading TF 5M To 1D
5. Three Black Crows
Three Black pattern is a multiple candlestick chart pattern
that is used to predict reversal to the downtrend.
This candlestick pattern is formed when the bearish forces
come into the action and make the prices fall for three
consecutive days.
Traders should take a short position after this bearish
candlestick pattern is formed.
Traders can also take the help of volume and technical
indicators to confirm the formation of this candlestick
pattern.
Trading Example
Three Black Crows
Trading TF 5M To 1D
6. Black Marubozu
Black Marubozu is a large black candle with no wicks on
either end. This candle is considered to be very bearish. This
pattern can lead to a continuation of current downtrend or
start of a bullish reversal.
Trading Example
Black Marubozu
Trading TF 5M To 1D
7. Bearish Harami
A Bearish Harami candlestick is formed when there is a
One should note that the important aspect of the bearish
Trading Example
Bearish Harami
Trading TF 1D