Forex
43 Types of Candlestick Patterns Every Trader Should Know in 2024
By Nathalie Okde
5 August 2024
Candlestick patterns are visual representations of price movements in the market. These patterns reflect the market sentiment and are highly useful for predicting future price movements.
Therefore, this article will list the top 43 types of candlestick patterns every trader should know in 2024.
Key Takeaways
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Candlestick patterns provide visual insights into market sentiment and potential price movements.
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Bullish patterns indicate potential upward price movements, while bearish patterns suggest downward trends.
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Continuation patterns signal the persistence of the current trend.
What Is a Candlestick Pattern?
A candlestick pattern is a visual representation of price movements within a specific time frame displayed on a candlestick chart.
Each candlestick shows four key pieces of information: the opening price, the closing price, the highest price, and the lowest price during the period.
The candlestick's body represents the range between the opening and closing prices, while the wicks (or shadows) indicate the highest and lowest prices.
The arrangement of one or more candlesticks forms patterns that can provide insights into market sentiment and potential future price movements.
Candlestick vs. Bar Charts
Candlestick charts and bar charts both provide similar information but in different visual formats.
Bar charts use a simple vertical line to show the price range, with horizontal ticks indicating the opening and closing prices.
However, candlestick charts use a thicker body to represent the opening and closing prices, with thin lines (wicks) showing the highs and lows.
Many traders prefer candlestick charts because they are visually more intuitive and provide clearer signals of market trends and potential reversals.
How to Read a Candlestick Pattern
Reading a candlestick pattern involves understanding the candlestick's color and shape, as well as its position relative to previous candlesticks.
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A green (or white) candlestick typically indicates that the closing price is higher than the opening price, signaling bullish sentiment.
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A red (or black) candlestick indicates that the closing price is lower than the opening price, signaling a bearish sentiment.
Patterns can be single candlesticks or combinations of multiple candlesticks, each providing unique insights into market psychology and potential price movements.
43 Candlestick Patterns You Must Know in 2024
Traders highly rely on candlestick patterns and often use a cheat sheet to spot the pattern directly. These patterns are usually categorized into three categories: bullish, bearish, and continuation patterns.
Below is a list of each type of candlestick, its characteristics, formation, and implication.
Bullish Candlestick Patterns
Bullish candlestick patterns are specific formations of one or more candlesticks that suggest a potential reversal from a downtrend to an uptrend or a continuation of an uptrend.
These patterns indicate that buying pressure is overcoming selling pressure, which could lead to a rise in prices. Traders use these patterns to identify potential entry points for long positions.
Here are some common bullish candlestick patterns:
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Hammer
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Inverted Hammer
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Piercing Pattern
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Bullish Engulfing
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Bullish Spinning Top
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The Morning Star
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Three White Soldiers
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Three Inside Up
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Bullish Harami
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Tweezer Bottom
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Bullish Counterattack
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Bullish Kicker
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Bullish Abandoned Baby
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Morning Star Doji
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Dragonfly Doji
1. Hammer
The hammer is a bullish reversal pattern that forms after a downtrend. It is characterized by a small body near the top of the candlestick with a long lower wick.
This indicates that despite selling pressure driving the price down, buyers stepped in to push the price back up. The implication is that the downtrend may be nearing its end, and a potential uptrend could follow.
2. Inverted Hammer
The inverted hammer is a bullish reversal pattern that appears after a downtrend. It has a small body, a long upper wick, and little to no lower wick.
This indicates that buyers attempted to push the price higher but met resistance, and the following bullish candlestick confirms the reversal.
3. Piercing Pattern
The piercing pattern is a two-candlestick formation signaling a potential bullish reversal.
It occurs in a downtrend, with the first candlestick being bearish and followed by a bullish candlestick that opens lower but closes above the midpoint of the previous candlestick. This pattern suggests a strong shift in market sentiment from bearish to bullish.
4. Bullish Engulfing
The bullish engulfing pattern is a reversal signal. It consists of a small bearish candlestick followed by a larger bullish candlestick that completely engulfs the previous one.
This indicates that buyers have taken control, overpowering the sellers, and suggests a potential upward movement.
5. Bullish Spinning Top
A bullish spinning top is characterized by a small body and long wicks on both sides.
It indicates indecision in the market, with both buyers and sellers unable to gain the upper hand. When it appears after a downtrend, it suggests that selling pressure is weakening and that a bullish reversal may be imminent.
6. The Morning Star
The morning star is a three-candlestick pattern that signals a bullish reversal.
It’s characterized by the following:
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Starts with a long, bearish candlestick
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Followed by a small-bodied candlestick (the star) that gaps down
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Ends with a long bullish candlestick that closes near the midpoint of the first candlestick
This pattern indicates a shift from selling to buying pressure.
7. Three White Soldiers
The three white soldiers' pattern consists of three consecutive long bullish candlesticks with small or no wicks.
Each candlestick opens within the previous body and closes at or near its high, indicating strong buying pressure and the potential start of a sustained uptrend.
8. Three Inside Up
The three-inside-up pattern is a bullish reversal signal formed by three candlesticks.
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The first is a long, bearish candlestick
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Followed by a smaller bullish candlestick that forms within the first one's body
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And a third bullish candlestick that closes above the first one's high.
This indicates a shift in momentum from bearish to bullish.
9. Bullish Harami
The bullish harami is a two-candlestick pattern indicating a potential reversal. It occurs when a small bullish candlestick forms within the body of a preceding large bearish candlestick.
This suggests that selling pressure is weakening, and buyers may be gaining control.
10. Tweezer Bottom
A tweezer bottom is a bullish reversal pattern formed by two candlesticks with matching lows.
It indicates that the downtrend has found a strong support level, and a potential reversal to the upside could follow.
11. Bullish Counterattack
The bullish counterattack pattern consists of a bearish candlestick followed by a bullish candlestick that opens lower but closes at the same level as the previous candlestick's close.
This indicates that buyers have countered the selling pressure, potentially leading to a reversal.
12. Bullish Kicker
The bullish kicker pattern is a strong reversal signal. It starts with a bearish candlestick followed by a bullish candlestick that opens above the previous close and continues to move higher.
This pattern shows a significant shift in market sentiment from bearish to bullish.
13. Bullish Abandoned Baby
The bullish abandoned baby is a rare three-candlestick pattern indicating a reversal. It consists of a long bearish candlestick, a doji that gaps down, and a long bullish candlestick that gaps up.
This pattern suggests a strong shift in market sentiment from bearish to bullish.
14. Morning Star Doji
The morning star doji is similar to the morning star pattern but features a doji as the middle candlestick.
The doji indicates indecision in the market, and the following bullish candlestick confirms the reversal. This pattern signals a shift from selling to buying pressure.
15. Dragonfly Doji
A dragonfly doji is a bullish reversal pattern that appears at the bottom of a downtrend. It has a small body at the top with a long lower wick, indicating that despite selling pressure, buyers pushed the price up significantly during the session.
This pattern suggests that the downtrend may be nearing its end.
Bearish Candlestick Patterns
Bearish candlestick patterns are specific formations of one or more candlesticks that suggest a potential reversal from an uptrend to a downtrend or a continuation of a downtrend.
These patterns indicate that selling pressure is overcoming buying pressure, which could lead to a price decline. Traders use these patterns to identify potential entry points for short positions.
Here are some common bearish candlestick patterns:
16. Hanging Man
17. Dark Cloud Cover
18. Bearish Engulfing
19. The Evening Star
20. Three Black Crows
21. Three Inside Down
22. Bearish Harami
23. Shooting Star
24. Tweezer Top
25. Bearish Counterattack
26. Bearish Spinning Top
27. Bearish Kicker
28. Evening Star Doji
29. Bearish Abandoned Baby
30. Gravestone Doji
16. Hanging Man
The hanging man is a bearish reversal pattern that appears after an uptrend.
It has a small body at the top with a long lower wick, indicating that despite buying pressure, sellers pushed the price down significantly during the session. The bearish candlestick that follows confirms the reversal.
17. Dark Cloud Cover
The dark cloud cover is a two-candlestick pattern, indicating a bearish reversal.
It occurs in an uptrend where:
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the first candlestick is bullish
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followed by a bearish candlestick that opens higher but closes below the midpoint of the previous candlestick
This pattern suggests a shift from buying to selling pressure.
18. Bearish Engulfing
The bearish engulfing pattern is a strong reversal signal. It consists of a small bullish candlestick followed by a larger bearish candlestick that completely engulfs the previous one.
This indicates that sellers have taken control, overpowering the buyers, and suggests a potential downward movement.
19. The Evening Star
The evening star is a three-candlestick pattern that signals a bearish reversal.
It’s characterized by the following:
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starts with a long, bullish candlestick
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followed by a small-bodied candlestick (the star) that gaps up
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and ends with a long, bearish candlestick that closes near the midpoint of the first candlestick
This pattern indicates a shift from buying to selling pressure.
20. Three Black Crows
The three black crows pattern consists of three consecutive long bearish candlesticks with small or no wicks.
Each candlestick opens within the previous body and closes at or near its low, indicating strong selling pressure and the potential start of a sustained downtrend.
21. Three Inside Down
The three-inside-down pattern is a bearish reversal signal formed by three candlesticks.
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The first is a long, bullish candlestick
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Followed by a smaller bearish candlestick that forms within the first one's body
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And a third bearish candlestick that closes below the first one's low
This indicates a shift in momentum from bullish to bearish.
22. Bearish Harami
The bearish harami is a two-candlestick pattern indicating a potential reversal. It occurs when a small bearish candlestick forms within the body of a preceding large bullish candlestick.
This suggests that buying pressure is weakening, and sellers may be gaining control.
23. Shooting Star
The shooting star is a bearish reversal pattern that appears after an uptrend. It has a small body, a long upper wick, and little to no lower wick.
This indicates that buyers attempted to push the price higher but met resistance.
24. Tweezer Top
A tweezer top is a bearish reversal pattern formed by two candlesticks with matching highs.
It indicates that the uptrend has found a strong resistance level, and a potential reversal to the downside could follow.
25. Bearish Counterattack
The bearish counterattack pattern consists of a bullish candlestick followed by a bearish candlestick that opens higher but closes at the same level as the previous candlestick's close.
This indicates that sellers have countered the buying pressure, potentially leading to a reversal.
26. Bearish Spinning Top
A bearish spinning top is characterized by a small body and long wicks on both sides. It indicates indecision in the market, with both buyers and sellers unable to gain the upper hand.
When it appears after an uptrend, it suggests that buying pressure is weakening and that a bearish reversal may be imminent.
27. Bearish Kicker
The bearish kicker pattern is a strong reversal signal. It starts with a bullish candlestick followed by a bearish candlestick that opens below the previous close and moves lower.
This pattern shows a significant shift in market sentiment from bullish to bearish.
28. Evening Star Doji
The evening star doji is similar to the evening star pattern but features a doji as the middle candlestick.
The doji indicates indecision in the market, and the following bearish candlestick confirms the reversal. This pattern signals a shift from buying to selling pressure.
29. Bearish Abandoned Baby
The bearish abandoned baby is a three-candlestick pattern indicating a reversal. It consists of a long bullish candlestick, a doji that gaps up, and a long bearish candlestick that gaps down.
This pattern suggests a strong shift in market sentiment from bullish to bearish.
30. Gravestone Doji
A gravestone doji is a bearish reversal candlestick pattern that appears at the top of an uptrend.
It has a small body at the bottom with a long upper wick, indicating that despite buying pressure, sellers pushed the price down significantly during the session.
This pattern suggests that the uptrend may be nearing its end.
Continuation Candlestick Patterns
Continuation candlestick patterns indicate the likelihood of the current trend continuing in the same direction. These patterns suggest a brief consolidation or pause in the market before resuming the prevailing trend, whether bullish or bearish.
Continuation patterns help traders confirm the persistence of the current trend and provide opportunities to enter or add to their positions.
Here are some common continuation candlestick patterns:
31. Falling Three Methods
32. Rising Three Methods
33. Upside Tasuki Gap
34. Downside Tasuki Gap
35. Rising Window
36. Falling Window
37. Three-outside-up
38. Three-outside-down
39. White Marubozu
40. Black Marubozu
41. On-neck-pattern
42. Mat hold
43. Long-legged Doji
31. Falling Three Methods
The falling three methods is a bearish continuation pattern.
It consists of:
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a long, bearish candlestick
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followed by three smaller bullish candlesticks that stay within the range of the first candlestick
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and then another long, bearish candlestick
This pattern indicates a temporary pause in the downtrend before it continues.
32. Rising Three Methods
The rising three methods is a bullish continuation pattern.
It consists of:
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a long bullish candlestick
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followed by three smaller bearish candlesticks that stay within the range of the first candlestick
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and then another long bullish candlestick
This pattern indicates a temporary pause in the uptrend before it continues.
33. Upside Tasuki Gap
The upside tasuki gap is a bullish continuation pattern. It occurs in an uptrend where a bullish candlestick gaps up from the previous one, followed by a bearish candlestick that partially fills the gap.
This pattern indicates that the uptrend is likely to continue.
34. Downside Tasuki Gap
The downside Tasuki gap is a bearish continuation pattern. It occurs in a downtrend where a bearish candlestick gaps down from the previous one, followed by a bullish candlestick that partially fills the gap.
This pattern suggests that the downtrend is likely to continue.
35. Rising Window
A rising window is a bullish continuation pattern characterized by a gap between two bullish candlesticks.
This pattern indicates strong buying pressure and suggests that the uptrend is likely to continue.
36. Falling Window
A falling window is a bearish continuation pattern characterized by a gap between two bearish candlesticks.
This pattern indicates strong selling pressure and suggests that the downtrend is likely to continue.
37. Three Outside Up
The three-outside-up pattern consists of a bearish candlestick, followed by a larger bullish candlestick that engulfs the previous one and another bullish candlestick that closes higher.
This pattern confirms a bullish reversal and suggests a continuation of the uptrend.
38. Three Outside Down
The three-outside down pattern consists of a bullish candlestick, followed by a larger bearish candlestick that engulfs the previous one and another bearish candlestick that closes lower.
This pattern confirms a bearish reversal and suggests a continuation of the downtrend.
39. White Marubozu
A white marubozu is a bullish candlestick with no wicks, which opens at its low and closes at its high.
This technical analysis pattern shows strong buying pressure throughout the trading session and suggests a continuation of the uptrend.
40. Black Marubozu
A black marubozu is a bearish candlestick with no wicks, which opens at its high and closes at its low.
This pattern shows strong selling pressure throughout the trading session and suggests a continuation of the downtrend.
41. On-Neck Pattern
The on-neck pattern is a bullish continuation pattern formed by a bearish candlestick followed by a smaller bullish candlestick that closes at or near the low of the previous candlestick.
This pattern suggests that the selling pressure is weakening, and the uptrend is likely to continue.
42. Mat-Hold
The mat-hold is a bullish continuation pattern. It starts with a long bullish candlestick, followed by three smaller bearish candlesticks that stay within the range of the first candlestick, and then another long bullish candlestick that closes above the first one's high.
This pattern indicates a strong continuation of the uptrend.
43. Long Legged Doji
A long-legged doji is a neutral pattern with a small body and long wicks on both sides. It indicates high volatility and indecision in the market.
Depending on its position and context, it can signal a potential reversal or continuation of the current trend.
Conclusion
Understanding and mastering these candlestick patterns can significantly enhance your trading strategies in 2024.
By recognizing and interpreting these patterns accurately, you can better anticipate market movements, manage risks, and capitalize on potential trading opportunities. For more support in your trading journey, join XS!
FAQs
Which Candlestick Pattern is Most Reliable?
The most reliable candlestick pattern is often considered to be the bullish or bearish engulfing pattern.
These patterns show a strong shift in market sentiment and are often followed by significant price movements.
Does Candlestick Pattern Analysis Really Work?
Candlestick pattern analysis can be effective when used in conjunction with other technical analysis tools and indicators.
While no method is foolproof, understanding candlestick patterns can provide valuable insights into market psychology and potential price movements.
What is the 3 Candle Rule?
The three-candle rule refers to the confirmation of a candlestick pattern over three consecutive trading sessions.
This rule suggests that traders wait for three candles to confirm a pattern before taking action, ensuring the pattern's reliability.
Do Professional Traders Use Candlestick Patterns?
Yes, professional traders often use candlestick patterns as part of their technical analysis toolkit.
These patterns provide visual insights into market sentiment and can be used to identify potential trading opportunities.
