Candlestick Patterns: A Complete Guide to Reversal and Continuation Patterns

Single Candle Patterns

Doji: A candle where the open and close are nearly identical, creating a small or nonexistent body. The long upper and lower wicks show that both buyers and sellers pushed price aggressively but neither gained control. The doji signals indecision. When it appears after a strong uptrend or downtrend, it often signals an imminent reversal. A doji at the top of an uptrend is particularly significant.

Hammer: A small body at the top of the candle with a long lower wick at least twice the length of the body. The hammer appears after a downtrend and signals that sellers pushed price lower during the period, but buyers stepped in and pushed price back up to close near the open. It is a bullish reversal pattern — the long lower wick shows rejection of lower prices. The longer the lower wick, the more significant the signal.

Shooting star: The opposite of a hammer. A small body at the bottom with a long upper wick of at least twice the body length. It appears after an uptrend and signals that buyers pushed price higher but sellers took control and pushed it back down. The long upper wick shows rejection of higher prices. It is a bearish reversal pattern.

Marubozu: A long candle with no wicks or very small wicks. The open equals the low (for a bullish marubozu) or the high (for a bearish marubozu), and the close is at the opposite extreme. Marubozu candles show strong, uninterrupted momentum in the direction of the candle. A bullish marubozu after a pullback suggests the trend is resuming with force. Review the basics of candlestick chart reading →

Two-Candle Patterns

Bullish engulfing: A small bearish candle is followed by a large bullish candle whose body completely engulfs the body of the previous candle. The pattern shows that sellers had control at the open but buyers overwhelmed them and pushed price significantly higher. Bullish engulfing is one of the most reliable reversal patterns, especially at support levels or after a prolonged downtrend.

Bearish engulfing: The opposite pattern. A small bullish candle is followed by a large bearish candle whose body engulfs the previous candle's body. It shows that buyers pushed price higher initially, but sellers stepped in with force and drove price below the previous open. Bearish engulfing is most reliable at resistance levels or after a long uptrend.

Harami: A large candle is followed by a small candle whose body sits entirely within the range of the previous body. The harami signals that momentum is weakening. In an uptrend, a bearish harami suggests the trend may be losing steam. In a downtrend, a bullish harami suggests selling pressure is easing. The harami is a weaker signal than the engulfing pattern but useful as an early warning. Learn how candlestick patterns fit into a broader trading strategy →

Three-Candle Patterns

Morning star: A three-candle bullish reversal pattern. The first candle is a long bearish candle (strong selling). The second candle is a small-bodied candle — a doji or spinning top — showing indecision. The third candle is a long bullish candle that closes at least halfway up the body of the first candle. The morning star signals that selling momentum has exhausted and buyers have taken control. It is one of the most powerful bullish reversal patterns and works best after a sustained downtrend.

Evening star: The bearish equivalent. The first candle is a long bullish candle (strong buying). The second candle is small-bodied (indecision). The third candle is a long bearish candle that closes at least halfway down the first candle's body. The evening star marks the end of an uptrend and the beginning of a downtrend. It is a highly reliable bearish reversal signal.

Three white soldiers: Three consecutive long bullish candles, each closing higher than the previous and near its high. The pattern shows sustained buying pressure with no significant pullback. Three white soldiers signals strong trend continuation and suggests that the uptrend has momentum behind it. Traders look for this pattern to confirm that a new uptrend is underway.

Three black crows: Three consecutive long bearish candles, each closing lower than the previous and near its low. The pattern shows sustained selling pressure and signals strong trend continuation to the downside. Three black crows after a prolonged uptrend suggests a major reversal is in progress. Combine candlestick patterns with support and resistance levels →

Continuation Patterns

Continuation patterns suggest that the existing trend will resume after a brief pause. The rising three methods pattern occurs in an uptrend: a long bullish candle is followed by three small bearish candles that trade within the range of the first candle (a pullback), then a second long bullish candle closes above the first candle's high. This pattern shows that the pullback was just profit-taking and buyers have returned. The falling three methods is the same pattern in reverse for downtrends. These patterns are less flashy than reversals but equally useful for staying in profitable trades.

Real Example: Morning Star on EUR/USD Daily

EUR/USD daily chart shows a long bearish candle followed by a doji, followed by a long bullish candle that closes above the bearish candle's midpoint — a morning star pattern. This marks the end of a 300-pip downtrend. Price rallies 400 pips over the next 3 weeks. The morning star at the bottom of a downtrend is one of the most reliable signals in technical analysis. To trade it, enter long above the high of the third candle with a stop below the low of the morning star pattern. Target the next resistance level above. Use moving averages to confirm candlestick pattern signals →

What is the most reliable candlestick pattern?

The bullish and bearish engulfing patterns are among the most reliable because they show a clear, decisive shift in momentum from one session to the next. The morning star and evening star patterns are also highly reliable due to their three-candle confirmation structure. No pattern works 100% of the time, but engulfing patterns at key support or resistance levels have a high success rate. The key is context — a bullish engulfing at a major support level is far more reliable than one in the middle of a range. Always consider where the pattern appears relative to the overall trend and key levels. Confirm candlestick reversals with RSI →

Do candlestick patterns work in crypto?

Yes, candlestick patterns work equally well in crypto, stocks, forex, and commodities. The patterns reflect universal market psychology — fear, greed, indecision, and conviction — which is the same regardless of the instrument being traded. In fact, candlestick patterns may be even more useful in crypto because the market is driven heavily by retail sentiment and technical analysis. Patterns like the hammer and engulfing frequently mark major bottoms and tops in Bitcoin and Ethereum. The same rules apply: look for patterns at key support/resistance levels and confirm with volume or an oscillator like RSI. See candlestick patterns in crypto trading strategies →

How many candles do I need to confirm a pattern?

Single-candle patterns (doji, hammer, shooting star) should be confirmed by the next candle. For example, a hammer after a downtrend is confirmed if the next candle closes higher. Two-candle patterns (engulfing, harami) are complete after the second candle closes. Three-candle patterns (morning star, evening star) require all three candles to close. For stronger confirmation, look for the pattern to form at a key support or resistance level, and check that volume confirms the move. A pattern without volume confirmation or at a meaningless level is far less reliable.

Should I trade candlestick patterns alone or with indicators?

Candlestick patterns are most effective when combined with other forms of analysis. Trading patterns alone can lead to many false signals because any single candle pattern can occur randomly in the noise of the market. The best approach is to use candlestick patterns as your entry trigger within a broader framework that includes trend analysis (moving averages), support/resistance levels, and momentum confirmation (RSI or MACD). For example, in an uptrend, wait for a pullback to the 50 EMA, then look for a hammer or bullish engulfing pattern as your entry trigger. The combination of context (trend and level) plus trigger (candlestick pattern) produces the highest-probability trades. Find the best indicators to pair with candlestick patterns →

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