Top 16 Candlestick Patterns List: Criteria & Trading Tips
That is why you’ll have to wait for the price to close before analysing whether it’s a bullish or bearish candle. A candle’s open and close price will either be at the top or bottom of the candle. In bullish candlesticks, the open price is at the bottom, and the close is at the top, and in bearish candles, the open price is at the top and the close is at the bottom. You could also look at the wicks that form during the candle interval. TradingWolf’s analysis also supports it, citing nearly 68% success when appearing in strong uptrends. LiberatedStockTrader’s candlestick research shows Matching Low produces around 55–57% reversal accuracy. Quantified Strategies notes the signal works better near long-term support levels, pushing effectiveness closer to 60% with confirmation. In Japanese candlestick traditions, Matching Low was described as a “floor” being tested but not broken. Candlestick Charts Traders Gotta Peep This stock chart pattern suggests that selling pressure is weakening, and a bullish reversal is likely. This trading pattern reflects weak buying interest and signals that the prevailing downtrend is likely to continue. The dead cat bounce pattern is a bearish continuation pattern where a temporary recovery occurs after a steep decline, only for the price to resume its downward trend. This pattern signifies a trend reversal and highlights areas where traders can anticipate significant price movement. Arjun is a seasoned stock market content expert with over 7 years of experience in stock market, technical & fundamental analysis. The Mat Hold Bullish candlestick pattern is formed by five candles. It comes in both bearish and bullish variations, known respectively as the three inside up and three inside down. A tweezers pattern is a 2-candlestick formation that may signal a reversal. As mentioned above, there are a couple of factors to consider, such as the candle’s body, the wicks, and the colour. Confluence is King: Reversals at Support and Resistance The second candle also doesn’t overlap with the two candles next to it because the market will gap both on the open and the close. To better understand the market trend, you’ll have to look at the previous candlesticks and how those candles are moving. When assessing a candlestick pattern, you must first wait for the interval candle to close. Once the candlestick is closed, you can examine the candle’s high, low, open, and closing points combined with the colour. Candlestick patterns were later introduced to the Western world by Steve Nison, a leading authority on candlestick strategies. By integrating these patterns with other technical indicators like RSI and moving averages, traders can obtain more reliable signals and refine their trading strategies. And if you haven’t already, check out our Candlestick Patterns Guide to learn the best ways to trade candlestick patterns. Engulfing candlestick patterns show that the momentum fizzled out on candle one, demonstrated by a counter-trend move on candle two. Reading candlestick patterns is a useful skill all traders should consider. It might also be best to practise reading candlestick patterns on Trade Nations demo account first and find other factors that align with your trading style and goals. Traders use candlestick patterns to determine when to buy or sell and when to take profits or cut losses. No analysis or pattern works 100% of the time, but many traders are enthusiastic about using them. The buyers tried to push the price higher, and the sellers tried to push the price lower, resulting in a stalemate with the price closing close to where it opened. The breakdown below the support level formed by the lows between the peaks confirms the trend reversal, often accompanied by increased volume. His deep insights into market trends, strategic trading approaches, and risk management made him a respected figure in the cryptocurrency space. Western chartists further popularized it through technical analysis literature. Candlestick charts are one of the most popular components of technical analysis, enabling traders to interpret price information quickly and from just a few price bars. The bullish engulfing setup is a favorite among traders because it clearly shows buyers overpowering sellers. Still, no pattern guarantees results—context and follow-up confirmation matter most. Study live charts, review historical data, and test your strategies under real conditions. Dragonfly Doji 🐉 Eventually, the price breaks out from the pattern, often in the opposite direction of the last swing. The Broadening Wedge, also called the expanding triangle, forms when price action becomes increasingly volatile, creating diverging trendlines. It reflects market psychology, showing the progression of optimism and pessimism through repeated cycles. Traders use it to forecast market direction and potential reversal points. Three white soldiers Unlike a 16 candlestick patterns simple line chart, a candlestick chart provides much more information about price movement. Candlesticks form chronologically, one after the other, and can help you see the overall trend of how prices move. A bearish marubozu is a long red candle with no upper or lower shadows, meaning the price opened at the high and closed at the low. It shows strong selling pressure throughout the session and often signals the beginning or continuation of a downward trend. It became prominent in Western technical analysis in the 1990s as a highly reliable gap-based pattern. It forms when sellers run out of momentum, leaving a gap Doji, after which buyers decisively reclaim control. The dual gap structure makes it one of the strongest reversal signals. It forms when profit-taking or minor selling interrupts an uptrend, but bulls quickly reassert themselves with a decisive rally. The final candle demonstrates that the bullish trend remains intact. The Doji amplifies the significance of the reversal, showing that sellers have lost their grip completely before buyers take over. They are key to technical analysis and help traders quickly understand price trends. Bearish candlestick patterns are like the ultimate red alert for a plot twist from flexing to flopping. You’ll spot these chillin’ at the price peaks, and they’re your cue to peace out or play the short game. Stick around as
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