Japanese Candlestick Chart Patterns
Single Candlestick Patterns
Doji
Description: a tiny body with the opening and closing prices virtually equal and long tails in both directions.
Signal: indecision between buyers and sellers; at the top or bottom of a trend, it can signal a reversal.
Dragonfly Doji
Description: a tiny body with long lower tail, or a T-shape.
Signal: after a downtrend, it may signal a reversal upward; after an uptrend – a reversal downward.
Gravestone Doji
Description: a tiny body with a long upper tail, or a reversed T-shape.
Signal: after a downtrend, it may signal a reversal upward; after an uptrend – a reversal downward.
Bullish Spinning Top
Description: a small body with equal length long tails and the closing price higher than the open (i.e. green candle).
Signal: if occurs during a downtrend, it typically signals a reversal upward.
Bearish Spinning Top
Description: a small body with equal length long tails and the closing price lower than the open (i.e. red candle).
Signal: if occurs during an uptrend, it typically signals a reversal downward.
Bullish Marubozu
Description: a long body without tails and the closing price higher than the open (i.e. green candle).
Signal: strong movement in one direction that is likely to continue upward.
Bearish Marubozu
Description: a long body without tails and the closing price lower than the open (i.e. red candle).
Signal: strong movement in one direction that is likely to continue downward.
Hammer
Description: a small body with a short or no tail on top and a long tail on the bottom. Candle is found in a downtrend and can be green or red.
Signal: if occurs during a downtrend, it can signal a reversal upward.
Hanging Man
Description: same as Hammer, but follows an uptrend. Candle can be green or red.
Signal: if occurs during an uptrend, it can signal a reversal downward.
Inverted Hammer
Description: a small body with a long tail on top and a short or no tail on the bottom. Candle is found in a downtrend and can be green or red.
Signal: if occurs during a downtrend, it can signal a reversal upward.
Shooting Star
Description: same as Inverted Hammer, but follows an uptrend. Candle can be green or red.
Signal: if occurs during an uptrend, it can signal a reversal downward.
Double Candlestick Patterns
Tweezer Bottoms
Description: occurs following a decline; first candle is bearish (red) and second is bullish (green); both share the same low and a moderate bottom tail length.
Signal: indicates the shift in the trend direction, with a reversal upward.
Tweezer Tops
Description: occurs following a rise; first candle is bullish and second is bearish; both share the same high and a moderate top tail length.
Signal: indicates the shift in the trend direction, with a reversal downward.
Bullish Engulfing Candles
Description: a bearish candle (red) followed by a bullish candle (green) of a larger size, which completely overlaps (engulfs) the body of the previous candle.
Signal: if preceded by the bearish candlesticks, it may signal a reversal upward.
Bearish Engulfing Candles
Description: a bullish candle (green) followed by a bearish candle (red) of a larger size, which completely overlaps (engulfs) the body of the previous candle.
Signal: if preceded by the bullish candlesticks, it may signal a reversal downward.
Bullish Harami
Description: a large bearish (red) candle followed by a bullish (green) candle with a small body contained within the body of the previous candle.
Signal: if occurs during a downtrend, it can signal a reversal upward.
Bearish Harami
Description: a large bullish (green) candle followed by a bearish (red) candle with a small body contained within the body of the previous candle.
Signal: if occurs during an uptrend, it can signal a reversal downward.
Piercing Line
Description: a bearish candle, continuing a downtrend, followed by a bullish candle with the open lower and the close above the 50% of the first candle’s body.
Signal: indicates a potential short-term reversal upward, especially if confirmed by a bullish candle.
Dark Cloud Cover
Description: a bullish candle, continuing an uptrend, followed by a bearish candle with the open higher and the close below the 50% of the first candle’s body.
Signal: indicates a downward reversal, especially if confirmed by a bearish candle.
Bullish Kicker
Description: a bearish candle, continuing a downtrend, followed by a bullish candle with the open at the level or higher than the previous candle’s open.
Signal: indicates a reversal upward; stronger with a bigger open price gap beween the candles.
Bearish Kicker
Description: a bullish candle, continuing an uptrend, followed by a bearish candle with the open at the level or lower than the previous candle’s open.
Signal: indicates a reversal downward, stronger with a bigger open price gap beween the candles.
Triple Candlestick Patterns
Morning Star
Description: a bearish long-bodied candle, followed by a doji (green or red), followed by a bullish candle with the close above the 50% of the first candle’s body.
Signal: signals a reversal upward; stronger with gaps down between candles 1 and 2 and up between 2 and 3.
Evening Star
Description: a bullish long-bodied candle, followed by a doji (green or red), followed by a bearish candle with the close below at least 50% of the first candle’s body.
Signal: a reversal downward; stronger with gaps up between candles 1 and 2 and down between 2 and 3.
Bullish Abandoned Baby
Description: same as Morning Star but the Doji in the middle gaps below the tails of the first and the third candles.
Signal: occurs rarely; if happens in a downtrend, it indicates an upward reversal.
Bearish Abandoned Baby
Description: same as Evening Star but the Doji in the middle gaps above the tails of the first and the third candles.
Signal: occurs rarely; if happens in an uptrend, it indicates a downward reversal.
Three White Soldiers
Description: three consecutive long-bodied bullish candles; each candle opens higher than the previous open and closes higher than the previous close.
Signal: if occurs after a downtrend, indicates a strong reversal upward.
Three Black Crows
Description: three consecutive long-bodied bearish candles; each candle opens lower than the previous open and closes lower than the previous close.
Signal: if occurs after an uptrend, indicates a strong reversal downward.
Three Inside Up
Description: a long red candle, followed by a smaller engulfed bullish candle reaching at least the midpoint of the first one, followed by another bullish candle, closing above the first candle’s high.
Signal: indicates that a downtrend may be over and signals a reversal upward.
Three Inside Down
Description: a long green candle, followed by a smaller engulfed red candle reaching at least below the midpoint of the first one, followed by another bearish candle, closing below the first candle’s low.
Signal: indicates that an uptrend may be over and signals a reversal downward.
Things to remember:
Do not trade by candlestick patterns alone! Notice chart formations, market indicators, and news.
Some patterns are less reliable than others - look for confirming candles and strong volume.
Do not try to force a pattern. Beware that you can become misled by “hunting” for it.
Every pattern is a probability. Patterns should not be applied as rules that always work.
The timing of your conclusions should correspond with the timeframe of your analysis.
Watch your emotions and always remember about risk management.
