Candlestick patterns are one of the most powerful tools in a trader’s arsenal. They provide crucial insights into market sentiment, helping traders anticipate potential price movements. Whether you are a beginner or an experienced trader, understanding these patterns can enhance your trading strategy and decision-making.
In this comprehensive guide, we will cover 50 essential candlestick patterns that every trader must know in 2025. You’ll learn how these patterns work, their significance, and how to apply them in real-world trading. We will also discuss how to use them effectively in trading strategies, common pitfalls to avoid, and the best resources for mastering candlestick analysis.
Candlestick Patterns
Candlestick patterns are visual representations of price movements on a chart. They help traders analyze market trends, reversals, and continuation signals. A typical candlestick consists of:
- Open price: The price at which an asset starts a particular time period.
- Close price: The price at which an asset ends the time period.
- High price: The highest price reached during the period.
- Low price: The lowest price reached during the period.
Candlestick patterns are broadly classified into three categories:
- Bullish Patterns – Indicate potential upward price movement.
- Bearish Patterns – Suggest a possible decline in price.
- Continuation Patterns – Show ongoing trend momentum.
By analyzing these patterns, traders can predict market movements with a higher degree of accuracy.
How Candlestick Patterns Work
Each candlestick tells a story about the battle between buyers (bulls) and sellers (bears). The shape, size, and color of the candlestick provide critical information about market sentiment.
- Long bodies indicate strong buying or selling pressure.
- Short bodies signify indecision.
- Shadows (wicks) show price rejection at certain levels.
Candlestick patterns can indicate trend continuation, trend reversal, or market indecision. By understanding these formations, traders can make more informed entry and exit decisions.
Types of Candlestick Patterns
Single Candlestick Patterns (Trend Reversal & Continuation)
1. Doji – Indicates Market Indecision
A Doji forms when the opening and closing prices of an asset are nearly identical, creating a small or nonexistent body. This pattern reflects market indecision, as neither buyers nor sellers have gained control. Traders often look for confirmation in the next candlestick to determine potential reversals or trend continuation.
- Types of Doji Patterns: Standard Doji, Long-Legged Doji, Dragonfly Doji, and Gravestone Doji.
- How to Trade It: A Doji in an uptrend might indicate a potential reversal, especially if followed by a bearish candle.
2. Hammer – A Bullish Reversal Signal
A Hammer appears at the bottom of a downtrend, characterized by a small body at the upper end and a long lower shadow. This pattern suggests that sellers pushed the price lower during the session, but strong buying pressure drove it back up.
- How to Trade It: A Hammer needs confirmation—traders usually wait for a bullish candle after it to enter a long position.
3. Inverted Hammer – Suggests a Potential Uptrend Reversal
The Inverted Hammer is a bullish reversal pattern that forms after a downtrend. It features a small body at the lower end with a long upper wick, signaling that buyers attempted to push prices higher but faced resistance. However, its presence indicates potential buying interest.
- How to Trade It: Wait for confirmation with a strong bullish candle on the next session before entering a trade.
4. Spinning Top – Shows Market Hesitation
A Spinning Top has a small body with long upper and lower wicks, indicating indecision between buyers and sellers. The pattern suggests reduced momentum and potential consolidation before the next major move.
- How to Trade It: Look at the surrounding trend; if a spinning top appears after a strong trend, it may indicate exhaustion and a possible reversal.
5. Hanging Man – A Bearish Reversal Pattern
The Hanging Man resembles a Hammer but appears at the top of an uptrend. It has a small body and a long lower shadow, signaling that sellers have begun to push back against the bulls.
- How to Trade It: A Hanging Man pattern needs confirmation through a bearish candle in the next session before taking a short position.
6. Shooting Star – Indicates a Bearish Reversal
A Shooting Star forms at the top of an uptrend, featuring a small body and a long upper wick. It suggests that buyers attempted to drive prices higher, but strong selling pressure forced the close near the opening price.
- How to Trade It: A strong bearish confirmation candle following the Shooting Star increases the probability of a downtrend.
7. Marubozu (Bullish & Bearish) – Signals Strong Momentum in One Direction
A Marubozu candle has no shadows (or very minimal ones) and represents strong buying or selling pressure.
- Bullish Marubozu: Indicates buyers are in full control, leading to higher prices.
- Bearish Marubozu: Suggests aggressive selling with lower prices ahead.
- How to Trade It: A Marubozu in the direction of the trend reinforces momentum and can be a strong signal for entry.
8. Long-Legged Doji – Suggests Upcoming Volatility
A Long-Legged Doji has long wicks on both ends, indicating significant price movement in both directions before closing near the open price. This suggests market indecision and potential upcoming volatility.
- How to Trade It: A Long-Legged Doji at key resistance or support levels often precedes major breakouts.
9. Dragonfly Doji – A Bullish Reversal Pattern
A Dragonfly Doji forms when the opening, high, and closing prices are nearly identical, with a long lower wick. This pattern suggests that sellers initially pushed the price down, but buyers regained control, leading to a potential bullish reversal.
- How to Trade It: Look for confirmation with a bullish candle after the Dragonfly Doji before entering a long trade.
10. Gravestone Doji – A Bearish Reversal Pattern
A Gravestone Doji is the opposite of the Dragonfly Doji, forming when the open, low, and closing prices are nearly identical, with a long upper wick. This indicates that buyers attempted to push the price higher but faced strong selling pressure, often signaling a bearish reversal.
- How to Trade It: If the Gravestone Doji forms at a resistance level, traders often look for a bearish confirmation candle before shorting the asset.
Double Candlestick Patterns (Reversal & Confirmation)
1. Bullish Engulfing – A Strong Bullish Reversal Pattern
The Bullish Engulfing pattern consists of two candlesticks. The first is a small bearish candle, followed by a larger bullish candle that completely engulfs the previous one. This pattern appears at the bottom of a downtrend, signaling strong buying momentum.
- How to Trade It: A bullish engulfing pattern is more effective when accompanied by high volume. Traders often enter a long position after confirmation from the next bullish candle.
2. Bearish Engulfing – Indicates a Bearish Reversal
The Bearish Engulfing pattern is the opposite of the Bullish Engulfing. It consists of a small bullish candle followed by a larger bearish candle that engulfs the previous one. This pattern suggests a shift from bullish to bearish sentiment and often appears at the top of an uptrend.
- How to Trade It: A confirmation candle closing lower strengthens the signal for short positions.
3. Piercing Line – A Two-Candle Bullish Reversal Pattern
The Piercing Line pattern forms at the end of a downtrend and consists of two candles:
- A long bearish candle.
- A long bullish candle that opens lower but closes above the midpoint of the previous bearish candle.
This pattern indicates that buyers are stepping in, reversing bearish momentum.
- How to Trade It: Look for confirmation with another bullish candle and consider entering a long trade near support levels.
4. Dark Cloud Cover – A Bearish Counterpart of the Piercing Line
The Dark Cloud Cover pattern is the inverse of the Piercing Line, forming at the end of an uptrend. It consists of:
- A long bullish candle.
- A long bearish candle that opens higher but closes below the midpoint of the previous bullish candle.
This pattern signals weakening buying momentum and the potential start of a downtrend.
- How to Trade It: Wait for confirmation with another bearish candle before taking a short position.
5. Tweezer Bottom – Signals a Bullish Trend Reversal
The Tweezer Bottom pattern consists of two or more candlesticks with nearly identical lows, indicating strong support and a potential reversal from bearish to bullish.
- How to Trade It: If Tweezer Bottom appears at a key support level, it strengthens the bullish reversal signal. Look for additional confirmation before entering a long trade.
6. Tweezer Top – A Bearish Reversal Pattern
The Tweezer Top is the opposite of the Tweezer Bottom. It consists of two or more candlesticks with nearly identical highs, indicating strong resistance and a possible trend reversal to the downside.
- How to Trade It: If Tweezer Top forms near a resistance level, it increases the probability of a bearish reversal. Traders may enter a short position with a confirmation candle.
7. Harami (Bullish & Bearish) – Suggests Trend Reversals
The Harami pattern consists of two candles:
- Bullish Harami: A small bullish candle appears within the body of a previous long bearish candle, signaling a potential uptrend.
- Bearish Harami: A small bearish candle appears within the body of a previous long bullish candle, indicating a potential downtrend.
- How to Trade It: A Harami pattern requires confirmation from the next candle before taking action.
8. Inside Bar – Indicates Market Consolidation
An Inside Bar occurs when a smaller candle is entirely within the range of the previous larger candle. This pattern suggests consolidation and potential breakout in either direction.
- How to Trade It: Traders often wait for a breakout in either direction before entering a trade.
9. Outside Bar – A Sign of Potential Breakout
An Outside Bar is the opposite of an Inside Bar, where the second candle engulfs the range of the previous candle. This pattern suggests increased volatility and a potential trend continuation or reversal.
- How to Trade It: If an Outside Bar appears in the direction of the trend, it reinforces momentum and may signal a continuation.
10. Belt Hold (Bullish & Bearish) – Shows a Trend Reversal
The Belt Hold pattern consists of a single candlestick with no or minimal upper/lower wicks, suggesting a strong market shift.
- Bullish Belt Hold: A long bullish candle opens at its low and closes at its high, signaling strong buying momentum.
- Bearish Belt Hold: A long bearish candle opens at its high and closes at its low, indicating strong selling pressure.
- How to Trade It: This pattern is more reliable when found at significant support or resistance levels. Traders look for follow-up candles to confirm the direction.
Triple Candlestick Patterns (Stronger Trend Confirmations)
1. Morning Star – A Bullish Trend Reversal Pattern
The Morning Star is a three-candle pattern that appears at the bottom of a downtrend, signaling a potential reversal to the upside. It consists of:
- A long bearish candle.
- A small-bodied candle (can be bullish or bearish) that indicates market indecision.
- A long bullish candle that closes well above the midpoint of the first candle.
- How to Trade It: Traders look for confirmation from the third candle and may enter a long position after it closes above the midpoint of the first candle.
2. Evening Star – A Bearish Reversal Counterpart
The Evening Star is the opposite of the Morning Star and appears at the top of an uptrend, signaling a potential bearish reversal. It consists of:
- A long bullish candle.
- A small-bodied candle indicating hesitation.
- A long bearish candle that closes below the midpoint of the first candle.
- How to Trade It: A confirmation candle closing lower strengthens the signal for short positions.
3. Three White Soldiers – A Strong Bullish Trend Continuation
The Three White Soldiers pattern consists of three consecutive long bullish candles with small wicks, showing strong buying momentum. This pattern appears after a downtrend or consolidation phase.
- How to Trade It: Traders often enter a long position after the third candle confirms sustained bullish pressure.
4. Three Black Crows – Signals a Strong Downtrend
The Three Black Crows is the bearish counterpart of the Three White Soldiers, consisting of three consecutive long bearish candles with small wicks. This pattern suggests strong selling pressure and the potential start of a downtrend.
- How to Trade It: A confirmation candle closing lower supports short trade entries.
5. Three Inside Up – A Bullish Confirmation Pattern
The Three Inside Up is a three-candle pattern that suggests a bullish reversal at the end of a downtrend. It consists of:
- A large bearish candle.
- A smaller bullish candle that forms within the body of the first candle (like a bullish Harami).
- A third bullish candle that closes above the first candle’s open.
- How to Trade It: A breakout above the third candle’s high confirms a potential uptrend.
6. Three Inside Down – A Bearish Confirmation Pattern
The Three Inside Down is the bearish counterpart of the Three Inside Up and signals a bearish reversal. It consists of:
- A large bullish candle.
- A smaller bearish candle within the first candle’s body.
- A third bearish candle that closes below the first candle’s open.
- How to Trade It: Traders look for a confirmation candle to initiate short positions.
7. Three Outside Up – A Bullish Reversal Confirmation
The Three Outside Up pattern consists of three candles and signals a bullish reversal. It includes:
- A small bearish candle.
- A large bullish candle that engulfs the first one (Bullish Engulfing).
- A third bullish candle that confirms the trend change.
- How to Trade It: A confirmation candle with continued bullish momentum is needed before entering a trade.
8. Three Outside Down – A Bearish Reversal Confirmation
The Three Outside Down is the bearish counterpart of the Three Outside Up. It consists of:
- A small bullish candle.
- A large bearish candle that engulfs the first candle (Bearish Engulfing).
- A third bearish candle that confirms the trend reversal.
- How to Trade It: If the price continues downward, traders may enter a short position.
9. Three Line Strike (Bullish & Bearish) – Indicates Trend Continuation
The Three Line Strike pattern consists of three candles moving in one direction, followed by a strong candle in the opposite direction.
- Bullish Three Line Strike: Three consecutive bearish candles, followed by a large bullish candle that engulfs them.
- Bearish Three Line Strike: Three consecutive bullish candles, followed by a large bearish candle that engulfs them.
- How to Trade It: This pattern suggests trend continuation, but traders should confirm it with additional indicators.
10. Rising Three Methods – A Bullish Continuation Pattern
The Rising Three Methods pattern consists of five candles and signals a bullish trend continuation:
- A long bullish candle.
- Three small bearish candles staying within the range of the first candle.
- A strong bullish candle that breaks above the first candle’s high.
- How to Trade It: A breakout above the last candle suggests a continuation of the uptrend, providing an entry signal for long trades.
11. Falling Three Methods – A Bearish Continuation Pattern
The Falling Three Methods pattern is the bearish counterpart of the Rising Three Methods and signals trend continuation to the downside. It consists of:
- A long bearish candle.
- Three small bullish candles staying within the first candle’s range.
- A strong bearish candle that breaks below the first candle’s low.
- How to Trade It: A breakdown below the last candle suggests a continuation of the downtrend, signaling an entry for short trades.
Advanced & Rare Candlestick Patterns
1. Abandoned Baby (Bullish & Bearish) – A Strong Reversal Pattern
The Abandoned Baby is a rare but powerful reversal pattern that consists of three candles:
- Bullish Abandoned Baby:
- A long bearish candle.
- A small Doji candle with a gap below the first candle (no overlap).
- A strong bullish candle gapping up from the Doji.
- Indication: Signals a potential trend reversal from bearish to bullish.
- Bearish Abandoned Baby:
- A long bullish candle.
- A Doji candle with a gap above the first candle.
- A strong bearish candle gapping down from the Doji.
- Indication: Suggests a bearish reversal.
- How to Trade It: Traders enter trades after confirmation candles form above or below the Abandoned Baby pattern.
2. Kicker (Bullish & Bearish) – Signals a Sudden Price Shift
The Kicker pattern is one of the strongest reversal signals caused by a major shift in market sentiment.
- Bullish Kicker:
- A long bearish candle followed by a long bullish candle that gaps up and opens above the previous candle’s open.
- Indication: A sudden shift to bullish momentum.
- Bearish Kicker:
- A long bullish candle followed by a long bearish candle that gaps down below the previous candle’s open.
- Indication: A sharp shift to bearish sentiment.
- How to Trade It: Entry is taken after the second candle confirms the new trend direction.
3. Matching Low – A Double-Bottom Bullish Reversal Pattern
The Matching Low pattern consists of two bearish candles closing at the same price level, forming strong support.
- Indication: A potential bullish reversal as selling pressure weakens.
- How to Trade It: Traders wait for a breakout above the recent resistance before entering long positions.
4. Mat Hold (Bullish & Bearish) – Indicates Trend Continuation
The Mat Hold pattern is a five-candle continuation pattern:
- Bullish Mat Hold:
- A strong bullish candle.
- Three smaller bearish candles within the first candle’s range.
- A strong bullish candle that breaks above the first candle’s high.
- Indication: The uptrend is likely to continue.
- Bearish Mat Hold:
- Opposite of the bullish version, indicating a continuation of the downtrend.
- How to Trade It: Enter the trade after the breakout candle confirms trend continuation.
5. Separating Lines – Confirms the Prevailing Trend
The Separating Lines pattern is a two-candle pattern that confirms an ongoing trend:
- Bullish Separating Lines: A bearish candle is followed by a bullish candle that opens at the previous candle’s open price.
- Bearish Separating Lines: A bullish candle is followed by a bearish candle that opens at the previous candle’s open price.
- How to Trade It: Trade in the direction of the trend once the pattern forms.
6. Upside Gap Two Crows – A Bearish Reversal Pattern
This pattern occurs in an uptrend and consists of:
- A long bullish candle.
- A small bearish candle that gaps up.
- Another bearish candle that closes within the first candle’s body.
- Indication: Signals a potential bearish reversal.
7. On-Neck Pattern – Suggests Slight Continuation
The On-Neck Pattern consists of:
- A long bearish candle followed by a smaller bullish candle that closes near the first candle’s low.
- Indication: A minor bearish continuation pattern.
8. In-Neck Pattern – A Minor Continuation Pattern
Similar to the On-Neck pattern, but the second candle closes slightly higher than the first candle’s low.
- Indication: Bearish continuation is likely, but less reliable than the On-Neck pattern.
9. Thrusting Pattern – A Bearish Continuation Pattern
The Thrusting Pattern is a two-candle pattern:
- A long bearish candle followed by a bullish candle that closes within the previous candle’s body.
- Indication: Suggests a continuation of the bearish trend.
10. Stick Sandwich – Indicates Trend Reversal
The Stick Sandwich consists of three candles:
- A long bearish candle.
- A bullish candle closing higher.
- A third bearish candle closing at the same level as the first candle.
- Indication: Potential bullish reversal.
11. Ladder Bottom – A Bullish Reversal Signal
This five-candle pattern appears at the bottom of a downtrend:
- Three consecutive bearish candles.
- A small bullish candle.
- A long bullish candle that confirms the reversal.
- Indication: Trend reversal to the upside.
12. Tower Top – A Bearish Reversal Pattern
This pattern appears at the peak of an uptrend and consists of:
- A long bullish candle.
- Small-bodied candles forming a consolidation.
- A long bearish candle closing below the consolidation.
- Indication: Bearish trend reversal.
13. Unique Three River Bottom – A Rare Bullish Reversal
This pattern consists of three candles and is rare:
- A long bearish candle.
- A smaller bearish candle with a long lower wick.
- A small bullish candle closing near the second candle’s body.
- Indication: A potential bullish reversal.
14. Concealing Baby Swallow – Indicates Strong Selling Pressure
A four-candle bearish pattern:
- Two long bearish candles.
- A small bullish candle engulfed by the previous candle.
- Another long bearish candle confirming the downtrend.
- Indication: Signals strong bearish momentum.
15. Rising Window – A Bullish Gap Continuation Pattern
The Rising Window pattern occurs when:
- A bullish gap appears between two candles.
- The price continues moving upward.
- Indication: Signals strong buying momentum.
16. Falling Window – A Bearish Gap Continuation Pattern
The Falling Window is the bearish counterpart of the Rising Window:
- A gap appears between two bearish candles.
- The price continues downward.
- Indication: Confirms strong selling pressure.
17. Island Reversal – Signals a Strong Reversal
The Island Reversal is a gap-based pattern where:
- A cluster of candles is isolated between two price gaps.
- A bullish Island Reversal occurs after a downtrend.
- A bearish Island Reversal occurs after an uptrend.
- Indication: Strong reversal signal.
18. High Wave Candlestick – Shows Market Indecision
The High Wave Candlestick has a small body with long upper and lower wicks.
- Indication: Uncertainty in the market, potential reversal.
19. Gap Candlestick Pattern – Suggests a Potential Breakout
A Gap Candlestick Pattern forms when:
- There is a noticeable gap between two candles due to sudden demand or supply.
- Indication: Can signal a breakout or trend continuation, depending on confirmation.
How to Use Candlestick Patterns in Trading Strategies
- Combine Patterns with Indicators – Use RSI, Moving Averages, Bollinger Bands for confirmation.
- Look for Trend Confirmation – Don’t rely solely on candlestick patterns; check market trends.
- Set Stop-Loss and Take-Profit Levels – Protect your trades with risk management.
- Practice on Demo Accounts – Backtest strategies before using real money.
- Use Higher Timeframes for Reliability – Daily and weekly charts provide more reliable signals.
Common Mistakes Traders Make with Candlestick Patterns
- Ignoring Market Context – Always analyze the bigger picture.
- Misinterpreting Patterns Without Confirmation – Wait for confirmation signals.
- Overtrading Based on Single Patterns – Look for stronger setups.
- Neglecting Volume Analysis – Volume can validate candlestick patterns.
Conclusion
Mastering candlestick patterns can significantly improve your trading skills and market predictions. By combining these patterns with other technical indicators and proper risk management, you can increase your chances of making profitable trades.
Are you ready to enhance your trading strategy? Start by analyzing candlestick patterns in historical charts and apply them to your next trade! Happy trading! 🚀
