Candlestick Patterns

Candlestick patterns are formed by combinations of one or more candles and are used by traders to help identify potential market trends, reversals, and price action signals.
They are formed by plotting the open, high, low, and close prices of an asset over a specific period of time,

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A candlestick is a type of price chart used in technical analysis to visualize the movement of an asset's price over a specific period of time, such as minutes, hours, days, or weeks. It consists of rectangular blocks called "candlesticks," with lines extending from the top and bottom, resembling a candle with a wick.

Each candlestick represents the price action during the chosen time frame and typically includes four key pieces of information: the opening price, the closing price, the highest price (high), and the lowest price (low). These elements are depicted visually within the candlestick as follows:

Body: The rectangular part of the candlestick, known as the "body," represents the price range between the opening and closing prices during the selected time period. If the closing price is higher than the opening price, the body is usually filled or colored green, indicating bullish momentum. Conversely, if the closing price is lower than the opening price, the body is typically hollow or colored red, suggesting bearish momentum.
Wicks (or Shadows): The lines extending from the top and bottom of the body are called "wicks" or "shadows." The upper wick represents the highest price reached during the period, while the lower wick represents the lowest price. These wicks provide additional information about the price volatility and the trading range during the specified time frame.

Here are some common candlestick patterns:

Doji: a candlestick with a small body and a long shadow, indicating indecision in the market.
Gravestone doji: a bearish reversal pattern where the candlestick has a long upper shadow and no lower shadow, indicating that buyers pushed the price up but couldn't maintain it, and the sellers eventually took control.
Dragonfly doji: a bullish reversal pattern where the candlestick has a long lower shadow and no upper shadow, indicating that sellers pushed the price down but couldn't maintain it, and the buyers eventually took control.
Marubozu: a bullish or bearish candlestick pattern with no shadow or wick, indicating a strong buying or selling pressure throughout the entire trading session.
Rising and falling three methods: a bullish continuation pattern consisting of five candles - three small bullish candles in a row, followed by a long bullish candle, and another small bullish candle. A bearish continuation pattern is the opposite, with three small bearish candles in a row, followed by a long bearish candle, and another small bearish candle.
Morning doji star: a bullish reversal pattern consisting of three candles - a long bearish candle, followed by a doji candle, and finally a long bullish candle, indicating a potential bullish reversal.
Evening doji star: a bearish reversal pattern consisting of three candles - a long bullish candle, followed by a doji candle, and finally a long bearish candle, indicating a potential bearish reversal.
Three inside up and three inside down: a bullish reversal pattern where a small bearish candle is followed by a larger bullish candle that completely engulfs the previous candle, and then another small bullish candle. A bearish reversal pattern is the opposite, with a small bullish candle followed by a larger bearish candle that engulfs the previous candle, and then another small bearish candle.
Shooting star: a bearish reversal pattern that has a small real body at the lower end of its range and a long upper shadow, indicating that buyers drove prices up, but then sellers took over and pushed prices down.
Inverted hammer: a bullish reversal pattern that has a small real body at the upper end of its range and a long lower shadow, indicating that sellers pushed prices down, but then buyers took over and pushed prices up.
Engulfing pattern: a two-candle reversal pattern in which the second candlestick completely engulfs the real body of the previous candlestick. A bullish engulfing pattern is a long bullish candlestick followed by a long bearish candlestick, while a bearish engulfing pattern is a long bearish candlestick followed by a long bullish candlestick.
Doji star: a two-candle pattern consisting of a doji candlestick and a candlestick with a real body. A bullish doji star has a doji followed by a bullish candlestick, while a bearish doji star has a doji followed by a bearish candlestick.
Hanging man: a bearish reversal pattern that has a small real body at the upper end of its range and a long lower shadow, indicating that prices rose during the session but then sellers pushed prices back down.
Three white soldiers: a bullish reversal pattern consisting of three long bullish candlesticks with each candlestick closing higher than the previous one.
Three black crows: a bearish reversal pattern consisting of three long bearish candlesticks with each candlestick closing lower than the previous one.
Evening star: a bearish reversal pattern that occurs at the top of an uptrend, consisting of three candles - a long bullish candle, a small-bodied candle, and a long bearish candle, indicating that sellers are taking control of the market.
Morning star: a bullish reversal pattern that occurs at the bottom of a downtrend, consisting of three candles - a long bearish candle, a small-bodied candle, and a long bullish candle, indicating that buyers are taking control of the market.
Harami cross: a two-candle pattern consisting of a small-bodied candle and a doji, where the doji is completely inside the previous candle's real body. A bullish harami cross has a small bearish candle followed by a doji, while a bearish harami cross has a small bullish candle followed by a doji.
Meeting lines: a two-candle pattern consisting of a long-bodied candle and a candle with the same open as the previous day's close, indicating a potential reversal. A bullish meeting lines pattern occurs when the first candle is bearish and the second candle is bullish, while a bearish meeting lines pattern occurs when the first candle is bullish and the second candle is bearish.
Kicker pattern: a two-candle pattern that occurs when there is a sudden gap between two consecutive candlesticks, where the second candlestick moves in the opposite direction of the first candlestick. A bullish kicker pattern occurs when the first candlestick is bearish and the second candlestick is bullish, while a bearish kicker pattern occurs when the first candlestick is bullish and the second candlestick is bearish.
Thrusting line: a bearish continuation pattern that occurs when a long white candlestick is followed by a small black candlestick that opens above the previous candlestick's close but closes below the midpoint of the previous candlestick.
Homing pigeon: a two-candle pattern that occurs when a small-bodied candlestick is followed by a long bullish candlestick in a downtrend, indicating a potential bullish reversal.
Matching low: a bullish reversal pattern that occurs when two candlesticks have the same low, indicating that buyers have stepped in to support the price.
Tweezer top/bottom: a reversal pattern that occurs when two candlesticks have the same high or low, indicating that buyers or sellers are unable to push the price past a certain level.
Abandoned baby: a three-candle pattern that occurs at the end of a trend, where the first and third candlesticks are small-bodied and the second candlestick is a doji. In a bullish abandoned baby pattern, the first and third candlesticks are bearish, while the second candlestick is a doji, and in a bearish abandoned baby pattern, the first and third candlesticks are bullish, while the second candlestick is a doji.
Three inside up/down: a bullish reversal pattern consisting of a long bearish candle, a small-bodied candle that trades within the range of the previous candle, and a long bullish candle that closes above the previous candle's high in a three inside up pattern, or below the previous candle's low in a three inside down pattern.
Sanku (falling knife): a pattern that occurs when a stock experiences a sharp decline followed by a long candlestick with a small real body and a long upper shadow, indicating a potential reversal.
Rickshaw man: a doji with long upper and lower shadows, indicating indecision in the market.
Separating lines: a two-candle pattern consisting of two candlesticks with the same real body and opposite colors, indicating a potential reversal.
Side-by-side white lines/black lines: a two-candle pattern consisting of two long candlesticks with the same color, indicating that the trend is likely to continue.
Upside gap two crows: a bearish reversal pattern consisting of three candlesticks. The first two candlesticks are white and bullish, and the third candlestick is black and opens above the high of the second candlestick but closes below the close of the first candlestick.
Deliberation: a three-candle pattern that occurs at the end of a trend, where the first candlestick is long and in the direction of the trend, the second candlestick is a doji, and the third candlestick is a long candlestick that closes in the opposite direction of the trend.
Thrusting pattern: a bearish continuation pattern that occurs when a long white candlestick is followed by a small black candlestick that opens above the previous candlestick's close but closes below the previous candlestick's low.
Long-legged doji: a doji with long upper and lower shadows, indicating a market in which buyers and sellers are evenly matched.
Takuri line: a long shadow candlestick that occurs near a support level in a downtrend, indicating a potential bullish reversal.
Homing pigeon: a two-candlestick pattern where a long white candlestick is followed by a small black candlestick that opens and closes within the real body of the white candlestick, indicating a potential bullish reversal.

By analyzing candlestick patterns and formations, traders can gain insights into market sentiment, trend direction, and potential price reversals. Different candlestick patterns, such as doji, hammer, engulfing, and shooting star, convey distinct signals about the balance between buyers and sellers in the market. Candlestick charts are widely used by traders and analysts across various financial markets, including stocks, forex, commodities, and cryptocurrencies, to make informed trading decisions based on price action analysis.