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Understand Top 15 Candlestick Patterns for Day Trading

Candlestick Patterns for Day Trading

BEST CANDLESTICK PATTERNS FOR DAY-TRADING

When you will start to learn forex trading techniques and analysis, you will find out about candlestick patterns. I am assuming you all know about Candles. If not read our post “What is Bears, Bulls & Candles? Forex Fundamentals.” So, let’s start with the Candlestick Patterns.

You will find several candlestick patterns when you research online. We have collected them all for you on one page.

  1. Doji Pattern
  2. Hammer Pattern
  3. Inverted Hammer Pattern
  4. Marubozu Pattern
  5. Shooting Star
  6. Engulfing Pattern
  7. Harami Pattern
  8. Piercing Pattern
  9. Dark Cloud Cover Pattern
  10. Rising Three Method
  11. Evening Star
  12. Three Inside Up Pattern
  13. Three Inside Down
  14. Three Black Crows
  15. Three White Soldiers

Doji

A Doji is formed when the opening price and the closing price are equal.

Doji-Candlestick Patterns

Hammer Pattern

The Hammer candlestick formation is viewed as a bullish reversal candlestick pattern that mainly occurs at the bottom of downtrends.

Hammer-Candlestick Patterns

Inverted Hammer Pattern

The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential reversal upward.

It is important to note that the Inverted pattern is a warning of potential price change, not a signal, in and of itself, to buy.

Inverted Hammer Pattern

Marubozu Pattern

The word Marubozu means “bald head” or “shaved head” in Japanese, and this is reflected in the candlestick’s lack of wicks.

The single candle involved in the signal should have a long real body. There must not be an upper or a lower wick.

Marubozu Pattern

Shooting Star

A shooting star is a bearish candle with a long upper shadow, little or no lower shadow and a small real body near the day’s low.

It comes after an uptrend. Said differently, a shooting star is a type of candlestick formation that results when a security’s price, at some point during the day, advances well above the opening price but closes lower than the opening price.

Shooting Star Pattern

Engulfing Pattern

A bullish engulfing candlestick formation represents that bulls are in full control of bears.

As the pattern below shows, the white body (bulls) covers completely the red-bodied candle (bears).
And Bearish Engulfing Pattern is just the opposite

Engulfing Pattern

Harami Pattern

The Harami (meaning “pregnant” in Japanese) Candlestick Pattern is considered a reversal pattern. The pattern consists of two Candlesticks.

=> Larger Bullish or Bearish Candle (Day 1)

=> Smaller Bullish or Bearish Candle (Day 2)

Harami Pattern

Piercing Pattern

The Piercing Pattern is viewed as a bullish candlestick reversal pattern, similar to the Bullish Engulfing Pattern (see: Bullish Engulfing Pattern). There are two components of a Piercing Pattern formation:

-Bearish Candle (Day 1)
-Bullish Candle(Day 2)

Piercing Pattern

Dark Cloud Cover Pattern

A Dark Cloud Cover Pattern occurs when a bearish candle on Day 2 closes below the middle of Day 1’s candle.

Rising Three Method

The Rising Three Methods is a bullish candlestick pattern that is used to predict the continuation
of the current uptrend. This pattern forms when the candlesticks meet the following characteristics:

  • The first bar of the pattern is a long white (or green) candlestick within a defined uptrend.
  • A series of three consecutive descending small-bodied black (or red) candlesticks that trade above the low of the first candlestick.
  • A long white candlestick creates a new high, which suggests the bulls are back in control of the market’s direction.
Rising Three Method

Evening Star

The Evening Star Pattern is viewed as a bearish reversal pattern, that usually occurs at the top of an uptrend. The pattern consists of three candlesticks:

>> Large Bullish Candle (Day 1)
>> Small Bullish or Bearish Candle (Day 2)
>> Large Bearish Candle (Day 3)

Evening Star Pattern

Morning Star

The Morning Star Pattern is viewed as a bullish reversal pattern, usually occurring at the bottom of a downtrend. The pattern consists of three candlesticks:

>> Large Bearish Candle (Day 1)
>> Small Bullish or Bearish Candle (Day 2)
>> Large Bullish Candle (Day 3)

Morning Star

Three Inside Up

The three inside up is a bullish reversal pattern with the following characteristics:

  • The market is in a downtrend.
  • The first candle is a black candle with a large real body.
  • The second candle is a white candle with a small real body that opens and closes within the real body of the first candle.
  • The third candle is a white candle that closes above the close of the second candle.
Bullish Three Inside

Three Inside Down

The three inside down is a bearish reversal pattern with the following characteristics:

  • The market is in a downtrend.
  • The first candle is a white candle with a large real body.
  • The second candle is a black candle with a small real body that opens and closes within the real body of the first candle.
  • The third candle is a black candle that closes below the close of the second candle.
Bearish Three Inside

Three Black Crows

Three black crows is a bearish candlestick pattern that is used to predict the reversal of the current uptrend. This pattern consists of three consecutive long-bodied candlesticks that have opened within the real body of the previous candle and closed lower than the previous candle.

Three Black Crows

The White Soldiers

Three white soldiers is a bullish candlestick pattern that predicts the reversal of a downtrend. The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle’s real body and a close that exceeds the previous candle’s high.

White Soldiers

We hope that we were able to give a basic idea about the Candlestick Patterns. For further information or assistance feel free to knock TFS Admin anytime.

Understanding Candle Stick
Candle Patterns

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