Candlestick Patterns: The Ultimate Cheat Sheet

Why Study Candlestick Patterns

If you’re serious about trading, learning candlestick patterns is a non-negotiable skill. These patterns are more than shapes on a chart—they reveal the ongoing battle between supply and demand, helping you anticipate price movements

When you’re scanning through countless charts, candlestick patterns give you an instant snapshot of who’s in control—buyers or sellers. Patterns like the hammer candlestick and the bullish engulfing pattern provide clear entry signals, while also helping you manage risk effectively.

They’re like a shortcut to smarter, more confident trading decisions.

This blog will act as a guide reference to help analyze key reversal patterns.

Bullish Reversal Patterns

Bullish reversal patterns form after a prolonged downtrend, signaling that buyers are starting to take control. These patterns indicate a shift in momentum from sellers to buyers, which creates demand and often leads to a price reversal.

Bullish reversal patterns signal that the downtrend is losing strength and a potential price increase is on the horizon. These patterns give traders an opportunity to enter long positions near the bottom of a trend, maximizing potential upside while minimizing risk.

Single Candlestick Patterns

Sometimes, a single candlestick can signal a market turnaround. After a series of bearish candles, these single-candle formations often indicate that buyers are stepping in.

• Hammer: A hammer forms when a stock opens, trades significantly lower, and then rallies to close near its opening price. It has a small body and a long lower shadow, signaling that buyers rejected the downtrend and pushed prices higher. The hammer shows strong buying pressure, signaling a potential reversal upward.
• Inverted Hammer: The inverted hammer looks like an upside-down version of the hammer, with a small body near the bottom and a long upper shadow forming after a downtrend which indicates that buyers are testing the waters. While the candle itself isn’t a full confirmation, it suggests that buyers are trying to gain control.
• Dragonfly Doji: The dragonfly doji has no upper shadow, with the open, high, and close prices at or near the same level. Its long lower shadow shows that sellers pushed the price down, but buyers brought it back up. Like the hammer, this signals strong buying interest and a possible reversal.
• Bullish Spinning Top: A spinning top has a small real body and long upper and lower shadows. It shows indecision, but when it forms at the end of a downtrend, it signals that selling pressure may be weakening – Momentum is shifting from bearish to bullish.

Double Candlestick Patterns

Double candlestick patterns are more powerful because they combine the action of two candles to confirm a reversal.

• Bullish Kicker: A bullish kicker begins with a bearish candle, followed by a bullish candle that opens above the previous day’s high and closes even higher. There’s no overlap between the two candles signaling a sudden shift in market sentiment, often signaling strong upward momentum.
• Bullish Engulfing: In this pattern, a small bearish candle is followed by a large bullish candle that completely engulfs the previous candle. a bullish engulfing pattern signals buyers are taking control, and a reversal is likely underway.
• Bullish Harami: A bullish harami starts with a large bearish candle, followed by a smaller bullish candle that fits entirely within the previous day’s range. A bullish harami signals selling pressure is fading, and buyers are starting to gain strength.
• Piercing Line: This pattern forms when a bearish candle is followed by a bullish candle that opens below the previous close but closes above the midpoint of the bearish candle. A piercing line shows a strong rejection of lower prices and a potential upward move.
• Tweezer Bottom: A tweezer bottom forms when back-to-back candles test the same low and usually have larger lower shadows. This signals sellers are losing control with a retest and reversal off the lows

Triple Candlestick Patterns

Triple candlestick patterns are some of the most reliable reversal signals, as they show sustained buyer strength over multiple sessions

• Morning Star: A morning star consists of three candles: a large bearish candle, a small indecisive candle (doji or spinning top), and a large bullish candle that closes near the top of its range. Morning stars display a clear shift from bearish to bullish sentiment, signaling a strong reversal.
• Bullish Abandoned Baby: This pattern features a bearish candle, followed by a doji that gaps down, and then a bullish candle that gaps up. Seeing price gap back higher signals buyers have taken over, and a strong upward move is likely to begin.
• Three White Soldiers: This pattern consists of three consecutive bullish candles, each closing near its high and opening within the previous candle’s range. Three white soldiers strongly signal buyers are in full control, and momentum is building.
• Three-Line Strike: In this pattern, three small bearish candles are followed by a large bullish candle that quickly retraces the previous decline. The stock confirms strong price action when one candle retraces many at the same time.
• Morning Doji Star: Similar to the morning star, but with the middle candle as a doji. A doji emphasizes indecision before buyers regain control.

Confirmation Patterns

Confirmation patterns are critical for verifying the reliability of candlestick signals. A single candlestick or pattern may hint at a reversal or continuation, but without confirmation from the next candle, the signal might not hold. Always wait for the next candlestick to “confirm” the action before acting on it.

The Three Inside Up pattern is a bullish reversal signal that occurs after a downtrend. It’s made up of three candles and indicates that sellers are losing strength while buyers are starting to take control.

• First candle (bearish): The first candle is a large bearish candlestick, representing strong selling pressure.
• Second candle (bullish): The second candle is a smaller bullish candle that forms within the body of the first candle. Its close must be higher than the midpoint of the first candle. This shows that buyers are starting to push back.
• Third candle (bullish): The third candle is a strong bullish candlestick that closes above the high of the first candle. This confirms the reversal and signals that buyers are now in control.

The Three Outside Up pattern is another bullish reversal signal that indicates a shift from a downtrend to an uptrend. This pattern also consists of three candles and confirms a strong change in market sentiment.

• First candle (bearish): The first candle is a bearish candlestick that continues the downtrend, showing sellers are still in control.
• Second candle (bullish engulfing): The second candle is a large bullish candlestick that completely engulfs the body of the first candle. This signals that buyers are stepping in aggressively.
• Third candle (bullish): The third candle is another bullish candlestick that closes even higher than the second candle, confirming the reversal.

Bearish Reversal Patterns

Bearish reversal patterns occur after an uptrend, signaling that sellers are starting to take control. These patterns indicate a shift in momentum from buyers to sellers, often leading to a price decline.

Bearish reversal patterns signal that the uptrend is losing strength, and a potential price decrease is on the horizon. These patterns help traders spot opportunities to exit long positions or even take short positions near the top of a trend.

Single Candlestick Patterns

Just like bullish candlestick patterns, a single bearish candlestick can often signal a key reversal day. After a series of up days, begin looking for any signs of weakness.

• Hanging Man: Similar to a hammer but forms after an uptrend. It has a small body and a long lower shadow. A hanging man shows selling pressure is increasing, and a reversal may be coming.
• Shooting Star: A bearish candle with a small body near the low and a long upper shadow. Although a shooting star looks like an inverted hammer it is at the end of an uptrend and displays sellers took control and drove it back down after buyers pushed the price higher.
• Gravestone Doji: A doji with a long upper shadow and no lower shadow signaling strong rejection of higher prices, signaling potential downside.
• Bearish Spinning Top: Similar to the bullish spinning top but forms after an uptrend. Momentum is shifting from bullish to bearish.

Double Candlestick Patterns

These patterns often indicate that sellers are stepping in to halt upward momentum, signaling a potential price drop. When a bearish pattern forms immediately after an uptrend, it suggests confirmation of the reversal.

• Bearish Kicker: A strong bullish candle continues the existing uptrend, showing strong buying pressure. A bearish candle opens at or below the previous candle’s open, creating a significant gap down, and closes even lower suggesting a sharp rejection of higher prices and a sudden shift in sentiment.
• Bearish Engulfing: A small bullish candle continues the uptrend, showing that buyers are still in control. A larger bearish candle completely engulfs the body of the first candle signaling that the uptrend is losing strength and a reversal to the downside is likely.
• Bearish Harami: A large bullish candle represents the continuation of the uptrend. A small bearish candle forms within the body of the first candle reflecting hesitation and showing that the uptrend is weakening.
• Dark Cloud Cover: A strong bullish candle continues the uptrend and closes near its high. A bearish candle opens above the high of the first candle (gapping up) but closes below the midpoint of the first candle signaling that buyers have lost control and sellers are dominating.
• Tweezer Top: A bullish candle continues the uptrend and closes near its high. A bearish candle forms with the same high as the first candle and closes lower confirming the rejection of higher prices and the potential for a reversal.

Triple Candlestick Patterns

Triple candlestick patterns are highly reliable bearish reversal signals because they show sustained selling pressure over three sessions

• Bearish Abandoned Baby: An exhaustive bullish candle continues the uptrend and then a gap up closes near the lows showing exhaustion. A bearish candle gaps down and closes lower signaling sellers have taken control.
• Three Black Crows: This pattern consists of three consecutive bearish candles, each closing near its lows and opening within the previous candle’s range. Three black crows strongly signal sellers are in full control, and momentum is building.
• Evening Doji Star: A doji shows indecision after a large bullish candle. A bearish candle then closes below the midpoint of the first candle confirming a the reversal
• Evening Star: After a strong bullish candle, a gap up is sold off signaling a potential for reversal. A gap odwn then closes below the midpoint of the first candle confirming a shift in momentum.

Confirmation Patterns

Confirmation patterns are essential to validating a candlestick signal. In bearish trading setups, these patterns confirm that sellers have taken control, signaling a potential price reversal or continuation to the downside. Instead of acting on the initial signal alone, waiting for confirmation from the next candlestick improves your chances of success and avoids false signals.

The Three Inside Down pattern is a bearish reversal signal that forms after an uptrend. It consists of three candles and indicates that buyers are losing strength while sellers are taking over.

• First candle (bullish): The first candle is a large bullish candlestick, representing strong buying pressure.
• Second candle (bearish): The second candle is a smaller bearish candlestick that forms within the body of the first candle. Its close should be below the midpoint of the first candle, signaling that sellers are gaining traction.
• Third candle (bearish): The third candle is a strong bearish candlestick that closes below the low of the first candle. This confirms the bearish reversal and indicates that sellers are now in control.

The Three Outside Down pattern is another bearish reversal signal, but it’s even stronger than the Three Inside Down because it involves a bearish engulfing candle. This pattern also forms after an uptrend and indicates a decisive shift from buyers to sellers.

• First candle (bullish): The first candle is a small bullish candlestick that reflects the ongoing uptrend.
• Second candle (bearish engulfing): The second candle is a large bearish candlestick that completely engulfs the body of the first candle, showing a sudden and significant shift in momentum to sellers.
• Third candle (bearish): The third candle is another bearish candlestick that closes lower than the second candle, confirming the reversal.

Candlestick Pattern Cheat Sheet PDF

Click the button below to download the candlestick pattern cheat sheet PDF! It’s a simple graphic with top candlestick patterns you can download.