most reliable candlestick patterns: Top12 Effective Candlestick Patterns

bearish engulfing pattern

The vertical lines before the Mat Hold pattern represent the range of the previous candles. The previous candles’ color, shape and size are not important. The 2nd candlestick must gap up and then close lower, and all the 3 candles in the middle must be bearish. The Mat Hold candlestick pattern looks almost identical to the Rising Three Methods candlestick pattern, with 2 exceptions. The 2 vertical lines before the Side-by-side pattern represent the range of the previous candles. At the 1st glance, the Side-by-side White Lines candlestick pattern looks like the Upside Tasuki Gap candlestick pattern.

Advanced Candlestick Patterns – Trading – Investopedia

Advanced Candlestick Patterns – Trading.

Posted: Mon, 21 Jun 2021 07:00:00 GMT [source]

Candlestick charts are easy to understand and provide ahead indications regarding the turning points of the market. Candlestick charts not only illustrate the market trends but also give you an idea about the underneath forces that encourage the trend. Great knowledge piece to understand candle stick patterns. At the formation of this candle, the buyers should be caution and close their buying position. Suddenly the buyers came into the market and pushed the prices up but were unsuccessful in doing so as the prices closed below the opening price. At the formation of this candle, the sellers should be caution and close their shorting position.

If you aren’t fast enough to enter on the close of the Hanging Man and risk to the highs, it does offer a right shoulder for entry later. Momentum is being lost as gravity, supply in this case, strangles this rocket off the morning lows. Strong hands take advantage of morning break-out buyers, who are left holding the bags as the stock fades the rest of the day.

The second candle should be completely out of the real bodies of first and third candle. Upgrade your inbox and get our DailyCoin editors’ picks 1x a week delivered straight to your inbox. Discover the range of markets and learn how they work – with IG Academy’s online course. The bulls continued being in the driver’s seat, causing prices to surge by $6.90 (31.3%) in 2.5 weeks. A spinning top is very similar in appearance to a Doji but has a smaller body.

The Rickshaw Man candlestick pattern is very similar to the Long-Legged Doji pattern. A Long-Legged Doji pattern is the one that has a closing and opening price happening at or in the middle of the shadows. The high and low prices are far apart and make very long… Most times, traders take a ‘ready, fire, aim’ process to trade which is a backward way of trading.

Candlestick PatternNameDescriptionBearish Exhaustion/Shooting StarA candlestick that has a long wick above it with a tiny body underneath. What marks it out as a bearish candlestick pattern is a small body underneath a long wick.Bearish EngulfingMade up of two candlesticks – a bullish followed by a bearish one. The second one is a little candle without a body and very little wicks. The third one is a bearish candle that suggests a turnaround in the market bias. The bearish candlestick doesn’t always have to be as big as the first bullish candle.Three Black CrowsMade up of three bearish candlesticks with little or no wicks. This often suggests a bearish continuation.Three Inside Down HaramiMade up of three candlesticks, a bullish followed by two bearish ones.

What is a Marubozu candlestick pattern and how to trade it?

In this article, we will cover in-depth the Three Line Strike candlestick pattern…. Trading price action usually brings about surprise and excitement at the same time. Price is commonly used as a base for any technical analysis, and the hikkake trading strategy takes in consideration three price action bars to identify the pattern. It consists of consecutive long green candles with small wicks, which open and close progressively higher than the previous day.

  • The 2 vertical lines before the Upside Tasuki Gap pattern represent the range of the previous candles.
  • Which ends up at the high score of the 1st candle in the sequence.
  • The abandoned baby pattern is a 3-bar reversal pattern.The bullish abandoned baby follows a downtrend.
  • Armed with all the bullish reversal patterns and bullish continuation patterns, you can be confident in applying them when you are bullish.
  • A hammer candlestick indicates that even though there were selling pressures during the day, at a point in time, an intense buying pressure reverses the price.

Because of this, don’t use the candlestick patterns in isolation, especially if you are not an expert in trading with them. Some are more reliable to make trading strategies than others. Its reliability depends on various factors like the trading market, the timings, and the suitable positions of your trade. Fourthly, the bullish candlestick should close more than the midpoint of the previous bearish candlestick. FUBO provides a fantastic opportunity to see this bearish candlestick pattern in action right at the opening of the market.

Shooting Star

After the selloff, buyers come in and overcome the prior selling pressure from the pre-market, engulfing the bears before moving higher. A candlestick is a type of price chart that displays the high, low, open, and closing prices of a security for a specific period and originated from Japan. Both patterns suggest indecision in the market, as the buyers and sellers have effectively fought to a standstill. But these patterns are highly important as an alert that the indecision will eventually evaporate and a new price direction will be forthcoming. We’ll learn how to interpret these candlestick chart patterns and apply them to our daily trading.


There are some candlesticks you need to know to make a profit. By following them you will get the basic price-action structure of the 12 most effective patterns as listed below. When we’re talking about engineering works, technical drawing is its backbone. But for crypto, candlesticks are one of the principal instruments used to minimize trading loss. We research technical analysis patterns so you know exactly what works well for your favorite markets. It indicates the reversal of an uptrend, and is particularly strong when the third candlestick erases the gains of the first candle.

Stochastic Oscillator: What Is It & How To Trade With It?

There is usually a significant gap down between the first candlestick’s closing price, and the green candlestick’s opening. It indicates a strong buying pressure, as the price is pushed up to or above the mid-price of the previous day. You can learn more about candlesticks and technical analysis with IG Academy’s online courses. This is true not only for candlestick patterns but also for technical analysis. So, in summary, we have 4 candlestick patterns with the highest accuracy. They are in turn Engulfing, Harami, Morning Star , and the Pin Bar candlestick.

Candlestick Patterns – Barchart

Candlestick Patterns.

Posted: Wed, 27 Jul 2022 18:35:13 GMT [source]

In the GBDUSD chart above, the market is trending down and formed a little consolidation. A bearish harami then appeared at the end of a short pullback Then The market dropped afterward. A candlestick is a representation of price movements in a trading session, which can be anything from one minute to one month.

Inverse Hammer Candlestick Pattern

This pattern consists of three long bullish candlesticks which are green in colour and do not have long shadows. A bullish candlestick should be formed after the Hammer which confirms that the bullish reversal has taken place. Trading in the direction of the trend is not always a given as key levels of support/resistance can indicate a reversal. Classically, the entry points for traders is positioned above or below the high or low of the mother bar depending on the direction of the trade. This pattern works particular well at the high of the day as a trend reversal. But it can also be a trend continuation pattern if it appears at the top of a short-lived rally into prior resistance.


Gravestone Doji – Gravestone Doji is a bearish pattern that suggests a potential reversal followed by a downtrend in the price action. This gravestone Doji makes more meaningful if it happens after a significant uptrend. The evening star pattern is considered a very strong indicator of future price declines.

The following picture showsbullish engulfing patternonGBPNZDdaily chart. As you can see the market opened with gap down but closed above the previous day candle body. Therefore it triggered the sentiment of bullishness and market went towards north. These are the ten top-performing candlestick patterns based on current research. What’s important for you as a trader is that you try to analyze the sentiment behind each candle formation. Ask yourself, “What is going on in each trading session that makes this formation reliable according to, or against, its theoretical expectations?

San-Ku (Three Gaps) Pattern

The unique three river bottom candlestick pattern is a bullish reversal pattern.It occurs during a downtrend in the market. Statistics to prove if the Unique Three River pattern really works What is the unique three river… The matching low candlestick pattern is a 2-bar bullish reversal pattern.

The also makes your chart look more compact and easier to analyze. Thematically, the Tweezer Bottom alerts the chart reader to the fact that price is trying to be pushed lower, but to no avail. The two small-bodied candles represent the presence of demand in the market.

For example, on a daily most reliable candlestick patterns frame, it plays more reliably as a double tweezer bottom on an hourly basis. At the end of the sequence of black candles marking lower lows, the abandoned baby pattern comes near the low point of a downtrend. Now it will submit a limited range of Doji patterns that starts and ends at the matching price. The five most reliable candlestick charts work accurately. When the speed and price direction changes the ancestors.

It an interesting bearish trend reversal candlestick pattern. Some traders, use this pattern in their daily lives to learn about the feel of the market. The opposite is true for the bullish pattern, called the ‘rising three methods’ candlestick pattern. It comprises of three short reds sandwiched within the range of two long greens. The pattern shows traders that, despite some selling pressure, buyers are retaining control of the market.

The second candle, being a bullish candle engulfs the first candle and indicates that the bulls are taking over the market. The hanging man candlestick pattern is formed at the top of uptrends and mostly predicts the potential for a bearish trend. Don’t expect massive price movements after the candlestick patterns. Sometimes, a candlestick pattern is followed by a single candlestick in the direction the pattern suggests.

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