1. All candlesticks pattern names
Here is a list of common candlestick patterns used in technical analysis:
Bullish Patterns:
1. Hammer
2. Inverted Hammer
3. Bullish Engulfing
4. Piercing Line
5. Morning Star
6. Three White Soldiers
7. Bullish Harami
8. Three Inside Up
9. Rising Three Methods
Bearish Patterns:
1. Hanging Man
2. Shooting Star
3. Bearish Engulfing
4. Dark Cloud Cover
5. Evening Star
6. Three Black Crows
7. Bearish Harami
8. Three Inside Down
9. Falling Three Methods
Continuation Patterns:
1. Doji
2. Spinning Top
3. Marubozu
4. Tweezer Tops and Bottoms
5. Three Line Strike
These patterns help traders make predictions based on price action and market sentiment.
Tere are some additional candlestick patterns that are also commonly used in technical analysis:
Bullish Patterns:
1. Dragonfly Doji
2. Morning Doji Star
3. Three Inside Up
4. Kicker Pattern (Bullish)
5. Tweezer Bottom
6. Rising Window (Gap Up)
7. Bullish Belt Hold
Bearish Patterns:
1. Gravestone Doji
2. Evening Doji Star
3. Kicker Pattern (Bearish)
4. Tweezer Top
5. Falling Window (Gap Down)
6. Bearish Belt Hold
Neutral and Continuation Patterns:
1. Long-Legged Doji
2. High-Wave Candlestick
3. Rickshaw Man
4. Mat Hold
5. Upside Gap Two Crows
6. Deliberation
7. On-Neck Pattern
8. In-Neck Pattern
9. Thrusting Pattern
These candlestick patterns, along with the ones mentioned previously, provide traders with a wide range of signals for both trend reversals and continuations.
Here’s an explanation of each candlestick pattern and how traders typically apply them:
Bullish Patterns
1. Hammer:
Description: A small body with a long lower wick. It forms after a downtrend, indicating a possible reversal.
Application: After a downtrend, if a hammer forms, it suggests the market rejected lower prices, indicating potential buying pressure.
2. Inverted Hammer:
Description: A small body with a long upper wick. It forms after a downtrend.
Application: Signals potential reversal when followed by a bullish confirmation candle (e.g., a strong green candle).
3. Bullish Engulfing:
Description: A larger green candle fully engulfs the previous smaller red candle.
Application: Appears after a downtrend and indicates strong buying pressure, signaling reversal.
4. Piercing Line:
Description: A red candle is followed by a green candle that closes more than halfway up the red candle's body.
Application: Indicates buying pressure, and a potential reversal after a downtrend.
5. Morning Star:
Description: Consists of three candles: a large red candle, a small indecisive candle (Doji or Spinning Top), and a large green candle.
Application: Appears after a downtrend and signals a strong bullish reversal.
6. Three White Soldiers:
Description: Three consecutive green candles with small wicks, each closing higher than the previous.
Application: Signals strong bullish momentum after a downtrend, indicating continued upward movement.
7. Bullish Harami:
Description: A small green candle forms within the previous red candle’s body.
Application: Indicates weakening selling pressure and potential reversal.
8. Three Inside Up:
Description: A Bullish Harami followed by a third green candle closing above the previous candle.
Application: Confirms the reversal signal after the bullish harami pattern.
9. Rising Three Methods:
Description: A long green candle followed by three small red candles that stay within the range of the first green candle, followed by another large green candle.
Application: Continuation pattern that shows a temporary pause in an uptrend before resuming upward momentum.
Bearish Patterns
1. Hanging Man:
Description: Similar to a hammer but forms after an uptrend, with a long lower wick.
Application: Indicates potential reversal after an uptrend if followed by a bearish confirmation candle.
2. Shooting Star:
Description: Small body with a long upper wick forming after an uptrend.
Application: Suggests rejection of higher prices and potential reversal to the downside.
3. Bearish Engulfing:
Description: A large red candle engulfs the previous smaller green candle.
Application: Appears after an uptrend, signaling strong selling pressure and potential reversal.
4. Dark Cloud Cover:
Description: A large green candle followed by a red candle that closes more than halfway into the green candle's body.
Application: Appears after an uptrend, signaling bearish reversal and a potential sell-off.
5. Evening Star:
Description: Three candles: a large green candle, a small indecisive candle, and a large red candle.
Application: Appears after an uptrend, signaling a bearish reversal.
6. Three Black Crows:
Description: Three consecutive red candles with little to no wicks, each closing lower than the previous.
Application: Signals strong bearish momentum, indicating continuation of the downtrend.
7. Bearish Harami:
Description: A small red candle forms within the previous green candle’s body.
Application: Indicates weakening buying pressure and potential reversal.
8. Three Inside Down:
Description: A Bearish Harami followed by a third red candle that closes below the previous two candles.
Application: Confirms a bearish reversal signal after the bearish harami.
9. Falling Three Methods:
Description: A large red candle followed by three small green candles within the range of the first red candle, followed by another large red candle.
Application: Continuation pattern showing a brief pause in a downtrend before continuing lower.
Neutral/Continuation Patterns
1. Doji:
Description: The open and close prices are very close or identical, forming a small or non-existent body with long wicks.
Application: Indicates indecision in the market. If seen after a strong trend, it can signal a potential reversal or pause in the trend.
2. Spinning Top:
Description: A small body with long wicks on both sides, indicating indecision.
Application: Can signal a pause in the trend or potential reversal, especially when followed by strong confirmation candles.
3. Marubozu:
Description: A full-body candle with no wicks, indicating strong momentum. Bullish Marubozu has no wicks and closes at the high; Bearish Marubozu has no wicks and closes at the low.
Application: Indicates strong continuation in the direction of the trend.
4. Tweezer Tops and Bottoms:
Description: Two candles with identical highs (for Tweezer Tops) or identical lows (for Tweezer Bottoms).
Application: Suggests a potential reversal after a strong trend.
5. Three Line Strike:
Description: A bullish or bearish pattern where three consecutive candles are followed by a fourth candle that reverses the entire previous move.
Application: Signals potential reversal after a strong move but often interpreted as a continuation pattern in some cases.
Other Patterns
1. Dragonfly Doji:
Description: A Doji with a long lower wick and no upper wick, forming after a downtrend.
Application: Suggests potential bullish reversal after a downtrend.
2. Gravestone Doji:
Description: A Doji with a long upper wick and no lower wick, forming after an uptrend.
Application: Suggests potential bearish reversal after an uptrend.
3. Morning Doji Star:
Description: Similar to the Morning Star but with a Doji in the middle.
Application: Stronger bullish reversal signal due to indecision in the middle Doji.
4. Evening Doji Star:
Description: Similar to the Evening Star but with a Doji in the middle.
Application: Stronger bearish reversal signal due to indecision in the middle Doji.
5. Kicker Pattern (Bullish/Bearish):
Description: A sudden shift in momentum with a gap and no overlap between the previous and new trend's candles.
Application: Signals a strong reversal or change in trend with high momentum.
6. Rickshaw Man:
Description: A variation of the Doji with long upper and lower wicks, indicating extreme indecision.
Application: Can signal a reversal or continuation depending on the context of the market.
7. Mat Hold:
Description: A large candle followed by several small candles, followed by another large candle in the same direction as the first.
Application: Continuation pattern that shows a brief pause before resuming the trend.
8. Upside Gap Two Crows:
Description: A bullish candle is followed by two small bearish candles that close the gap but stay within the range of the first candle.
Application: A bearish reversal pattern signaling a correction after a gap-up in an uptrend.
Application Tips:
Confirmation: Always wait for a confirmation candle to validate the signal.
Time Frame: Candlestick patterns work best when combined with other indicators like support/resistance, trend lines, or moving averages.
Market Context: Use these patterns in the context of the overall market trend for better accuracy.
How to understand market sentiment through these indicator
Understanding market sentiment through candlestick patterns involves interpreting the psychology of buyers (bulls) and sellers (bears) behind price movements. Each candlestick or pattern reflects a battle between these two forces, which reveals the sentiment prevailing at a given time.
Here’s how to gauge market sentiment using different candlestick patterns:
Bullish Sentiment Patterns
1. Hammer:
Interpretation: Buyers are stepping in after a downtrend, rejecting lower prices. The long lower wick shows that bears initially pushed the price down, but bulls recovered most of the losses, indicating growing buying pressure.
Sentiment: Bullish reversal.
2. Bullish Engulfing:
Interpretation: The bulls have completely overwhelmed the bears. The large green candle that engulfs the previous red candle shows strong buying interest, signaling a shift from bearish to bullish sentiment.
Sentiment: Strong bullish reversal.
3. Piercing Line:
Interpretation: A gap down suggests initial bearish sentiment, but the recovery of more than half the previous candle indicates a shift to bullish sentiment as buyers regain control.
Sentiment: Bullish reversal, buyers taking control.
4. Three White Soldiers:
Interpretation: The market is experiencing a consistent increase in buying pressure over three sessions, with each candle closing higher. This suggests strong and sustained bullish sentiment.
Sentiment: Bullish continuation, strong buying momentum.
5. Morning Star:
Interpretation: A strong sell-off followed by indecision (Doji or small candle) and then a large bullish candle signals that the sentiment has shifted from bearish to bullish. It reflects a gradual reversal in market sentiment.
Sentiment: Bullish reversal.
Bearish Sentiment Patterns
1. Shooting Star:
Interpretation: Sellers are rejecting higher prices after an uptrend, indicated by the long upper wick. Although buyers initially drove prices higher, they couldn't sustain the move, suggesting the start of bearish sentiment.
Sentiment: Bearish reversal.
2. Bearish Engulfing:
Interpretation: A large red candle completely engulfs the previous green candle, indicating that selling pressure is overwhelming buying pressure. This signals a shift from bullish to bearish sentiment.
Sentiment: Strong bearish reversal.
3. Dark Cloud Cover:
Interpretation: The market gaps up, showing initial bullish sentiment, but sellers come in force, pushing the price down into the previous candle's range. This indicates a change in sentiment from bullish to bearish.
Sentiment: Bearish reversal, sellers taking control.
4. Three Black Crows:
Interpretation: Three consecutive bearish candles show a sustained sell-off. Each candle closes lower than the last, suggesting strong and growing selling pressure.
Sentiment: Bearish continuation, strong selling momentum.
5. Evening Star:
Interpretation: After an uptrend, a large bullish candle is followed by indecision and then a strong bearish candle, signaling that buyers have lost control, and sellers are taking over.
Sentiment: Bearish reversal.
Neutral or Mixed Sentiment Patterns
1. Doji:
Interpretation: A Doji represents indecision, as neither buyers nor sellers are in control. The market is in balance, and it often signals a reversal or a pause in the trend.
Sentiment: Uncertain or neutral, depending on the context.
2. Spinning Top:
Interpretation: The small body and long wicks indicate a lack of clear direction, reflecting indecision between buyers and sellers.
Sentiment: Neutral or indecisive, potential reversal if confirmed by subsequent candles.
3. Marubozu:
Interpretation: A Marubozu (without wicks) indicates that one side completely dominated the other. A bullish Marubozu shows that buyers were in control throughout the session, while a bearish Marubozu shows complete selling dominance.
Sentiment: Strong continuation of the current trend, depending on the direction of the Marubozu.
4. Tweezer Tops and Bottoms:
Interpretation: The identical highs (Tweezer Tops) or identical lows (Tweezer Bottoms) suggest the market has tested and rejected a particular level. This reflects equal buying and selling pressure at key price levels, signaling a potential reversal.
Sentiment: Reversal at key levels, sentiment shift.
5. Three Line Strike:
Interpretation: Three consecutive candles in one direction followed by a reversal on the fourth candle can be seen as either a strong reversal or a continuation of the trend.
Sentiment: Can signal reversal or continuation depending on subsequent confirmation.
Understanding Sentiment with Volume and Context
1. Volume Confirmation:
A candlestick pattern accompanied by high volume indicates stronger market sentiment and confidence in the move.
For example, a Bullish Engulfing pattern with high volume signals that many buyers have entered the market, confirming bullish sentiment.
2. Market Context:
Support and Resistance: Candlestick patterns occurring near key support or resistance levels are stronger indicators of sentiment change. For instance, a Bearish Engulfing pattern at resistance signals a strong potential reversal.
Trend Strength: If a bullish pattern forms in a strong uptrend, it likely signals continuation, while in a weak trend, it might signal exhaustion.
Timeframe: Patterns on larger timeframes (e.g., daily or weekly) usually carry more weight than patterns on smaller timeframes.
3. Market Conditions:
Overbought/Oversold: Candlestick patterns combined with indicators like RSI or MACD can give further confirmation of sentiment. A reversal pattern in an overbought condition is a stronger signal that the sentiment is turning bearish.
Practical Application
Bullish Patterns: In a downtrend, look for bullish reversal patterns like the Hammer or Bullish Engulfing to signal the potential end of the selling pressure and the beginning of an upward move. A confirmed bullish pattern suggests it's time to consider buying or reducing short positions.
Bearish Patterns: In an uptrend, bearish patterns like the Shooting Star or Bearish Engulfing signal weakening buying pressure and potential reversal. Traders often use these patterns to exit long positions or consider shorting opportunities.
Continuation Patterns: In a strong trend, continuation patterns like Three White Soldiers or Rising Three Methods suggest that the trend will persist, and traders can look for opportunities to enter in the direction of the prevailing trend.
By interpreting these patterns within the broader context of the market, including volume, trend direction, and support/resistance levels, traders can gauge overall sentiment and make informed decisions about their positions.
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