Download the most profitable candlestick patterns pdf for free. You can also download a printable 35 powerful candlestick patterns cheat sheet!
Candlestick patterns are like guiding lamps to decode the trends of the market and generate a baseline for your next trade. Trading without candlestick patterns is like flying over the North Pole – just speculative trades without any technical analysis. In this article, we will learn about All Candlestick Patterns in detail, we will discuss them with real-time examples so that you have a practical understanding. Even if you are a complete novice, stay with us, and by the end of this article, you will have a directional starting point for your journey.
First of all, let us understand candlestick patterns, what are they, and how they are useful!
What are Candlestick Patterns?
A candlestick is basically a summary of price movements that help us to future price direction predictions. Candlesticks, whose history can be traced back to the 18th century, cover the complete movement of prices, their opening, high, closing & low (OHCL). Candlesticks catch all movements in a single stick thus making it far better than traditional bars or line representation.
If I explain this in simpler words I would say a candlestick represents the hustle between buyers and sellers. If the color of the stick is green then it means buyers have dominated, reversely if the color is red then it means sellers are dominating.
Historical Evolution of Candlestick Pattern
The history of Candlestick Patterns can be traced back to the 18th century. This concept was first used by a Japanese rice trader Muneshisa Homma and brought to the Western world by Steve Nison. Steve mentioned this concept in his book Japanese Candlestick Charting Techniques. However, in his other book, he mentioned that Homma had unlikely used these techniques.
Nevertheless, as per various texts available, Muneshisa when took over the family business used to keep a record of rice prices in the market along with various factors related to crops such as weather conditions. His method of keeping records helped him forecast the nature of the rice market.
This technique was also deployed at Dojima Rice Exchange, in which merchants used to grade and sell their yield at a set price in a harmonic way!
What is the significance of the Candlestick Patterns?
From my trading experience, I can definitely say one thing, there is no right or wrong way of making trades in the stock market. Yes, there are a few reliable ways that we, traders, used to rely on! Candlestick Patterns are one of the most popular among them! Otherwise stock market will be nothing more than a gamble if traders start trading without any informed decisions.
Thus here comes the significance of the Candlestickt Pattern. These patterns represent the most likely behavior of the market and help us to strategize our next move.
Only the right opportunities can bring you profits. Patience and Discipline are the foundation of those right opportunities!
–Spectre
With the right amount of practice, you will be able to decipher the general trend of the market and thus set your stop loss accordingly. That’s why I am going to give you real-time examples to understand the practical understanding of the chart patterns. Remember that, the key to making good trades is not that you are making trades every minute rather it is more of analysis and trade only when you are maximum sure.
How To Read Candlestick Patterns?
Take a look at the image below and then refer to the text;
A complete candlestick represents 4 things at once: Opening, High, Low & Closing (OHCL). The colored brick represents Opening and Closing and the lines above and below the brick, also known as wicks or tails, represent High and Low.
When the opening is lower than the closing, then it makes a bullish candlestick body (represented by a green color or white).
Similarly, if the opening is higher than the closing, then it makes a bearish candlestick body (represented by red color or black).
All 75 Candlestick Patterns PDF Downloading Link
All Candlestick Patterns – With Explanation
Now that you know the basics about candlestick patterns, their significance, and how to read them. Let us get into All Candlestick Patterns while explaining each of them one by one!
Overview
Download Printable 35 Powerful Candlesticks Patterns PDF Cheat Sheet
Candlestick patterns are generally divided into 4 categories:
- Continuation Candlestick Patterns
- Bullish Patterns
- Bearish Patterns
- Reversal Candlestick Patterns
- Bullish Patterns
- Bearish Patterns
Also, check out: Abandoned Baby Pattern and Its 3 key characteristics
All Candlestick Patterns Explained
Here we have explained all the patterns in detail with examples. If you want to jump to any specific chart pattern, please refer to the table of contents given above!
Indecision Candlestick Patterns
As the name suggests, these candlestick patterns do not suggest the likely behavior of the market. Thus these patterns help us to dodge such unforeseen circumstances where instead of placing a sure shot trade, we must hold and proceed with caution.
Let us discuss these patterns in detail!
Doji Candlestick Patterns
A doji candlestick forms with only one candle.
To spot a doji candle, look for a candle that doesn’t have a body at all or has a very small body like a tick-sized.
Another identification is that it will also have wigs/tails though not so big but of medium size.
In a continuous chart, a doji candle should look like this:
Spinning Top Candlestick Pattern
This pattern also forms with only a single candle.
To identify a spinning top candlestick pattern, look for a single candle with a very small body but larger than the Doji candlestick.
Like Doji, it will also have wigs on both ends. The main difference between a spinning top and a doji candlestick is that the former has a larger body as compared to the latter one.
Both these spinning tops and doji candlesticks shows that the market faces equal pressure from the buyers and sellers. It’s like a tug of war-between the bulls and bears. In a continuous chart spinning top candlestick pattern should look like this:
High Wave Candlestick Pattern
This pattern also forms with one candle.
Look for a single candle with a small body like a spinning top candlestick.
Now, the uniqueness of this pattern is that it will have very big wigs/tails on both ends.
There are very minute differences between these three indecisive candlestick patterns, so it is important to remember that you notice those small differences to guess them right.
In a continuous chart this pattern should look like this:
Bullish Reversal Candlestick Patterns
As its name suggests i.e. reversal! It means that Bulls/Buyers are gaining back control of the market thus giving a reversal swing to the market.
However, do keep in mind that, these patterns usually continue with their trend but sometimes they come in the form of short positions thus serving as warning signals.
Let us discuss the types of these patterns:
Hammer Candlestick
This pattern is formed by one single candle;
To locate this pattern, look for a candle that has a small body, with wicks on both sides.
But the wick on the bottom will be big in comparison with the wich present at the top.
Also note that, do not look for any specific color of the candle. It does not matter much!
Generally, the success rate of this candlestick pattern is about 60%.
This kind of pattern shows that
- it might end the downtrend and start an uptrend, or
- it will stop a pullback and resume an uptrend.
In a continuous chart this pattern should look like this:
Inverted Hammer
Inverted hammer pattern forms with only a single candle,
This pattern is an inverted version of the pattern that we discussed previously.
Here you will notice a small body with a wick on both ends. Here the top wick will be larger in comparison with the bottom wick
Generally, the success rate of this pattern is around 60-67%.
This kind of pattern shows that
- it might end the downtrend and start an uptrend, or
- it will stop a pullback and resume an uptrend.
In a regular chart, this pattern should look like this:
Bullish Engulfing
This kind of pattern forms with 2 candles (1 bearish + 1 bullish);
To identify this type of pattern, look for a bearish candle with a bullish candle next to it. Now the bullish candle must engulf the whole body of the bearish candle.
This type of pattern is generally used to find the bottoms.
Generally, the success rate of this pattern is around 60-64%. Such a pattern indicates the end of a downtrend and the start of an uptrend. In a continuous chart, this pattern should look like this:
Piercing
This pattern forms with 2 candles (1 bearish + 1 bullish);
To identify this pattern, look for a bearish candle immediately followed by a bullish candle.
The opening level of the bullish candle must be below the bearish candle and the closing of the bullish candle must be above half of the bearish candle.
Generally, the success rate of this candle is around 64%.
This kind of pattern shows that
- it might end the downtrend and start an uptrend, or
- it will stop a pullback and resume an uptrend.
In a regular chart, this trend should look like this:
Morning Star
This pattern forms with 3 candles (1 bearish + 2 bullish);
To locate this pattern, look for a bearish candle. Also, the third candle must be bullish. In between, there will be a small candle (the color of this candle doesn’t matter at all).
Now keep in mind that, the body of the middle candle shall not overlap with the body of the other two candles.
Generally, the success rate of this candle is around 75-80%.
This kind of pattern shows that
- it might end the downtrend and start an uptrend, or
- it will stop a pullback and resume an uptrend.
This pattern should look like this in a continuous chart:
Three White Soldiers
This pattern forms with 3 candles (3 bullish candles);
Look for 3 consecutive bullish candles. Bodies of these candles must be big and the wicks should be small or almost non-existent.
Generally, the success rate of this pattern is around 80-85%.
This kind of pattern shows that
- it might end the downtrend and start an uptrend, or
- it will stop a pullback and resume an uptrend.
In a continuous chart, this trend should look like this:
White Marubozu
This pattern forms with a single candlestick;
To identify this pattern, look for one single bullish candle. The body of the candle must be big with its wicks/tails small or no wick at all.
Generally, the success rate of this pattern is around 71%. This kind of pattern shows the sign of a reversal pattern towards the uptrend. In a continuous chart this pattern should look like this:
Three Inside-Up Candlestick Pattern
This pattern forms with 3 candles (1 bearish + 2 bullish);
To locate this type of trend, look for a bearish candle followed by a bullish candle.
The close of the second candle must be above 50% of 1st candle.
The third candle should close above the opening of the first candle.
Generally, the success rate of this pattern is around 65%. This pattern should look like this in the real chart:
Bullish Harami Candlestick Pattern
This pattern forms with 2 candlesticks (1 bearish + 1 bullish);
To identify such a pattern, look for a big red candle followed by a big green candle.
The body of the second candle must be small and bullish. Also. the body of the second candle must fit inside the body of the first candle.
Generally, the success rate of this pattern is around 50-55%. In a continuous chart, this trend should look like this:
Tweezer Bottom Candlestick Pattern
This type of pattern consists of 2 candles;
To identify this pattern, look for a red candle. The second candle must be bullish.
The lows of both the candle must be at almost the same level.
Generally, the success rate of this candle is around 55%. This trend might indicate a reversal towards an uptrend or the end of a pullback, resuming an uptrend. In a continuous chart, this pattern should look like this:
Three Outside Up
This type of pattern is formed by 3 candles (1 bearish + 2 bullish);
To locate this type of pattern, look for a bearish and small candle.
It should be followed by a bullish candle that engulfs the first candle completely.
The third candle, also bullish, closes above both the candles.
Generally, the success of the pattern is around 75%. This trend might indicate a reversal towards an uptrend or the end of a pullback, resuming an uptrend. In a continuous chart, this pattern should look like this:
Bullish Counterattack Line
This pattern forms with 2 candlesticks;
Look for a big red candle. After this, there will be a smaller green candle.
Now the closing level of both the candles must be at the same level.
Generally, the success rate of this candle is around 58%. Such type of trends are used to find the bottom line. This trend might indicate a reversal towards an uptrend or the end of a pullback, resuming an uptrend. In a continuous chart, this pattern should look like this:
Dragonfly Doji
This pattern is made up of a single candle;
Well, as we discussed dragonfly doji in the above section. This pattern is a type of that.
In this pattern, the doji candlestick will have a big wick at the bottom and it will have a very small or almost non-existent wick at the top.
Generally, the success rate of his pattern is around 51%. Such type of trends are used to find the bottom line. This trend might indicate a reversal towards an uptrend or the end of a pullback, resuming an uptrend. In a continuous chart, this pattern should look like this:
Bearish Reversal Candlestick Patterns
Bearish Reversal Candlestick patterns indicate that bears/sellers are in control of the market or bears are regaining control over the existing movement.
Let us discuss the types of bearish reversal candlestick patterns in detail;
Hanging Man
This pattern is formed by one single candlestick;
To locate this type of candlestick pattern, look for a candle with a small body having a long wick at the bottom and almost no wick or very small wick at the top.
Generally, this pattern has a success of 59%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Shooting Star
This type of pattern is also made up of a single candlestick;
To identify this type of pattern, look for a candle with a small body with a long wick on its top.
At the bottom, it will have a little wick or almost no wick at all.
Generally, this type of trend has success of around 60%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Bearish Engulfing
This type of trend is made up of two candlesticks (1 bullish + 1 bearish);
Look for a bullish candlestick, immediately next to it would be a bearish candlestick which would engulf the previous candle
Generally, this type of candlestick pattern has success of around 80-85%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Dark Cloud Cover
This type of pattern forms with 2 candlesticks;
To locate this type of pattern you should look for a bullish candle followed by a bearish candlestick.
Note that the opening level of the second candle must be above the closing level of the first candle.
Also, the closing of second candle must be above the opening of first candle.
Generally, the success rate of such a pattern is around 65%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Evening Star
This type of pattern is made up of 3 candlesticks;
To locate such a pattern look for a bullish candle. After this candle, there will be a short body candle. And at last, there will be a bearish candlestick.
Now note that the body of the middle candle shall not overlap with the first and third candle’s body.
Generally, the success rate of this candlestick is around 71%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Three Black Crows
This type of pattern is formed by 3 bearish candlesticks;
To locate such type of candlestick look for 3 consecutive bearish candlesticks. Bodies of all the 3 candlesticks should be big with no wick at all on all three candles.
Generally, the success rate of such type of candlestick is around 80%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Black Marubozu
This pattern is made up of a single candlestick pattern;
This one bearish candle must be a big candle with very small or almost no wick on its top and bottom end.
Generally, this type of candlestick has a success rate of around 54%. In a continuous chart this type of candlestick looks like this:
Three Inside Down
This type of pattern is made up of 3 candle sticks (1 bullish + 2 bearish);
To spot this type of pattern, look for a bullish candlestick followed by a bearish candlestick. The closing of the second candle should be below 50% of 1st candlestick.
The third candlestick will be of a bearish nature, and it will close below the opening of the first candlestick as indicated in the image.
Generally, this type of candlestick pattern has a success rate of around 69%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Bearish Harami
This type of candlestick pattern is made up of 2 candlesticks;
Look for a bullish candlestick followed by a bearish candlestick.
The body of 1st candlestick must be bullish with a large body, and the body of the second candle which would be bearish will be small in comparison with the first candle.
The bearish candle will completely fit inside the body of the first candle.
Generally, this type of candlestick pattern has a success rate of around 56%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Tweezer Top
This type of candlestick pattern is formed by 2 candlesticks;
To spot this type of candlestick pattern, look for a bullish candlestick followed by a bearish candlestick.
Both the candlesticks will have the same highs.
Generally, this type of pattern has a success rate of around 55%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Three Outside Down
This type of candlestick pattern is made up of 3 candlesticks (1 bullish + 2 bearish)
To locate this type of pattern, look for a small bullish candle followed by 2 bearish candlesticks.
The second candle which would be bearish should engulf 1st candlestick completely.
The third candle shall close below the opening of the second candle.
Generally, this type of candlestick has a success rate of around 70%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Bearish Counterattack Line
This type of candlestick is made up of 2 candlesticks;
Look for a big green candlestick followed by a smaller red candle.
Now note that the closing level of both the candles shall match the same level and also both the candles will have a gap in between them.
Generally, the success rate of such a candlestick pattern is around 67%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Gravestone Doji
This type of candlestick is made up of single candlestick;
As explained in the Doji candlestick; this will be a single candlestick with almost no body.
The difference here from other Doji Candlestick will be that it will have a long wick on its top part while at the bottom there will be a very small wick or no wick at all.
Generally, the success rate of such a candlestick pattern is around 51%. If you spot this pattern at the right location then it might tell you the end of the uptrend and the start of a downtrend or the end of a pullback thus resuming the downtrend. In a continuous chart, this trend should look like this:
Bullish Continuation Candlestick Patterns
Bullish continuation candlestick patterns simply mean that the existing uptrend is likely to continue. It also suggests that the buying momentum will continue and thus price will continue to rise. In layman’s language, buyers are in control of the market even after an upward trend!
Let us talk about such sticks now,
Rising Three Methods Candlestick Pattern
This pattern forms with 5 candles (2 bullish + 3 bearish).
Initially, you need to locate a big green candle, followed by three red candles. But here note that the red candle’s opening is lower than the closing of 1st green candle.
After these red candles, there will be a big green candle whose closing is above all the previous candles!
Generally, the success rate of this pattern is 75-80%. This is a sign that the bulls of the market are taking back control of the market. In a continuous chart, this trend should look like this:
Upside Tasuki Gap
This pattern usually forms with 3 candlesticks (2 bullish + 1 bearish);
To locate this pattern, first, observe a green candle followed by another green candle with some game between the closing of the first candle and the opening of the second green candle.
At last, there will be a red small candle that will fit inside that gap or whose closing will adjust in between the gap.
Generally, the success rate of this pattern lies around 55-57%. This pattern should be observed while there is an existing uptrend. In a continuous chart, this trend should look like this:
Rising Window
This trend forms with 2 candles (both bullish);
To observe this pattern, first locate a big green candle followed by another big green candle. However, if you notice there will be a gap between the closing of the first green candle and the opening of the second green candle.
This pattern is a lot similar to the previous trend that we talked about, the difference is that these two candles are not followed by a bearish candle!
Generally, the success rate of this pattern is around 75% but do note that while observing this trend you should keep in mind that this pattern shall be observed while there is a pause during an uptrend. In a continuous chart, this trend should look like this:
Mat Hold Bullish
This pattern forms with 5 candles (2 bullish + 3 bearish) and is a little similar to the Rising Three Method;
To trace this pattern, try to locate a big green candle followed by 3 bearish (red) candles with a gap between the closing of the first candle and the opening of the red candle. And lastly, there will be another big candle whose closing is above all these candles.
Please note that these red candles will not break the low of the first green candles and there will be a gap between the closing of the first green candle and the closing of 1st bearish candle.
Generally, the success rate of this pattern is around 77-80%. Traders can assume that the market is likely to go in an uptrend. In a continuous chart, this pattern should look like this:
On Neck Bullish
This pattern forms with 2 sticks (1 Bearish and 1 Bullish);
To identify this pattern, observe a red candle followed by a gap after which there will be a green candle whose closing will lie at the previous low.
Generally, the success rate of this pattern is around 60-65%. In a continuous chart, this pattern should look like this:
In Neck Bullish
This candlestick pattern forms with 2 candles (1 bullish + 1 bearish.)
To identify this pattern, first notice a red candle whose closing will align with the closing of the next green candle.
This type of pattern indicates that the market is still captured by the bulls/buyers.
Generally, the success rate of this pattern is around 60-65%. In a continuous chart, this pattern should look like this:
Bearish Continuation Candlestick Patterns
Till now we have learned about bullish continuation candlestick patterns showing that buyers are still in control even after an upward trend. Similarly, Bearish Continuation Candlestick Patterns mean that bears/sellers are in control after a downward trend!
As we discuss different patterns of this bearish continuation, you will notice that most of the patterns are pretty similar to bullish continuation with a difference in market uptrend & downtrend.
Falling Three Methods
This pattern is formed by 5 candles (2 bearish + 3 bullish);
To locate this pattern, look for a big red candle followed by 3 green candles. Do note here that these 3 green candles will not break the high of the first red candle.
Lastly, there will be another big red candle whose closing will break the lows of previous candles.
Generally, the success rate of this pattern is about 70-75%. This pattern clearly indicates that bears are still in control of the market even after an existing downtrend. In a continuous chart, this pattern should look like this;
Downside Tasuki Gap
This pattern forms with 3 candles (2 bearish + 1 bullish);
To identify this pattern, locate a big red candle. After the big red candle, there will be a gap, followed by another big red candle.
At last, there will be a green candle which would be closing between the gap between both red candles.
Generally, the success rate of this trend is about 50-55%. In a real chart, this pattern should look like this:
Falling Window
This pattern forms with 2 bearish candles;
To locate this candle look out for 2 consecutive big red candles. Between these two red candles, there will be a gap which means, the closing of the first red candle will be above the opening of the second red candle.
Generally, the success rate of this pattern is around 70-73%. This 2-candle bearish trend shows that the market will continue to remain in a downtrend. In a continuous chart, this trend should look like this:
Mat Hold Bearish
This pattern forms with 5 candles (2 bearish + 3 bullish);
To locate this pattern, look for a big red candle followed by a gap and 3 small candles.
Do note that the closing of 1st green candle will be below the closing of 1st big red candle. And the green candles will not break the high of the first red candle.
At last, there will be a red candle closing below all the other candles.
Generally, the success rate of this pattern is around 55-62%. This pattern is an example that after a short pause, bears are taking back control while there is already a downtrend. In a continuous chart, this pattern should look like this:
On Neck Bearish
This pattern forms with 2 candles (1 bullish + 1 bearish)
To observe this pattern, observe a green candle, followed by a gap after which there would be a red candle.
The closing of the red candle would be at the high of the previous candle.
Generally, the success rate of this candle is around 55%. In a continuous chart, this pattern look like this:
In Neck Bearish
This pattern forms with 2 candlesticks (1 bullish +1 bearish);
To identify this pattern, look for a big green candle, followed by a red one.
Here, the closing of the green candle will align with the level of closing of the red candle.
Generally, the success rate of this pattern lies around 55-60%. In a continuous chart this pattern should look like this:
Download our Most Powerful Candlestick Patterns PDF
Where & How To Practice Candlestick Patterns?
Now that you have learned the basics about candlestick patterns for example. It is very important to practice these patterns continuously to gain mastery. Simply download our most profitable candlestick patterns pdf for free and have it in front of your eyes while practicing.
Furthermore, you can also bookmark this page so that whenever you need an explanation regarding any specific pattern you can directly navigate to it and do a revision.
There are a few tips that you should keep in mind while practicing these patterns;
- Use reliable platforms such as sgx-nifty.org or trading view etc.
- Instead of starting with your real money firstly master your techniques via paper trading. There are several such platforms that allow users to do paper trading.
- Stay connected to a like-minded community where you can not only listen to others’ experiences but also able to share your own experiences/ queries.
- Use advanced tools regularly such as trendlines, support, and resistance levels to hone your skills.
- Review your journey by maintaining a journal. Remember that even Munehisa Homma discovered these candlestick patterns only by maintaining previous data.
- Use other indicators such as moving averages, RSI, and MACD to confirm your pattern signals.
- Share your analysis with the peer community and get neutral feedback.
Wrap Up
So this was our comprehensive list of the most profitable candlestick patterns along with the pdf to download. Remember that the stock market always contains risk. The patterns and cheat sheet that we have shared are merely guiding indicators not the exact indicators due to the volatile nature of the stock market.
If you have any queries related to these candlestick patterns pdf, do leave your question in the comment section below!
Comments
Post a Comment