Knowledge Corner · Quick Reference

Candlestick Patterns — Quick Reference Guide

Eighteen battle-tested candlestick patterns every Indian trader should recognise — organised by formation. Use this as a cheat-sheet you keep open beside the chart.

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Anatomy of a Candle

Bullish (close > open)

Bearish (close < open)

Real Body: The thickest part of the candle — the range between the open and close prices.
Upper Shadow: The thin wick above the real body, marking the highest price reached during the period.
Lower Shadow: The thin wick below the real body, marking the lowest price reached during the period.
Open (O): The price at which trading began for the period.
High (H): The highest price reached during the period.
Low (L): The lowest price reached during the period.
Close (C): The price at which trading ended for the period.

Candle Properties to Read

Colour: Green / white candles are bullish (close > open). Red / black candles are bearish (close < open).
Body size: Large body = strong commitment from bulls (green) or bears (red). Small body = reduced commitment, indecision.
Range: Distance from high to low. Wide range = high volatility. Narrow range = low volatility.
Shadows: Shadows above the body show rejection of higher prices (selling pressure). Shadows below show rejection of lower prices (buying pressure).

Section 1

Single-Candle Patterns

Five powerful patterns that show in a single candle — typically marking trend exhaustion or reversal.

Pattern 1

Doji

Indecisionreversal

Signal: Indecision in the market — open is equal (or very close) to close, resulting in no visible real body.
Setup: Inside a clear trend. Bullish reversal at a downtrend bottom; bearish reversal at an uptrend top.
Psychology: A 'tug-of-war' — price moved significantly during the session but returned to the opening level. Often precedes a trend change. Gravestone Doji is more bearish (at tops); Dragonfly Doji is more bullish (at bottoms).
Confirmation: For a bottom: next candle trades above the Doji. For a top: next candle trades below the Doji.

Pattern 2

Shooting Star

bearishreversal

Signal: After an uptrend, price gaps up but sellers slam it back down — long upper shadow, small body near the low.
Setup: In an uptrend, ideally with a gap up. Upper shadow ≥ 2× the real body.
Psychology: Bulls initially pushed higher, but bears overwhelmed them and drove price down. A red Shooting Star is more bearish (closed below open).
Confirmation: Price trades below the body of the Shooting Star.

Pattern 3

Hanging Man

bearishreversal

Signal: In an uptrend, bears push price down sharply intraday but bulls recover — long lower shadow, small body near the high.
Setup: Uptrend, ideally with a gap up. Lower shadow ≥ 2× the real body.
Psychology: Despite the uptrend, bears fought back and drove prices down. Bulls recovered, but momentum has cracked. Less bearish than a Shooting Star (bulls did close higher).
Confirmation: Price trades below the body of the Hanging Man.

Pattern 4

Hammer

bullishreversal

Signal: In a downtrend, price gaps down and falls, but buyers swarm in and lift it — long lower shadow, small body near the high.
Setup: Downtrend, ideally with a gap down. Lower shadow ≥ 2× the real body.
Psychology: Bears initially pushed lower, then bulls overwhelmed them. A green Hammer is more bullish (closed above open).
Confirmation: Price trades above the body of the Hammer.

Pattern 5

Inverted Hammer

bullishreversal

Signal: In a downtrend, bulls push price up sharply intraday but can't hold — long upper shadow, small body near the low.
Setup: Downtrend, ideally with a gap down. Upper shadow ≥ 2× the real body.
Psychology: Despite the downtrend, bulls fought back hard. Bears resisted but bulls still closed higher. Less bullish than a Hammer (bears pushed the close back down from the highs).
Confirmation: Price trades above the body of the Inverted Hammer.

Section 2

Two-Candle Patterns

Pairs of candles where the second confirms or contradicts the first. Most reliable when they sit at the end of a strong trend.

Pattern 6

Bullish Engulfing

bullishreversal

Signal: In a downtrend, a small red candle is followed by a larger green candle whose body completely engulfs the first.
Setup: Downtrend. Ideally the second candle opens with a gap down to show continued bearish sentiment.
Psychology: A clear victory of bulls over bears. Bears tried to extend the trend (gap down) but bulls surged and closed well above the first candle. Complete engulfment = strong momentum shift.
Confirmation: Price trades above the body of the green engulfing candle.

Pattern 7

Bearish Engulfing

bearishreversal

Signal: In an uptrend, a small green candle is followed by a larger red candle whose body completely engulfs the first.
Setup: Uptrend. Ideally the second candle opens with a gap up to show continued bullish sentiment.
Psychology: A clear victory of bears over bulls. Bulls tried to extend the trend (gap up) but bears took over and closed well below the first candle.
Confirmation: Price trades below the body of the red engulfing candle.

Pattern 8

Piercing Pattern

bullishreversal

Signal: In a downtrend, a red candle is followed by a green candle that opens below the first's low and closes inside its upper half.
Setup: Downtrend. The second candle should pierce above the midpoint of the first candle's body.
Psychology: Buyers stepped in aggressively after a gap down but couldn't quite fully engulf the prior bar. Strong but not as decisive as a Bullish Engulfing.
Confirmation: Price trades above the body of the green candle.

Pattern 9

Dark Cloud Cover

bearishreversal

Signal: In an uptrend, a green candle is followed by a red candle that opens above the first's high and closes inside its lower half.
Setup: Uptrend. The second candle should plunge below the midpoint of the first candle's body.
Psychology: Sellers slammed in after a gap up but couldn't fully engulf the prior bar. Strong but not as decisive as a Bearish Engulfing.
Confirmation: Price trades below the body of the red candle.

Pattern 10

Harami

Indecisionreversal

Signal: A long candle in the trend direction is followed by a small candle whose body is completely contained inside the first.
Setup: Bullish Harami: long red, then small green/red inside it (at downtrend bottom). Bearish Harami: long green, then small green/red inside it (at uptrend top).
Psychology: Indicates a stall — neither side is dominant. Often precedes consolidation or a trend reversal.
Confirmation: For a bottom: price trades above the pattern. For a top: price trades below the pattern.

Pattern 11

Harami Cross

Indecisionreversal

Signal: Same as Harami but the second candle is a Doji — open equals close — fully inside the first candle's body.
Setup: End of a strong trend. The Doji signifies extreme indecision after dominant momentum.
Psychology: Even stronger reversal signal than a normal Harami, because the inside candle is a Doji = complete stall in momentum.
Confirmation: For a bottom: price trades above the pattern. For a top: price trades below the pattern.

Section 3

Three-Candle Patterns

Two iconic reversal patterns — Morning Star and Evening Star — that combine a trend candle, a stall, and a forceful reversal candle.

Pattern 12

Morning Star

bullishreversal

Signal: Long red candle → small-bodied 'star' candle (ideally gapped down) → long green candle that closes deep inside the first candle's body.
Setup: Downtrend. The 'star' candle in the middle can be green or red.
Psychology: First candle = bears in control. Star = loss of bearish momentum. Third candle = bulls re-take the market. The higher the third candle closes into the first, the stronger the signal.
Confirmation: Price trades above the body of the third (long green) candle.

Pattern 13

Evening Star

bearishreversal

Signal: Long green candle → small-bodied 'star' candle (ideally gapped up) → long red candle that closes deep inside the first candle's body.
Setup: Uptrend. The 'star' candle in the middle can be green or red.
Psychology: First candle = bulls in control. Star = loss of bullish momentum. Third candle = bears re-take the market. The lower the third candle closes into the first, the stronger the signal.
Confirmation: Price trades below the body of the third (long red) candle.

Section 4

Continuation Patterns

Patterns that signal a brief pause in an existing trend before it resumes in the same direction.

Pattern 14

Upward Gap Tasuki

bullishcontinuation

Signal: In an uptrend, a green candle gaps up; the next candle is red and opens inside, closes below the green candle's body — but never closes the gap.
Setup: Uptrend. The red candle is the pullback — it must NOT close the upward gap.
Psychology: Bulls remain strong (gap held). Bears tried a pullback but couldn't fill the gap, so the uptrend resumes.
Confirmation: Price continues trading above the gap, preferably above the red candle's body.

Pattern 15

Downward Gap Tasuki

bearishcontinuation

Signal: In a downtrend, a red candle gaps down; the next candle is green and opens inside, closes above the red candle's body — but never closes the gap.
Setup: Downtrend. The green candle is the bounce — it must NOT close the downward gap.
Psychology: Bears remain strong (gap held). Bulls tried a bounce but couldn't fill the gap, so the downtrend resumes.
Confirmation: Price continues trading below the gap, preferably below the green candle's body.

Pattern 16

Rising Three Methods

bullishcontinuation

Signal: Long green candle → 2-3 small candles (ideally red) all contained inside its range → another long green candle closing above the first's high.
Setup: Uptrend. The small middle candles represent a tight consolidation.
Psychology: Bulls established the trend (first candle). Bears tried a pullback but never broke the first candle's range. Bulls resume control and break out.
Confirmation: Price trades above the body of the second long green candle.

Pattern 17

Falling Three Methods

bearishcontinuation

Signal: Long red candle → 2-3 small candles (ideally green) all contained inside its range → another long red candle closing below the first's low.
Setup: Downtrend. The small middle candles represent a tight consolidation.
Psychology: Bears established the trend (first candle). Bulls tried a bounce but never broke the first candle's range. Bears resume control and break down.
Confirmation: Price trades below the body of the second long red candle.

Section 5

Tweezer Reversal Patterns

Two or more candles sharing an identical high or low — a clean visual cue for a support or resistance level being defended.

Pattern 18

Tweezer Top

bearishreversal

Signal: Two or more consecutive candles whose highs are at the same price level. The candle colours don't matter.
Setup: Uptrend. The matching highs mark an obvious resistance level.
Psychology: Bulls tried twice (or more) to push above the same level but were rejected each time. Sellers are defending — momentum has stalled.
Confirmation: Price trades below the resistance level, ideally below the bodies of the tweezer candles.

Pattern 19

Tweezer Bottom

bullishreversal

Signal: Two or more consecutive candles whose lows are at the same price level. The candle colours don't matter.
Setup: Downtrend. The matching lows mark an obvious support level.
Psychology: Bears tried twice (or more) to break below the same level but were rejected each time. Buyers are defending — momentum has stalled.
Confirmation: Price trades above the support level, ideally above the bodies of the tweezer candles.

How to use this guide

Memorise the four properties — colour, body size, range and shadows — before drilling into individual patterns. The patterns themselves are contextual: a Hammer means nothing in a sideways market and everything at the bottom of a clean downtrend. Always wait for the confirmation cue printed in each card before sizing into a trade, and combine these signals with support / resistance, moving averages or RSI for higher conviction. None of these are guarantees — they are probability tools.