Technical Analysis: 30 Different Types of Candlestick Patterns – Definition, How it Works

Candlestick patterns are a cornerstone of technical analysis, offering traders visual insights into market psychology and momentum shifts. Originating from Japanese rice markets centuries ago, these formations remain highly relevant in today’s dynamic trading environment. At TradeSmart, we recognise that mastering these patterns can empower traders to anticipate reversals, confirm trends, and time entries or exits more effectively. In this article, we break down 30 essential candlestick patterns—ranging from single-bar indicators to complex three-candle formations—and explain how each can be used strategically alongside key technical indicators like RSI, MACD, and moving averages.

1. Bullish Engulfing

The Bullish Engulfing is a two-candle pattern that often signals the start of a potential trend reversal from bearish to bullish. It appears when a smaller red (bearish) candle is immediately followed by a larger green (bullish) one, with the second candle’s body fully engulfing the first. This formation reflects a significant shift in sentiment, indicating that buyers have taken control.

From a psychological perspective, this pattern demonstrates that although the market was under pressure, a sudden surge in buying interest overpowers sellers. The strength of the bullish candle, particularly when it breaks above resistance levels or closes with strong volume, adds to its credibility.

Traders at TradeSmart often use this pattern alongside tools like support zones or RSI indicators to validate potential entries. When aligned with oversold conditions or positioned at key technical levels, the Bullish Engulfing pattern becomes a strong signal to consider long positions.

2. Bullish Spinning Top

A Bullish Spinning Top is recognised by its small real body and extended shadows on both sides. This configuration indicates high volatility and market uncertainty—yet when it forms during a downtrend, it can point to a possible reversal.

In this setup, neither buyers nor sellers dominate the session. However, the close near the opening price suggests selling pressure is easing. If followed by a bullish candle, this can confirm growing buyer interest and signal that downside momentum is losing steam.

TradeSmart traders enhance the accuracy of this pattern by incorporating volume spikes or cross-checking with trend indicators like moving averages. A Bullish Spinning Top near a support zone or a bounce from an EMA line can offer compelling entry points.

3. Bearish Spinning Top

The Bearish Spinning Top is a candlestick pattern that signals market hesitation and a potential reversal from bullish to bearish. Characterised by a small body and long upper and lower shadows, it suggests that buyers and sellers battled for control but reached a stalemate.

When this pattern appears after a steady uptrend, it raises a red flag. The inability of bulls to push prices decisively higher indicates waning strength. If the Bearish Spinning Top is followed by a strong bearish candle, the reversal signal becomes much more convincing.

At TradeSmart, traders commonly use this setup in combination with overbought indicators like RSI or proximity to resistance levels. If the pattern aligns with a slowdown in momentum or a rejection from a key price ceiling, it becomes a reliable signal for cautious profit-taking or short-term selling.

4. Bullish Harami

The Bullish Harami is a two-candle pattern that suggests a potential reversal at the end of a downtrend. It features a large bearish candle followed by a smaller bullish candle that fits entirely within the previous day’s body.

This pattern indicates that the selling pressure is slowing, and buyers are starting to emerge. The word “Harami,” meaning “pregnant” in Japanese, reflects how the smaller candle is “nested” within the larger one, visually showing the market’s indecision and shift in control.

TradeSmart traders often seek confirmation with follow-up bullish price action. A higher opening on the next candle or a break above a nearby resistance level strengthens the reversal case. When supported by technical indicators like RSI or MACD, the Bullish Harami can be a strategic signal for early entries into emerging uptrends.

5. Tweezer Bottom

The Tweezer Bottom is a multiple-candle formation that acts as a bullish reversal signal, particularly when it appears near established support levels. It features two or more candles with nearly identical lows, reflecting strong buyer interest at a specific price point.

The first candle is typically a bearish one, continuing the existing downtrend. However, the subsequent candle (bullish or neutral) matches its low, suggesting that sellers failed to break through. This forms a potential bottom, and when confirmed by a bullish follow-up candle, it may indicate the start of a trend reversal.

TradeSmart traders look for this pattern at key support zones or during oversold conditions confirmed by RSI. Volume also plays a critical role—if buying activity increases during the formation, it provides strong validation. When all these factors align, the Tweezer Bottom can present a high-quality buying opportunity.

6. Bearish Engulfing

The Bearish Engulfing pattern is a powerful signal that suggests a potential shift from bullish to bearish market sentiment. It features a small green (bullish) candle followed by a larger red (bearish) candle that entirely engulfs the previous one’s body. This visual formation marks a turning point where sellers begin to dominate after a period of upward momentum.

This pattern often appears at the peak of an uptrend, signaling that buying pressure is fading and sellers are gaining the upper hand. Confirmation through a third bearish candle or supporting indicators, such as an RSI reading above 70, adds further strength to the reversal signal.

At TradeSmart, traders frequently use the Bearish Engulfing pattern to identify exit points or set up short positions. When supported by volume surges or resistance zones, it becomes a strategic cue to prepare for a trend reversal.

7. Doji

Doji candlesticks represent indecision in the market, forming when the opening and closing prices are virtually identical. These candles have small or no bodies and are often flanked by long wicks, symbolising a temporary balance between buying and selling forces.

Key Variants:
Dragonfly Doji: Long lower wick and no upper wick, hinting at a possible bullish reversal during a downtrend.
Gravestone Doji: Long upper wick with no lower wick, typically found at the top of an uptrend, suggesting bearish pressure.
Long-Legged Doji: Extended wicks on both ends, indicating heightened uncertainty.
Four-Price Doji: All prices (open, high, low, and close) are equal—an extremely rare sign of total indecision.

The context in which a Doji appears is crucial. In an uptrend, it may signal a loss of bullish strength. In a downtrend, it could suggest that selling momentum is weakening. For clearer insights, TradeSmart traders pair Doji patterns with confirmation candles and indicators like RSI or moving averages. A Doji that forms at a resistance or support level—and is followed by a directional candle—can be a pivotal signal for a shift in trend.

8. Gravestone Doji

The Gravestone Doji is a bearish reversal pattern found near the top of an uptrend. It forms when the open, low, and close prices are nearly identical, with a long upper shadow showing that buyers pushed the price up but failed to hold those gains.

This pattern warns that bullish momentum is weakening and that a reversal may be on the horizon. Traders typically seek confirmation through a strong bearish candle that follows. If this occurs near a resistance level or alongside an overbought RSI reading, the probability of a trend change increases.

At TradeSmart, Gravestone Dojis are particularly valuable when paired with volume analysis and price action at key levels. A surge in selling volume following the pattern can help confirm bearish intent and offer a strategic short-selling opportunity.

9. Dragonfly Doji

A Dragonfly Doji is a reversal pattern that appears after a downtrend and signals a potential bullish shift. It has a long lower shadow and very little or no upper shadow, with the open, high, and close prices clustering at the top of the candle.

This formation reflects a session where sellers initially drove prices down, but buyers stepped in with strength to close near the high, indicating a possible turning point.

For greater confidence, traders look for a bullish follow-up candle and confirm with indicators like RSI crossing above 30 or a bounce from a support level. At TradeSmart, this setup is often used to time entries near oversold zones, especially when supported by increased buying volume.

10. Long Legged Doji

The Long-Legged Doji is a clear sign of market indecision, often surfacing in volatile conditions. It’s characterised by long upper and lower shadows with a small body, indicating a tug-of-war between bulls and bears that ends in a draw.

When it forms at the top of an uptrend, it may suggest that bullish energy is running out. Near the bottom of a downtrend, it could signal that bearish strength is fading. This candlestick gains more significance when located near support or resistance zones.

TradeSmart traders boost this pattern’s reliability by combining it with momentum tools like RSI or volume surges. A Long-Legged Doji with high volume and RSI divergence often sets the stage for a reversal, especially when followed by a strong directional candle.

11. Three Outside Up

Three Outside Up is a three-candle formation that marks a strong bullish reversal at the end of a downtrend. It begins with a bearish candle, followed by a bullish engulfing candle, and finishes with another bullish candle that closes higher than the previous one.

This sequence shows increasing buying pressure and a clear transition from bearish control to bullish momentum. Its reliability increases when the pattern occurs near a significant support level or when supported by rising volume.

TradeSmart users often validate this pattern using RSI and MACD crossovers. When the second and third candles in the sequence form with above-average volume, it’s a powerful indication that the market sentiment has shifted. This pattern is particularly useful in volatile markets for spotting short-term opportunities to go long.

12. Three Inside Down

The Three Inside Down pattern is a bearish reversal signal that typically appears at the end of an uptrend. It’s composed of three candles: a strong bullish candle, followed by a smaller bearish candle contained within the first, and a third bearish candle that closes below the second, confirming a momentum shift to the downside.

This pattern becomes more compelling when accompanied by increased volume on the third candle, indicating intensified selling interest. At TradeSmart, we recommend looking for this formation near resistance zones or after an overbought RSI reading, which boosts the reliability of the signal.

Incorporating tools like moving averages or support/resistance levels alongside this pattern enhances decision-making. Traders often use the Three Inside Down setup to plan exits from long positions or to time short entries with improved accuracy.

13. Hanging Man

The Hanging Man is a bearish reversal candlestick that forms at the top of an uptrend. It features a small real body at the top of the candle with a long lower shadow and little or no upper shadow. This structure reveals that although sellers had control during the session, buyers managed to push the price back up before the close, hinting at weakening bullish strength.

Traders at TradeSmart identify the Hanging Man after prolonged upward movement and seek confirmation through subsequent bearish candles or increased volume. Pairing this pattern with RSI or key moving averages can help validate the likelihood of a trend reversal.

The Hanging Man serves as a cautionary sign to reduce long exposure or prepare for a potential shift in trend direction.

14. Double Candlestick Patterns

Double candlestick patterns consist of two candles that signal either continuation or reversal, depending on the setup and location within the broader trend. They’re frequently used to spot early changes in sentiment.

These double patterns are a vital part of the TradeSmart toolkit and work best when integrated with broader market context and technical validation.

15. Bullish Kicker

The Bullish Kicker pattern reflects a dramatic shift in momentum from bearish to bullish. It consists of two distinct candles: the first is bearish, and the second is bullish, opening with a strong gap up, leaving no overlapping price with the previous close.

This sudden move indicates that buyers have decisively taken over, often following negative sentiment. At TradeSmart, we find this pattern especially potent after extended downtrends, where it can signal the beginning of a new bullish phase.

Traders should look for additional confirmation via tools like RSI rebounding from oversold levels or the price breaking above key moving averages. The Bullish Kicker is a strong early signal of upward momentum, particularly when supported by volume spikes.

16. Piercing Line

The Piercing Line is a two-candle bullish reversal pattern that signals a potential shift from a downtrend to an uptrend. It features a long bearish candle followed by a bullish candle that opens lower but closes above the midpoint of the first candle.

This movement shows that buyers are stepping in forcefully after a period of selling pressure. The Piercing Line is most effective when it appears at the bottom of a downtrend and is confirmed by high trading volume or RSI rising from oversold territory.

At TradeSmart, this pattern is often used to identify fresh long opportunities, particularly when combined with moving averages, support zones, or candlestick confirmation in the sessions that follow.

17. Bearish Kicker

The Bearish Kicker is a powerful two-candle reversal pattern that highlights an abrupt shift from bullish to bearish sentiment. The first candle is bullish and aligns with the ongoing uptrend. However, the second candle opens with a sharp gap down and turns decisively bearish, with no overlapping price between the two.

This pattern often indicates that sellers have seized control, and a downtrend may begin. Traders should seek confirmation through continued price weakness and validate the pattern using tools like MACD or RSI, especially when readings suggest overbought conditions.

TradeSmart traders find this setup particularly useful when it occurs near resistance levels or after news-driven rallies. A surge in volume accompanying the bearish candle adds weight to the signal, prompting traders to consider exiting long positions or entering short setups.

18. Dark Cloud Cover

The Dark Cloud Cover is a bearish reversal candlestick pattern that typically signals a shift from bullish to bearish momentum. It forms at the top of an uptrend and consists of two candles: the first is a strong bullish candle, and the second is a bearish candle that opens above the previous high but closes below the midpoint of the first.

This pattern reflects waning buyer strength and a surge in selling pressure. At TradeSmart, traders look for additional confirmation before taking action, such as an overbought RSI reading or increased volume on the bearish candle, which often validates the reversal.

The pattern’s impact is amplified when it forms near a key resistance level. Combining the Dark Cloud Cover with technical indicators or horizontal resistance zones strengthens its reliability as a signal to reduce long exposure or explore short opportunities.

19. Bearish Harami

The Bearish Harami pattern is a two-candle formation that indicates a potential trend reversal from bullish to bearish. It begins with a long bullish candle, followed by a smaller bearish candle contained entirely within the body of the first. This inside candle signals a loss of bullish momentum and a possible shift in sentiment.

This pattern gains credibility when accompanied by other indicators, such as a declining RSI or weakening trend confirmation from moving averages. TradeSmart users often monitor Bearish Harami formations at the end of extended uptrends, particularly near overbought zones or resistance levels.

Traders should also watch for follow-through price action. A lower opening or continued bearish movement following the pattern improves its predictive strength, offering a signal to tighten stops or consider downside protection.

20. Tweezer Top

A Tweezer Top candlestick pattern suggests a potential bearish reversal during an uptrend. It consists of two consecutive candles with nearly identical highs. The first candle is typically bullish, while the second is bearish, showing that upward momentum has stalled and sellers are stepping in.

The matching highs act as a psychological resistance point, where buyers are consistently being rejected. Confirmation with technical indicators—such as an overbought RSI reading or increased volume on the second candle—enhances the pattern’s reliability.

TradeSmart recommends combining Tweezer Tops with broader analysis techniques. When spotted at resistance or after prolonged uptrends, this pattern can help traders time exits or initiate short positions with greater confidence.

21. Marubozu

Marubozu candlesticks are powerful indicators of market conviction. They feature no upper or lower shadows, meaning the open and close occurred at the extreme high and low of the session. This visual clarity reflects a strong directional move with no hesitation.

Marubozu patterns can confirm trend continuations or act as reversal signals depending on their context. At TradeSmart, we suggest monitoring their appearance in established trends or near critical price levels. Pairing them with momentum indicators like RSI or MACD further improves decision-making and trade timing.

22. Triple Candlestick Patterns

Triple candlestick patterns offer some of the clearest signals for potential market reversals or continuations. Here are four key setups:

These multi-bar patterns are most effective when combined with volume, trendlines, or moving averages to confirm direction.

23. Morning Star Doji

The Morning Star Doji is a refined version of the Morning Star pattern, acting as a strong bullish reversal signal. It consists of three candles: a long bearish candle, followed by a Doji (which shows indecision), and then a bullish candle that closes above the midpoint of the first.

This formation suggests that sellers are losing momentum, with the Doji representing market uncertainty. When the bullish candle follows, it confirms that buyers are regaining control.

At TradeSmart, we recommend watching for this pattern near support levels, particularly after a sustained downtrend. Confirmation from volume increases and an RSI rebound from oversold territory can significantly boost its reliability.

24. Bullish Abandoned Baby

The Bullish Abandoned Baby is a rare but powerful bullish reversal pattern. It consists of three candles: a bearish candle, followed by a Doji that gaps below the previous close, and then a bullish candle that gaps above the Doji. This formation often occurs at the end of a downtrend and signals a decisive shift in momentum from sellers to buyers.

The middle Doji highlights uncertainty, while the gap up in the third candle confirms the buyers’ return. This pattern is often driven by unexpected news or overnight sentiment shifts, which create the gaps. TradeSmart traders typically seek additional confirmation through technical tools like the RSI or Moving Averages.

25. Morning Star

The Morning Star is a classic bullish reversal pattern made up of three candles: a long bearish candle, a small-bodied candle that gaps lower, and a bullish candle that closes above the midpoint of the first. This pattern reflects a transition from bearish to bullish control and is particularly powerful after extended downtrends.

The second candle shows market hesitation, while the third confirms a potential upward reversal. This setup becomes even more effective when supported by indicators like RSI or moving averages.

26. Evening Star Doji

An Evening Star Doji is a bearish reversal pattern that signals exhaustion in a prevailing uptrend. It features a bullish candle, a Doji that gaps higher, and a bearish candle that closes below the midpoint of the first.

The Doji reflects uncertainty after bullish momentum, while the final bearish candle confirms that sellers are stepping in. This pattern is especially effective when it occurs at resistance levels or after prolonged rallies.

27. Evening Star

The Evening Star pattern is a reliable signal of potential bearish reversal. It includes three stages: a strong bullish candle, a small-bodied candle that represents indecision, and a bearish candle that closes well below the midpoint of the first.

This pattern is typically found at the top of an uptrend and is used to identify potential exit points or shorting opportunities.

28. Three White Soldiers

The Three White Soldiers pattern signals a strong bullish continuation or reversal from a recent downturn. It features three long bullish candles, each opening within the body of the previous one and closing progressively higher.

This pattern represents sustained buying pressure and is most reliable when it appears after a downtrend or a consolidation phase.

29. Three Black Crows

The Three Black Crows pattern indicates a bearish reversal, typically emerging after a strong uptrend. It consists of three consecutive bearish candles that close progressively lower, reflecting growing seller dominance.

Each candle in the pattern opens within the body of the previous one, showcasing steady downward pressure.

30. Shooting Star

The Shooting Star is a one-candle reversal pattern appearing at the peak of an uptrend. It’s identified by a small body near the session’s low and a long upper wick, indicating that buyers lost control after a brief rally.

This pattern warns of weakening bullish momentum and a possible pullback.

How to read candlestick patterns?

Reading candlestick patterns effectively is a fundamental skill in technical analysis. At TradeSmart, we encourage traders to focus on these key principles:

  1. Understand the Structure: Each candlestick includes a body (open and close) and shadows (high and low). A bullish candle typically has a close above the open, while a bearish candle closes below.
  2. Identify the Trend: Candlestick patterns are most powerful when placed in context. A reversal pattern is more meaningful at the end of a trend, while continuation patterns support existing momentum.
  3. Seek Confirmation: Patterns should be validated using technical indicators like RSI, MACD, moving averages, or volume. A Doji in isolation might suggest indecision, but with a supporting RSI or key level, it becomes a high-probability signal.
  4. Monitor Support and Resistance: Candlestick patterns gain reliability when they form near established support or resistance. These price levels often act as psychological turning points.
  5. Use Real Examples: Apply what you learn in practice. For example, spotting a Bullish Engulfing near support and confirming with RSI rising from oversold can indicate a buy setup. Similarly, a Bearish Kicker with falling MACD at resistance suggests a reversal.
  6. Combine with Strategy: While candlestick patterns are powerful, they should be part of a broader trading plan. TradeSmart recommends using them alongside chart patterns, trendlines, and technical indicators for best results.

Conclusion

Understanding candlestick patterns is more than just recognising chart formations—it’s about interpreting the collective behaviour of market participants. Whether you’re identifying a bullish engulfing at support, a shooting star near resistance, or a three-candle reversal like the Morning Star, these patterns provide invaluable clues about potential price movements. However, their true power is unlocked when combined with volume analysis, trendlines, and indicators that offer context and confirmation.

At TradeSmart, we encourage traders to view candlestick patterns not in isolation, but as part of a holistic trading strategy—one that aligns with disciplined risk management and market awareness. The more you practise reading and integrating these signals, the sharper your decision-making will become in fast-paced markets.