Strong bearish candle following bullish candle with gap; indicates sharp bearish reversal. Small bullish candle followed by larger bearish candle engulfing it; indicates bearish reversal. Strong bullish candle following a bearish candle with gap; indicates sharp bullish reversal.
Bullish Engulfing
Click on the infographic below to get your free Candlestick Patterns PDF guide. This visual summary covers all the essential pattern types making it easy to print and refer to while analyzing charts. Blain Reinkensmeyer has 20 years of trading experience with over 2,500 trades placed during that time. He heads research for all U.S.-based brokerages on StockBrokers.com and is respected by executives as the leading expert covering the online broker industry. Blain’s insights have been featured in the New York Times, Wall Street Journal, Forbes, and the Chicago Tribune, among other media outlets. Forex – the foreign exchange market also known as FOREX or FX is the biggest and the most profits but is also a very risky endeavor.
The percentage of Bullish Harami winning trades was 55.2% versus 44.8% losing trades, lower than the 55.8% average performance across all candlestick types. The Max Drawdown was -41.5%, versus the stock’s drawdown of -59.6%, which shows less volatility than a buy-and-hold strategy. After conducting 1,553 trades on 575 years of data, we confirm the win rate to be 0.65% per trade. A 0.65% win rate means that trading a Gravestone Doji long will net you an average of 0.65% profit per trade if you sell after ten days. Conversely, short-selling a Gravestone Doji, you should expect to lose 0.65% per trade. The second one is a signal of indecision in the market, and the third one signals a reversal with buyers losing momentum and sellers gaining control, pushing prices down.
It has a small body at the top with a long lower wick, indicating that despite selling pressure, buyers pushed the price up significantly during the session. Bearish candlestick patterns suggest a possible reversal to the downside. A shooting star shows rejection of higher prices with a small body and long upper wick.
- Traders use a combination of candlestick patterns with a use of Fibonacci retracements and extensions for a determination of important level for an entry and an exit.
- The Inverted Hammer is the most profitable pattern, generating a remarkable 1.12% profit per trade.
- Today, TrendSpider can automatically detect, plot, and backtest all candlestick patterns.
- The body represents the difference between the open and close prices.
Dojis
- It has a small body near the low and a long upper wick, signalling rejection of higher prices.
- These visual formations, crafted from real-time buying and selling pressure, offer a raw, unfiltered view of market sentiment.
- This table provides an overview of the 41 most useful candlestick patterns for traders.
- Small body at the lower end with a long upper shadow; signals a possible bullish reversal after a downtrend.
The Spinning Top candle is identified by a relatively small body in the context of the trading range. The upper and lower shadows are longer than the body, giving it a “spinning top” appearance. Spinning Tops indicate indecision on the part of traders and can indicate a trend reversal or consolidation. The Bullish Harami Cross pattern is similar to the Bullish Harami as it also signals a possible end to a bearish trend and the commencement of a bullish trend. For confirmation, a closing price at a level higher in the subsequent session is preferable. The best use of the pattern is when it occurs with increased trading volumes.
How many types of candlestick patterns are there?
All you need to know about trading and investing in fanancial markets. We recommend starting with a core set of high-probability, easy-to-identify patterns. This is precisely why combining patterns with other technical indicators, as discussed earlier, is so important. Candlestick patterns are widely used to predict market movements, but their reliability varies.
This makes them equally valuable for forex, day trading, and even fast-paced scalping strategies. For practical trading success, we recommend mastering just the top 10 most significant patterns. Similarly, a bearish pattern appearing when the RSI is above 70 (indicating an overbought condition) could suggest a stronger downward move.
Gravestone Doji Candlestick Pattern
By diligently following these steps, you will transition from a passive observer of charts to an active interpreter of price action. You will begin to anticipate market movements rather than just reacting to them, which is the foundational skill for consistent profitability. The journey requires patience and discipline, but mastering the art of reading candles is one of the most valuable investments you can make in your trading career. In a Bearish Harami, the large green candle shows strong buying momentum.
Top 10 Powerful Common Candlestick Patterns You Must Know in 2025
The shooting star is a bullish reversal shape that forms at a high in an uptrend. It is a narrow shape at the lower edge of the trading range with a long upper wick, at least double in proportion to its shape. It reflects that buyers struggled to make the price rise but sellers took over and pushed the price down, closing at a level near its opening. For traders aiming to succeed in unpredictable markets, these 10 candlestick patterns are not optional they are vital. They simplify decisions, reveal momentum shifts, and ensure that strategies are based on market psychology rather than guesswork. By mastering them, traders gain not just signals but a mindset of discipline and clarity that builds long-term success.
That signal preceded a correction of over 20%, catching many late buyers off guard. Price dipped to $72, formed a hammer on the daily chart, and then rallied to $80 within days. Traders who recognised the signal and waited for confirmation gained a clear entry point. Users, visitors, and customers can use all our products, software, programs, services, content, and information at their own risk, and 100% responsibility lies on them.
The Morning Star is a classic three-candle bullish reversal pattern, highly regarded by traders for its reliability in signaling the end of a downtrend. Bullish candlestick patterns indicate potential upward movement, often after a downtrend. A hammer has a small body and long lower wick, showing strong buying pressure.
Top 7 Candlestick Patterns for Day Trading in 2025
The second one reflects indecision in the financial market and tends to be a doji or a spinning top, reflecting bears getting exhausted in sales. The third one reflects a reversal, with buyers re-entering and taking the price in a positive direction. Aside from that, a hammer form is pretty effective when accompanied by increased trading volumes, representing high buying volumes. Traders will even seek a level of support at which a hammer forms and such a level can confirm a sign of reversal. Trading with Japanese candlesticks works best when patterns are treated as tools within a structured plan. When combined with confirmation and discipline, reversal and continuation patterns can deliver consistent results across any market.
Adding confirmation, such as weakening RSI or rising selling volume, improves reliability. This makes bearish engulfing one of the candlestick patterns every trader must know for risk control and timely exits. The doji indicates indecision in the market, and the following bearish candlestick confirms the reversal. The bearish engulfing candlestick pattern is a strong reversal signal.
Shooting Star Candlestick Pattern
The bullish tri-star is a rare candlestick pattern that signals a potential reversal from a downtrend to an uptrend. It consists of three doji candles in a row, with the middle doji forming at the lowest point of top-4 best candlestick patterns for 2025 the pattern. The bullish abandoned baby is a rare three-candlestick pattern indicating a reversal. It consists of a long bearish candlestick, a doji that gaps down, and a long bullish candlestick that gaps up.
