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The Ultimate Guide to Candlestick Patterns
By Spencer Li, CFTe · Last updated 16 October 2026
How to read a candle, the reversal and continuation patterns worth knowing, and why location matters more than the name.
A candlestick pattern is a shape made by 1 to 5 price bars that shows who won the fight between buyers and sellers, and hints at where price may go next. Reversal patterns warn that a short-term move may be ending. Continuation patterns suggest it is only pausing.
The catch is that a pattern on its own is a clue rather than a signal. It earns your attention when it forms at a level that matters, such as support or resistance, in the direction of the bigger trend. This guide explains how to read both families, and links to every major pattern for the detail.
Chapter 1 of 4
Introduction to candlestick patterns
Each candlestick shows 4 prices for one period: the open, the high, the low and the close. The body runs from the open to the close. It is usually green or white when price closed higher, and red or black when it closed lower. The thin wicks above and below show how far price reached before it was pushed back.
Read a candle as a story. A long green body means buyers were in control from start to finish. A long lower wick means sellers drove price down and buyers pushed it all the way back. A tiny body with wicks on both sides means neither side could hold ground.
Rice traders in 18th-century Japan were among the first to chart prices this way. The method reached Western traders through Steve Nison's 1991 book, Japanese Candlestick Charting Techniques, and most pattern names in use today trace back to it. If you only learn a handful to start, make it these 5:
| Pattern | Type | What it suggests |
|---|---|---|
| Hammer | Bullish reversal | Sellers pushed down, and buyers took it back |
| Shooting star | Bearish reversal | Buyers pushed up, and sellers took it back |
| Bullish engulfing | Bullish reversal | One green body swallows the previous red one |
| Bearish engulfing | Bearish reversal | One red body swallows the previous green one |
| Doji | Indecision | Open and close are almost equal, and nobody won |
Further reading
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Chapter 2 of 4
Reversal candlestick patterns
A reversal pattern shows the side that was winning losing its grip. In a hammer, sellers pushed price well below the open, and buyers then drove it back up to close near the high. That long lower wick is a record of rejection, and rejection is what every reversal pattern is really showing you.
There is one test that matters more than the pattern's name, and that is location. A hammer in the middle of a range means very little. The same hammer at a well-tested support level, after a pullback in an uptrend, is worth watching closely. So the question to ask is whether the pattern formed where a turn would make sense.
Wait for the bar to close before you act, because a hammer that looks perfect halfway through the day can still finish as a plain red candle once the sellers come back in the last hour of trading. It happens often. Many traders also wait for the next bar to confirm, such as a close above the hammer's high, which costs a little of the move and filters out a lot of false starts.
A reversal pattern also gives you a natural place for the stop. If you buy after a hammer, the low of its wick is the point where the idea is proven wrong.
Further reading
- Hammer pattern→
- Shooting star→
- Morning star→
- Evening star→
- Piercing pattern→
- Dark cloud cover→
- Hanging man→
- Inverted hammer→
- Bullish engulfing→
- Bearish engulfing→
- Bullish harami→
- Bearish harami→
- Bullish harami cross and bearish harami cross→
- Spinning top→
- Long-legged doji (rickshaw man doji)→
- Gravestone doji→
- Dragonfly doji→
- Bullish and bearish tri-star doji→
- High wave candlestick pattern→
- Island reversal pattern→
- Hook reversal pattern→
- Three inside up and three inside down pattern→
- Three outside up and three outside down pattern→
- Tweezer top and tweezer bottom pattern→
- Bullish abandoned baby→
- Bearish abandoned baby→
- Upside gap two crows→
- Bullish counterattack lines and bearish counterattack lines→
- Bullish belt hold→
- Bearish belt hold→
- Dumpling top→
- Frying pan bottom pattern→
- Kicker pattern→
- Tower top and tower bottom→
- Advanced block pattern→
- Stalled pattern (deliberate pattern)→
- Sanku (three gaps) pattern→
Chapter 3 of 4
Continuation candlestick patterns
A continuation pattern shows a trend taking a breath rather than ending. The rising three methods is the classic example. A strong green candle is followed by 3 or so small candles drifting lower inside its range, and then another strong green candle closes at a new high.
Others tell the same story in different ways. A marubozu, a candle with almost no wicks, shows one side in full control for the whole period. Three white soldiers, 3 strong green candles in a row, show buyers pressing steadily. Windows, the Japanese name for gaps, show demand so strong that price jumped past the previous bar entirely.
For a swing trader these are often more useful than reversals, because they let you join a trend that is already working and has already shown its hand, instead of guessing at the exact bar where an old trend finally ends. Watch the trend's age, though. A continuation pattern early in a move carries more weight than the same pattern after 10 straight weeks of gains.
Further reading
- White marubozu and black marubozu pattern→
- Three white soldiers→
- Three black crows→
- Rising three methods→
- Falling three methods→
- Rising window and falling window pattern→
- Bullish gap and bearish gap candlestick pattern→
- Bullish gapping play and bearish gapping play→
- Bullish irikubi and bearish irikubi pattern→
- Bullish atekubi and bearish atekubi→
- Bullish separating lines and bearish separating lines→
- Thrusting line pattern→
- Upside tasuki gap→
- Downside tasuki gap→
- Mat hold pattern→
- Bullish three line break and bearish three line break→
- Up gap side-by-side white lines and down gap side-by-side white lines→
- On neck pattern→
Chapter 4 of 4
Tips from the trading desk
Every useful candlestick trade answers 3 questions, in this order. The first is context, meaning which way the bigger trend is going. The second is location, whether price sits at a level that matters, such as support, resistance or a moving average. Only then comes the trigger, the candlestick pattern itself, which tells you that the level is holding right now.
Most mistakes come from reversing that order. A trader learns 30 pattern names, spots a bearish engulfing candle in the middle of a strong uptrend that has been making higher highs for months, and sells it straight away without asking where it formed. The pattern was real, but the trend was stronger, and the trend usually wins.
Personally, I treat candles as the final check before an entry rather than the reason for one. Combine a pattern with 1 other tool, such as a trend filter or a support level, and many false signals drop away. Stack 5 other tools on top and you will rarely trade at all.
Further reading
- Best strategies for trading candlestick patterns→
- The wrong way to trade candlestick patterns (common mistakes)→
- How to read candlestick patterns like a pro→
- How to combine candlestick patterns (blended candles)→
- How to combine candlestick patterns with other technical indicators→
- The limitations of candlestick patterns→
Quick answers
Frequently asked questions
What is the most reliable candlestick pattern?
No pattern is reliable on its own. Location and trend matter more than the pattern's name, so a hammer at strong support in an uptrend beats any pattern in the middle of nowhere.
How many candlestick patterns should I learn?
Start with 5: the hammer, the shooting star, both engulfing patterns and the doji. Learn the rest when you need them.
Do candlestick patterns work in forex and crypto?
Yes. They read the open, high, low and close, which every liquid market has. Gaps are rarer in markets that trade around the clock, so gap patterns appear less often there.
Which timeframe is best for candlestick patterns?
Patterns on the daily chart and above tend to be cleaner, because each bar holds a full session of trading. On very short timeframes, noise produces many patterns that mean little.
Key takeaways
- A candlestick pattern is a clue about who won a period, and only a signal at the right level.
- Reversal patterns show rejection. Continuation patterns show a trend pausing.
- Read context, then location, then the trigger, and wait for the bar to close.
Next in the series: the Technical Indicators guide, which adds trend, momentum and volatility tools to your chart.
About the author
Spencer Li is The 15-Minute Trader and the founder of Synapse Trading. He is a Certified Financial Technician (CFTe) with 15+ years of trading, run from 70+ countries. He holds a B.Acc and B.BM from SMU. Every trade he takes is public, dated, losses left in. He teaches low-risk swing trading in 15 minutes a day, one system for any market.
Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss; past performance is not indicative of future results.
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