Candlestick & Chart Pattern Flashcards
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Example: After an extended decline, Hammer forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itSmall body at the top with a lower shadow at least twice the body. Appears after a downtrend.
What it meansSellers pushed price down hard but buyers dragged it back — selling pressure is drying up.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Only valid at the BOTTOM of a downtrend. Wait for the next candle to close higher as confirmation.
Example: After an extended decline, Inverted Hammer forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itSmall body at the bottom with a long upper shadow, at the end of a downtrend.
What it meansBuyers already tried to push price up hard. Even though it was rejected, this is a bottom-probing signal.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Weaker than the Hammer. You must wait for a green confirmation candle right after.
Example: After an extended decline, Bullish Engulfing forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA large green candle that completely engulfs the body of the previous red candle.
What it meansBuyers took over completely within a single session. One of the strongest reversal patterns.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: The longer the green body, the stronger the signal. Combine with a support zone before entering.
Example: After an extended decline, Piercing Line forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA green candle opens below the previous red low, then closes above the midpoint of that body.
What it meansBuyers won back more than half of what was lost — a reversal is forming.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: It must close ABOVE the midpoint of the red candle. Short of that, the pattern is void.
Example: After an extended decline, Morning Star forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itThree candles: long red, then a small indecision candle, then a long green. The middle one is the balance point.
What it meansThe decline runs out of steam, the market hesitates, then buyers take over.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: The most reliable reversal pattern. The third candle should close above the midpoint of the first.
Example: After an extended decline, Three White Soldiers forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itThree consecutive long green candles, each opening inside the previous body and closing higher.
What it meansSustained buying across several sessions — an uptrend is being established.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: If the upper shadows grow longer, buying strength is fading — careful about entering late.
Example: After an extended decline, Bullish Harami forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA small green candle sitting entirely inside the body of the previous long red candle.
What it meansSelling momentum stalls abruptly. This is a WARNING of a reversal, not a confirmation.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Wait for another confirming candle. Better used to tighten shorts than to open longs.
Example: After an extended decline, Tweezer Bottom forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itTwo consecutive candles with almost identical lows.
What it meansThe same price zone was rejected twice — support is holding firm.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Strongest when it lines up with an existing support zone or Fibonacci level.
Example: After an extended decline, Dragonfly Doji forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itOpen and close are nearly equal near the high, with a very long lower shadow.
What it meansSellers forced price down deep but lost all of it before the close.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: At the bottom of a downtrend it is a buy signal. At a top it means the opposite — be careful.
Example: After an extended rally, Hanging Man forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itSame shape as the Hammer, but it appears at the TOP of an uptrend.
What it meansSellers were strong enough to drag price down deep during the session — a top warning.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Location decides everything: same shape, at a bottom it is a Hammer (bullish), at a top a Hanging Man (bearish).
Example: After an extended rally, Shooting Star forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itSmall body at the bottom, upper shadow 2–3x the body, at the top of an uptrend.
What it meansBuyers pushed price up high then got knocked back completely — buying power is exhausted.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: The longer the upper shadow, the more reliable. Place your stop above the wick.
Example: After an extended rally, Bearish Engulfing forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA large red candle that completely engulfs the body of the previous green candle.
What it meansSellers took decisive control. A strong bearish reversal.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Very reliable when it appears after a long rally and at resistance.
Example: After an extended rally, Dark Cloud Cover forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA red candle opens above the previous green high, then closes below the midpoint of that body.
What it meansAn euphoric open that gets sold off — a classic bull trap.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: This is the "incomplete" version of Bearish Engulfing, so the signal is milder.
Example: After an extended rally, Evening Star forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itThree candles: long green, a small indecision candle at the top, then a long red.
What it meansThe rally runs dry, the market hesitates, then sellers step in.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Mirror image of the Morning Star. The third candle should eat past half of the first body.
Example: After an extended rally, Three Black Crows forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itThree consecutive long red candles, each closing lower than the last.
What it meansSelling pressure sustained over several sessions — a downtrend has formed.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: After these three candles price has usually run far; entering late often catches a bounce.
Example: After an extended rally, Bearish Harami forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA small red candle sitting entirely inside the body of the previous long green candle.
What it meansUpward momentum suddenly stalls — an early warning, not yet a confirmed reversal.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Use it to take profit on longs. To go short, wait for a confirming candle.
Example: After an extended rally, Tweezer Top forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itTwo consecutive candles with almost identical highs.
What it meansOne price zone rejected twice in a row — resistance is holding firm.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Strongest when it lines up with old resistance or an all-time high.
Example: After an extended rally, Gravestone Doji forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itOpen and close are nearly equal near the low, with a very long upper shadow.
What it meansBuyers pushed price up high then were sent all the way back to the start — a complete failure.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: At the top of an uptrend it is a clear sell signal.
Example: Doji appears when buyers and sellers are balanced. Price usually drifts sideways afterwards until a candle breaks out clearly.
How to spot itOpen and close are almost identical, leaving a very thin body.
What it meansBuyers and sellers are balanced. The market is hesitating, waiting on news.
How to trade it
- Do not trade this pattern on its own — it only says the market is undecided.
- Wait for the next candle to break its high or its low to get a direction.
- Enter in the breakout direction, stop loss on the opposite side of the pattern.
- If price keeps ranging, stay out — no signal is also a decision.
Watch out: A Doji by itself gives NO buy or sell signal. You must read its location and the next candle.
Example: Spinning Top appears when buyers and sellers are balanced. Price usually drifts sideways afterwards until a candle breaks out clearly.
How to spot itA small body in the middle with long shadows on both sides.
What it meansPrice swung hard both ways but ended the session going nowhere — indecision.
How to trade it
- Do not trade this pattern on its own — it only says the market is undecided.
- Wait for the next candle to break its high or its low to get a direction.
- Enter in the breakout direction, stop loss on the opposite side of the pattern.
- If price keeps ranging, stay out — no signal is also a decision.
Watch out: Often signals the trend is stalling. Avoid opening new positions until direction is clear.
Example: After an extended decline, Bullish Marubozu forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA solid green candle with almost no shadow on either end.
What it meansBuyers controlled the session from open to close — very strong momentum.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Usually a bullish continuation candle, and common when resistance breaks.
Example: After an extended rally, Bearish Marubozu forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA solid red candle with almost no shadow on either end.
What it meansSellers dominated the whole session — very strong downward momentum.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Common when price breaks support. Do not catch the falling knife right after this candle.
Example: In an uptrend, Rising Three Methods is a pause to gather momentum. Once it completes, price continues higher.
How to spot itA long green candle, then 3 small pullback candles inside its range, then a long green candle breaking the high.
What it meansA pause to gather momentum inside an uptrend, not a reversal.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: The pullback candles must not break the low of the first green candle — if they do, the pattern fails.
Example: In a downtrend, Falling Three Methods is a technical bounce. Once it completes, price continues lower.
How to spot itA long red candle, then 3 small bounce candles inside its range, then a long red candle breaking the low.
What it meansA technical bounce inside a downtrend, followed by more selling.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: This is the classic bull trap — many people buy the dip on the three bounce candles.
Example: After an extended decline, Bullish Pin Bar forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA very small body near the high, with a lower wick taking up at least two-thirds of the whole candle.
What it meansPrice was pushed down deep and rejected almost all of it — the area below was firmly refused.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: The tail must stick out beyond the surrounding candles to count. A Pin Bar inside a tight range means almost nothing.
Example: After an extended decline, Three Inside Up forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA Bullish Harami plus a third candle that closes above the high of the first red candle.
What it meansThe third candle turns the Harami warning into an actual confirmation.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: This is the confirmed version of a Bullish Harami, so it is considerably more reliable than the Harami alone.
Example: After an extended decline, Three Outside Up forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA Bullish Engulfing plus a third green candle closing even higher.
What it meansBuying pressure did not just dominate one session, it carried into the next.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: The third candle is the safer entry, at the cost of price having already moved some distance.
Example: After an extended decline, Bullish Kicker forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA red candle, then a green candle that opens with a gap above the red candle high and never fills it.
What it meansThe market reversed instantly, usually on surprise news — nobody could trade inside the gap.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: One of the strongest patterns there is, but entering late often means buying the top of the spike.
Example: After an extended decline, Bullish Belt Hold forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itA long green candle that opens right at its low (no lower wick) and rallies straight up.
What it meansBuyers seized control from the opening second and never let go.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Meaningful after an extended decline. Inside an existing uptrend it is just a normal momentum candle.
Example: After an extended decline, Bullish Abandoned Baby forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itLike a Morning Star, but the middle candle is a Doji fully separated from both neighbours by two gaps.
What it meansA panic sell-off followed by a decisive reversal, with no overlapping price at all.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Rare in forex because the market runs 24/5 and rarely gaps. More common in stocks and in crypto over weekends.
Example: After an extended decline, Homing Pigeon forms at the lows. The following candles confirm buyers are back and price reverses upward.
How to spot itTwo consecutive red candles, the second small and contained inside the body of the first.
What it meansStill bearish candles, but the range has clearly contracted — selling momentum is fading.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Both candles are red so most people ignore it. This is an early signal; a green confirmation candle is mandatory.
Example: After an extended rally, Bearish Pin Bar forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA very small body near the low, with an upper wick taking up at least two-thirds of the whole candle.
What it meansPrice was pushed up high and gave nearly all of it back — the area above was firmly refused.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: The further the tail sticks out beyond neighbouring candles, the more reliable. Put the stop just above the tail.
Example: After an extended rally, Three Inside Down forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA Bearish Harami plus a third candle closing below the low of the first green candle.
What it meansThe third candle confirms what the Harami only warned about.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: More reliable than a Bearish Harami alone. Place the stop above the first green candle high.
Example: After an extended rally, Three Outside Down forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA Bearish Engulfing plus a third red candle closing even lower.
What it meansSellers dominated and kept control into the following session.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Entering on the third candle is safer, but price has already fallen — consider sizing down.
Example: After an extended rally, Bearish Kicker forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA green candle, then a red candle opening with a gap below the green candle low that never fills.
What it meansAn instant reversal on surprise bad news — the market gave nobody a chance to exit in between.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Very strong, but very easy to enter late. If price fills the gap back in, the pattern is broken.
Example: After an extended rally, Bearish Belt Hold forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itA long red candle that opens right at its high (no upper wick) and sells off straight down.
What it meansSellers controlled the session from the open all the way to the close.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Only meaningful after an extended rally or at resistance.
Example: After an extended rally, Bearish Abandoned Baby forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itLike an Evening Star, but the middle candle is a Doji fully isolated by two gaps.
What it meansEuphoria spiked price up and it collapsed immediately, with no overlapping price.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Rare in forex; more common in stocks when news breaks outside trading hours.
Example: After an extended rally, Advance Block forms at the highs. The following candles confirm sellers have taken over and price reverses downward.
How to spot itThree consecutive green candles with progressively shorter bodies and longer upper wicks.
What it meansStill rising, but each session gets capped earlier — buying strength is running out.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: Easily confused with Three White Soldiers. The difference: here the bodies SHRINK and upper wicks grow.
Example: Long-legged Doji appears when buyers and sellers are balanced. Price usually drifts sideways afterwards until a candle breaks out clearly.
How to spot itOpen and close nearly identical in the middle, with very long wicks on both sides.
What it meansViolent swings both ways that ended flat — the market is completely directionless.
How to trade it
- Do not trade this pattern on its own — it only says the market is undecided.
- Wait for the next candle to break its high or its low to get a direction.
- Enter in the breakout direction, stop loss on the opposite side of the pattern.
- If price keeps ranging, stay out — no signal is also a decision.
Watch out: Often appears around major news. Wait for the next candle to break its high or low before acting.
Example: High Wave appears when buyers and sellers are balanced. Price usually drifts sideways afterwards until a candle breaks out clearly.
How to spot itA small body with unusually long wicks on both sides compared to surrounding candles.
What it meansThe market is fighting hard in both directions with neither side winning.
How to trade it
- Do not trade this pattern on its own — it only says the market is undecided.
- Wait for the next candle to break its high or its low to get a direction.
- Enter in the breakout direction, stop loss on the opposite side of the pattern.
- If price keeps ranging, stay out — no signal is also a decision.
Watch out: Several High Wave candles in a row often mean the old trend is ending. Size down here.
Example: In an uptrend, Rising Window is a pause to gather momentum. Once it completes, price continues higher.
How to spot itTwo green candles with a price gap between the first high and the second low.
What it meansBuying was strong enough that no trading happened at all inside that gap.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: The gap becomes a SUPPORT zone. Price often returns to test it before continuing — that retest is the better entry.
Example: In a downtrend, Falling Window is a technical bounce. Once it completes, price continues lower.
How to spot itTwo red candles with a price gap between the first low and the second high.
What it meansSelling was strong enough that price jumped over an entire untraded zone.
How to trade it
- Wait for the next candle to close below the pattern low — no confirmation, no trade.
- Enter SHORT when price breaks below the pattern low (green line).
- Stop loss above the pattern high (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest support.
Watch out: The gap becomes a RESISTANCE zone. If price fills it and closes above, the downtrend is broken.
Example: In an uptrend, Upside Tasuki Gap is a pause to gather momentum. Once it completes, price continues higher.
How to spot itTwo green candles with an upward gap, then a red candle that pulls back but does NOT close the gap.
What it meansShort-term profit taking while buyers keep the gap intact — the uptrend is still in place.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: If the red candle fully fills the gap, the pattern is void and becomes a reversal warning instead.
Example: In an uptrend, Mat Hold is a pause to gather momentum. Once it completes, price continues higher.
How to spot itA long green candle, a small gap, three pullback candles holding above the first body midpoint, then a long green candle breaking the high.
What it meansA very shallow pullback inside an uptrend — buyers would not even let price come back down.
How to trade it
- Wait for the next candle to close above the pattern high — no confirmation, no trade.
- Enter LONG when price breaks above the pattern high (green line).
- Stop loss below the pattern low (red line) — that is where the pattern is invalidated.
- Take profit at a minimum 1:2 risk-reward (teal line), or at the nearest resistance.
Watch out: Similar to Rising Three Methods but with a much SHALLOWER pullback, which makes the continuation signal stronger.
Example: Double Bottom builds at the end of a decline. Once price closes above the neckline, the pattern completes and the trend turns up.
How to spot itPrice makes two lows at a similar level with a bounce between them. The line across the bounce high is the neckline.
What it meansThe lows were rejected twice — sellers can no longer push price any lower.
How to trade it
- Wait for a candle to CLOSE above the neckline — an intraday poke through is not enough.
- Enter LONG on the breakout close, or on the pullback that retests the level from above.
- Stop loss below the last swing low inside the pattern (red line).
- Target the pattern height projected up from the breakout (teal line).
Watch out: The pattern only completes when price CLOSES above the neckline. Before that it can still become a third low.
Example: Double Top builds at the end of a rally. Once price closes below the neckline, the pattern completes and the trend turns down.
How to spot itPrice makes two highs at a similar level with a pullback between them. The low of that pullback is the neckline.
What it meansBuyers tried to break the high twice and failed both times — buying power is spent.
How to trade it
- Wait for a candle to CLOSE below the neckline — an intraday poke through is not enough.
- Enter SHORT on the breakdown close, or on the pullback that retests the level from below.
- Stop loss above the last swing high inside the pattern (red line).
- Target the pattern height projected down from the breakdown (teal line).
Watch out: Enter when price breaks the neckline. If the second high is clearly above the first, it is no longer a Double Top.
Example: Head and Shoulders builds at the end of a rally. Once price closes below the neckline, the pattern completes and the trend turns down.
How to spot itThree peaks: a left shoulder, a higher head in the middle, then a right shoulder around the left shoulder height. The line joining the two troughs is the neckline.
What it meansThe final peak fails to reach the middle one — the uptrend has lost its higher-high structure.
How to trade it
- Wait for a candle to CLOSE below the neckline — an intraday poke through is not enough.
- Enter SHORT on the breakdown close, or on the pullback that retests the level from below.
- Stop loss above the last swing high inside the pattern (red line).
- Target the pattern height projected down from the breakdown (teal line).
Watch out: The price target is roughly the head-to-neckline distance projected from the breakout. Price often comes back to retest the neckline.
Example: Inverse Head and Shoulders builds at the end of a decline. Once price closes above the neckline, the pattern completes and the trend turns up.
How to spot itThree troughs: a left shoulder, a lower head in the middle, then a right shoulder around the left shoulder level. The line joining the two peaks is the neckline.
What it meansThe final low fails to reach the middle one — the downtrend has lost its lower-low structure.
How to trade it
- Wait for a candle to CLOSE above the neckline — an intraday poke through is not enough.
- Enter LONG on the breakout close, or on the pullback that retests the level from above.
- Stop loss below the last swing low inside the pattern (red line).
- Target the pattern height projected up from the breakout (teal line).
Watch out: Rising volume on the neckline break is good confirmation. Without volume, false breaks are common.
Example: Bull Flag forms as a pause inside an uptrend. Once price breaks out of it, the advance resumes.
How to spot itA steep rally (the pole), then price drifts sideways or slightly lower inside a narrow channel (the flag).
What it meansThe market is pausing to catch its breath after a strong advance, not reversing.
How to trade it
- Wait for a candle to CLOSE above the flag boundary — an intraday poke through is not enough.
- Enter LONG on the breakout close, or on the pullback that retests the level from above.
- Stop loss below the last swing low inside the pattern (red line).
- Target the pattern height projected up from the breakout (teal line).
Watch out: The flag must not retrace too deep — pulling back more than half the pole badly weakens the pattern.
Example: Bear Flag forms as a pause inside a downtrend. Once price breaks out of it, the decline resumes.
How to spot itA steep decline, then price bounces slightly higher inside a narrow channel tilted against the trend.
What it meansA technical bounce that lets sellers add to positions — the downtrend is not over.
How to trade it
- Wait for a candle to CLOSE below the flag boundary — an intraday poke through is not enough.
- Enter SHORT on the breakdown close, or on the pullback that retests the level from below.
- Stop loss above the last swing high inside the pattern (red line).
- Target the pattern height projected down from the breakdown (teal line).
Watch out: Easily mistaken for a bullish reversal. Until price breaks the flag high, the downtrend stands.
Example: Pennant forms as a pause inside an uptrend. Once price breaks out of it, the advance resumes.
How to spot itAfter a strong rally, the range tightens into a small converging triangle.
What it meansBoth sides balance out briefly and the range compresses before continuing in the original direction.
How to trade it
- Wait for a candle to CLOSE above the flag boundary — an intraday poke through is not enough.
- Enter LONG on the breakout close, or on the pullback that retests the level from above.
- Stop loss below the last swing low inside the pattern (red line).
- Target the pattern height projected up from the breakout (teal line).
Watch out: Unlike a Bull Flag, the range CONVERGES instead of running parallel. The longer the squeeze, the sharper the break.
Example: Ascending Triangle forms as a pause inside an uptrend. Once price breaks out of it, the advance resumes.
How to spot itA flat upper edge (firm resistance) with lows stepping progressively higher to form a rising lower edge.
What it meansBuyers are willing to pay higher prices on each swing, squeezing price against resistance.
How to trade it
- Wait for a candle to CLOSE above the neckline — an intraday poke through is not enough.
- Enter LONG on the breakout close, or on the pullback that retests the level from above.
- Stop loss below the last swing low inside the pattern (red line).
- Target the pattern height projected up from the breakout (teal line).
Watch out: You want at least two touches of resistance and two rising lows. Enter on a close ABOVE the flat edge.
Example: Descending Triangle forms as a pause inside a downtrend. Once price breaks out of it, the decline resumes.
How to spot itA flat lower edge (firm support) with highs stepping progressively lower to form a falling upper edge.
What it meansSellers accept lower prices on each swing, squeezing price down against support.
How to trade it
- Wait for a candle to CLOSE below the neckline — an intraday poke through is not enough.
- Enter SHORT on the breakdown close, or on the pullback that retests the level from below.
- Stop loss above the last swing high inside the pattern (red line).
- Target the pattern height projected down from the breakdown (teal line).
Watch out: The more times support is tested, the more likely it breaks — the opposite of the "strong support" intuition.
Candlestick patterns are reference signals, not buy or sell orders. Always combine them with the trend, support/resistance zones and risk management.
