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5 Powerful Bearish Candlestick Patterns

The document discusses 5 powerful bearish candlestick patterns that indicate an uptrend is likely to reverse to a downtrend. These patterns include the hanging man, dark cloud cover, bearish engulfing, evening star, and three black crows patterns. Examples of each pattern are shown in charts and they should form at the end of an uptrend to signal a potential trend reversal. Volume and other indicators can help confirm signals from these bearish reversal candlestick patterns.

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921 views7 pages

5 Powerful Bearish Candlestick Patterns

The document discusses 5 powerful bearish candlestick patterns that indicate an uptrend is likely to reverse to a downtrend. These patterns include the hanging man, dark cloud cover, bearish engulfing, evening star, and three black crows patterns. Examples of each pattern are shown in charts and they should form at the end of an uptrend to signal a potential trend reversal. Volume and other indicators can help confirm signals from these bearish reversal candlestick patterns.

Uploaded by

vikas_k41
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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5 Powerful Bearish Candlestick

Patterns
After having a basic understanding of candlestick chart pattern, let’s dive into Bearish
Candlestick Patterns that indicate the ongoing uptrend which is going to end and it may reverse
to the downtrend.
These Bearish Reversal Candlestick Patterns can be single or multiple candlestick patterns.

One should note that:

 Bearish reversal patterns should form at the end of an uptrend otherwise it will act just
like a continuation pattern.

 One should confirm the reversal signals gives by bearish reversal patterns with other
indicators such as volume and resistance.

 Table of Contents

 1. Hanging Man:
 2. Dark Cloud Cover:
 3. Bearish Engulfing:
 4. The Evening Star:
 5. The Three Black Crows:
 Key Takeaways:
In this blog we will be discussing 5 Powerful Bearish Candlestick Patterns:
1. Hanging Man:
Hanging man is a bearish reversal candlestick pattern having a long lower shadow with a small
real body.
Appearing at the end of the uptrend this bearish candlestick pattern indicate weakness in the
ongoing price movement and shows that the bulls have pushed the prices up but they are not able
to push further.

It has a small real body which indicates a small distance between the opening and closing price.
The lower shadow should be twice the length of its body and there is no upper shadow.

This pattern helps the traders to square their buy position and enter a short position.

Below is an example of the formation of the Hanging Man on the Daily chart of Nifty 50 below:

2. Dark Cloud Cover:


Dark Cloud Cover is a bearish reversal candlestick pattern formed at the end of an uptrend and
indicating weakness in the uptrend.
This candlestick pattern are made of two candlesticks, the first being a bullish candlestick and
the second one is a bearish candlestick.
As the prices rise, this pattern becomes important for the reversal to the downside.

Below is an example of the Dark Cloud Cover in the daily chart of Sun Pharmaceutical
Industries Ltd.

3. Bearish Engulfing:
The bearish engulfing pattern is the bearish reversal pattern which signals a reversal of the
uptrend and indicates a fall in prices due to the selling pressure exerted by the sellers when it
appears at the top of an uptrend.

This pattern triggers a reversal of the ongoing uptrend as sellers enter the market and make the
prices fall.

The pattern is formed by two candles with the second bearish candle engulfing the ‘body’ of the
previous green candle.

Learn how to trade with bearish and bullish engulfing patterns


Below is an example of the Bearish Engulfing pattern as shown in the daily chart of Reliance
Industries:
4. The Evening Star:
An Evening Star is a candlestick pattern that is used by traders for analyzing when the uptrend is
going to reverse to a downtrend.
This candlestick pattern consists of three candlesticks: a large bullish candlestick, a small-bodied
candle, and a bearish candlestick.

Evening Star patterns appear at the top of the uptrend and signals that the uptrend is going to
reverse to a downtrend

Below is an example of the Evening Star pattern is formed in the Nifty 50 chart below:


5. The Three Black Crows:
Three Crows pattern is multiple candlestick patterns that is used for predicting reversal to the
downtrend from the uptrend.
It is formed when the sellers exert bearish forces and make the prices fall for three consecutive
days.

Traders can take a short position after the bearish candlestick pattern is formed.

Traders should take the help of volume and technical indicators for confirming the formation of
this candlestick pattern.

Below is an example of the daily chart of Phillips Carbon Black Ltd. that the Three Black Crows 
Candlestick pattern :
Key Takeaways:
 Hanging man is a bearish reversal candlestick pattern having a long lower shadow with a
small real body.

 Dark Cloud Cover is a bearish reversal candlestick pattern formed at the end of an
uptrend and indicating weakness in the uptrend.

 The bearish engulfing pattern is the bearish reversal pattern which signals a reversal of
the uptrend and indicates a fall in prices due to the selling pressure exerted by the sellers
when it appears at the top of an uptrend.

 An Evening Star is a candlestick pattern that is used by traders for analyzing when the
uptrend is going to reverse to a downtrend.

 Three Crows pattern is a multiple candlestick pattern that is used for predicting reversal
to the downtrend from the uptrend.

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