Candlestick Formation

Candlestick Patterns
Name: Spinning Top
Trend: Up or Down
Forecast: Both
Description: The body can be green and red. Candlestick lines that have small bodies with upper and
lower shadows that exceed the length of the body and vertically centered between long upper and lower
shadows. Spinning tops signal indecision. Spinning tops and dojis both represent indecision. Dojis are
smaller, with small real bodies and small upper and lower shadows. The Spinning top has long upper
and lower shadows. Both patterns occur frequently and are sometimes used to warn of a reversal after a
strong price move.

Name: Doji
Trend: Up or Down
Forecast: Both
Description: A Doji represents indecision in the markets as both buying and selling pressure are in
equilibrium.
Here’s how to recognize it:
• The candle’s open and close are around the middle of the range
• The upper and lower shadows are short and about the same length
Name: Dragonfly Doji
Trend: Up
Forecast: Bullish
Description: The Dragonfly Doji is created when the open, high, and close are the same or about the
same price (Where the open, high, and close are exactly the same price is quite rare). The most
important part of the Dragonfly Doji is the long lower shadow. When it forms at the bottom of a
downtrend, the dragonfly doji is considered a reliable indication of a trend reversal. This is because the
price hit a support level during the trading day, hinting that sellers no longer outnumber buyers in the
market.

Name: Gravestone Doji

Trend: Down
Forecast: Bullish
Description: Gravestone Doji closes open and close near the lows of the range with long upper
shadow. This tells you there is a rejection of higher prices as selling pressure stepped in and pushed the
market lower towards the opening price.
Name: Shooting Star
Trend: Down
Forecast: Bearish
Description: It is formed in an uptrend: it has a small lower body, and a long upper wick. The body
color can be red and green.
• no lower shadow or the shadow cannot be longer than the body
• upper shadow at least two times longer than the body
• if the gap is created at the opening or the closing, it makes the signal stronger
• appears as a long line

Name: Hammer
Trend: Up
Forecast: Bullish
Description: Hammers occur after a price decline. The color of the body can vary, but green hammers
indicate a stronger bull market than red hammers. If a lower shadow exceeds that height, we deal with
the Takuri Line pattern. In other words, the Takuri Line is like the Hammer but with a very long lower
shadow.
• white or black candle with a small body,
• no upper shadow or the shadow cannot be longer than the body,
• lower shadow between two to three times longer than the body,
• if the gap is created at the opening or at the closing, it makes the signal stronger,
• appears as a long line
Name: Inverted Hammer
Trend: Up
Forecast: Bullish
Description: The hammer candle happens at the end of a decline. In a downtrend, the open is lower,
then it trades higher, but closes near its open, therefore looking like an inverted lollipop.
• First candle:
• a candle in a downtrend
• black body
• Second candle:
• a white or black candle with a small body
• no lower shadow or the shadow cannot be longer than then body
• upper shadow at least 2.5 times longer than the body
• the open below or at the level of the previous candle's close

Name: Hanging Man

Trend: Down
Forecast: Bearish
Description: It forms at the end of an uptrend. The color of the hanging man's real body isn't of
concern.
white or black candle with a small body
• no upper shadow or the shadow cannot be longer than the body,
• lower shadow at least two times longer than the body,
• if the gap is created at the opening or at the closing, it makes the signal stronger,
• appears as a long line,
• the body fully located above the trend line
Name: Bullish engulfing
Trend: Up
Forecast: Bullish
Description: A reversal bullish pattern, that appears at the end of downtrend. The Bullish Engulfing
pattern is a two-candle reversal pattern. The first candle is a short red body that is completely engulfed
by a larger green candle, without regard to the length of the tail shadows.
• First candle
• a candle in a downtrend
• black body
• Second candle
• white body
• candle's body engulfs the prior (black) candle's body

Name: Bearish engulfing

Trend: Down
Forecast: Bearish
Description: A reversal bearish pattern, that appears at the end of uptrend. The Bearish Engulfing
pattern is a two-candle reversal pattern. The first candle has a small green body that is engulfed by a
subsequent long red candle, without regard to the length of the tail shadows.
• First candle
• a candle in an uptrend
• white body
• Second candle
• black body
• candle's body engulfs the prior (white) candle's body
Name: Piercing Line
Trend: Up
Forecast: Bullish
Description: A Piercing Pattern is a 2-candle reversal candlestick pattern that forms after a decline in
price. The first candle is long and red bringing the market lower. The next green candle opens at new
lows but rallies to close at a point which pierces through the middle of the previous candle.
• First candle
• a candle in a downtrend
• black body
• Second candle
• white body
• the opening below or equal of the prior low
• the closing above the midpoint of the prior candle's body
• the closing below the previous opening

Name: Morning Star

Trend: Up
Forecast: Bullish
Description: The pattern consists of three candles: one short-bodied candle (called a doji or a spinning
top) between a preceding long red candle in a down trend and a succeeding long white one. The color
of the real body of the short candle can be either white or black, and there is no overlap between its
body and that of the black candle before.
• First candle
• a candle in a downtrend
• black body
• Second candle
• white or black body
 • the candle body is located below the prior body
• Third candle
• white body
• the candle body is located above the prior body
• the candle closes at least halfway up the body of the first line

Name: Evening Star

Trend: Down
Forecast: Bearish
Description: The pattern consists of three candles: one short-bodied candle (called a doji or a spinning
top) between a preceding long green candle in an up trend and a down trend long red one. The color of
the real body of the short candle can be either white or black.

• First candle
• a candle in an uptrend
• white body
• Second candle
• white or black body
• the candle body is located above the prior body
• Third candle
• black body
• the candle body is located below the prior body
• the candle closes at least halfway down the body of the first line

Name: Three White Soldiers

Trend: Up
Forecast: Bullish
Description: The three white soldiers pattern occurs over three days. It consists of consecutive long
green (or white) candles with small wicks, which open and close progressively higher than the previous
day. It is a very strong bullish signal that occurs after a downtrend, and shows a steady advance of
buying pressure.
• First candle
• a candle in a downtrend
• white body
• Second candle
• white body
• the opening price within the previous body
• the closing price above the previous closing price
• Third candle
• white body
• the opening price within the previous body
• the closing price above the previous closing price

Name: Three Black Crows

Trend: Down
Forecast: Bearish
Description: The three black crows candlestick pattern comprises of three consecutive long red
candles with short or non-existent wicks. Each session opens at a similar price to the previous day, but
selling pressures push the price lower and lower with each close.
Traders interpret this pattern as the start of a bearish downtrend, as the sellers have overtaken the
buyers during three successive trading days.
• First candle
• a candle in an uptrend
• black body
• Second candle
• black body
• the opening price within the previous body
• the closing price below the previous closing price
• Third candle
• black body
• the opening price within the previous body
• the closing price below the previous closing price
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