Candlestick Patterns Encyclopedia: The Complete Visual Guide to Japanese Candlestick Trading

What Are Japanese Candlesticks?

Japanese candlestick charting dates back to the 1700s, used by rice trader Munehisa Homma. Each candlestick shows four prices: Open, High, Low, Close (OHLC).

Anatomy of a Candlestick

• Body: The thick part between Open and Close
• Upper Shadow/Wick: Line above the body (High)
• Lower Shadow/Wick: Line below the body (Low)
• Green/White body: Close > Open (bullish)
• Red/Black body: Close < Open (bearish)

Single Candlestick Patterns

1. Doji ⚖️

Appearance: Very small or no body, Open ≈ Close Meaning: Complete indecision between buyers and sellers Types:

• Standard Doji: Small body, equal shadows
• Long-Legged Doji: Very long upper and lower shadows
• Dragonfly Doji: Long lower shadow, no upper → Bullish at support
• Gravestone Doji: Long upper shadow, no lower → Bearish at resistance

2. Hammer 🔨

Appearance: Small body at top, long lower shadow (2-3× body length) Location: At the bottom of a downtrend Signal: Bullish reversal — sellers pushed price down but buyers recovered Confirmation: Next candle closes above hammer's body

3. Inverted Hammer 🔨🔄

Appearance: Small body at bottom, long upper shadow Location: At the bottom of a downtrend Signal: Potential bullish reversal — buyers attempted but couldn't hold gains yet Confirmation: Needs a strong bullish candle to follow

4. Hanging Man 🪢

Appearance: Identical to Hammer but at the TOP of an uptrend Signal: Bearish reversal — the same shape means something different based on context Confirmation: Next candle closes below hanging man's body

5. Shooting Star 💫

Appearance: Small body at bottom, long upper shadow Location: At the top of an uptrend Signal: Bearish reversal — buyers pushed up but sellers took over Confirmation: Next candle closes below shooting star's body

6. Marubozu 📊

Appearance: Full body with NO shadows Types:

• Bullish Marubozu: Opens at low, closes at high → Maximum bullish conviction
• Bearish Marubozu: Opens at high, closes at low → Maximum bearish conviction Signal: Very strong directional conviction — continuation expected

7. Spinning Top 🔄

Appearance: Small body with equal upper and lower shadows Signal: Indecision, similar to Doji but with a slightly larger body Context: After a strong trend, it can signal potential reversal

Double Candlestick Patterns

8. Bullish Engulfing 📈

Pattern: Small red candle → Larger green candle that completely engulfs it Location: At the bottom of a downtrend Signal: Strong bullish reversal Quality: The larger the engulfing candle and the more volume, the stronger

9. Bearish Engulfing 📉

Pattern: Small green candle → Larger red candle that completely engulfs it Location: At the top of an uptrend Signal: Strong bearish reversal

10. Tweezer Tops 🔝🔝

Pattern: Two candles with the same or nearly the same high Location: At resistance Signal: Bearish — price was rejected at the same level twice

11. Tweezer Bottoms 🔽🔽

Pattern: Two candles with the same or nearly the same low Location: At support Signal: Bullish — price was supported at the same level twice

12. Piercing Line ⚡

Pattern: Bearish candle → Bullish candle that opens below previous low and closes above the midpoint of the bearish candle Signal: Bullish reversal (weaker than engulfing)

13. Dark Cloud Cover ☁️

Pattern: Bullish candle → Bearish candle that opens above previous high and closes below the midpoint of the bullish candle Signal: Bearish reversal

Triple Candlestick Patterns

14. Morning Star ⭐

Pattern: Large bearish → Small body (any color, gap down) → Large bullish Location: Bottom of downtrend Signal: Strong bullish reversal Ideal: Third candle closes above midpoint of first candle

15. Evening Star 🌟

Pattern: Large bullish → Small body (gap up) → Large bearish Location: Top of uptrend Signal: Strong bearish reversal

16. Three White Soldiers 💂💂💂

Pattern: Three consecutive long-bodied bullish candles Each candle: Opens within previous body, closes near its high Signal: Strong bullish continuation/reversal Warning: If upper shadows are too long, momentum may be fading

17. Three Black Crows 🐦‍⬛🐦‍⬛🐦‍⬛

Pattern: Three consecutive long-bodied bearish candles Signal: Strong bearish continuation/reversal

18. Three Inside Up 📊↗️

Pattern: Bearish candle → Inside bar (bullish harami) → Bullish candle breaking above first candle's high Signal: Bullish reversal confirmation

19. Three Inside Down 📊↘️

Pattern: Bullish candle → Inside bar (bearish harami) → Bearish candle breaking below first candle's low Signal: Bearish reversal confirmation

Continuation Patterns

20. Rising Three Methods 📈📈📈

Pattern: Long bullish → 3 small bearish candles (within first candle's range) → Long bullish Signal: Bullish continuation — brief consolidation within an uptrend

21. Falling Three Methods 📉📉📉

Pattern: Long bearish → 3 small bullish candles (within first candle's range) → Long bearish Signal: Bearish continuation

22. Tasuki Gap ⬆️↔️

Pattern: Two bullish candles with a gap between → Third bearish candle partially fills the gap but doesn't close it Signal: Bullish continuation — the gap acts as support

Pattern Reliability Guide

How to Trade Candlestick Patterns

The 5 Rules

1. Context is everything — A hammer at random is noise. A hammer at major support with high volume is powerful.
2. Higher timeframes are more reliable — Daily > 4H > 1H > 15m
3. Always wait for confirmation — Don't enter on the pattern candle itself
4. Combine with S/R levels — Patterns at key levels are 3-5× more reliable
5. Volume matters — High volume patterns carry more conviction

Entry Framework

1. Identify the pattern
2. Confirm it's at a significant level (S/R, Fibonacci, moving average)
3. Wait for confirmation candle
4. Enter with stop loss below/above the pattern
5. Target the next significant S/R level

Related Resources:

• Price Action Strategy Guide
• Technical Analysis Tool
• Live Charts