Category: Chart Patterns

The Evening Star is multiple candlestick pattern which is formed after the uptrend indicating bearish reversal.

It is made of 3 candlesticks, first being a bullish candle, second a doji and third being a bearish candle.

The first candle shows the continuation of the uptrend, the second candle being a doji indicates indecision in the market, and the third bearish candle shows that the bears are back in the market and reversal is going to take place.

The second candle should be completely out of the real bodies of first and third candle.

Bearish Engulfing is a multiple candlestick pattern that is formed after an uptrend indicating a bearish reversal.

It is formed by two candles, the second candlestick engulfing the first candlestick. The first candle being a bullish candle indicates the continuation of the uptrend.

The second candlestick chart is a long bearish candle that completely engulfs the first candle and shows that the bears are back in the market.

Dark Cloud Cover is multiple candlestick pattern which is formed after the uptrend indicating bearish reversal.

It is formed by two candles, the first candle being a bullish candle which indicates the continuation of the uptrend.

The second candle is a bearish candle which opens gap up but closes more than 50% of the real body of the previous candle which shows that the bears are back in the market and bearish reversal is going to take place.

Hanging Man is a single candlestick pattern which is formed at the end of an uptrend and signals bearish reversal.

The real body of this candle is small and is located at the top with a lower shadow which should be more than the twice of the real body. This candlestick pattern has no or little upper shadow.

The psychology behind this candle formation is that the prices opened and seller pushed down the prices.

Suddenly the buyers came into the market and pushed the prices up but were unsuccessful in doing so as the prices closed below the opening price.

This resulted in the formation of bearish pattern and signifies that seller are back in the market and uptrend may end.

Traders can enter a short position if next day a bearish candle is formed and can place a stop-loss at the high of Hanging Man.

Bearish Reversal candlestick patterns indicate that the ongoing uptrend is going to reverse to a downtrend.

Thus, the traders should be cautious about their long positions when the bearish reversal candlestick patterns are formed.

The bullish counterattack pattern is a bullish reversal pattern that predicts the upcoming reversal of the current downtrend in the market. This candlestick pattern is a two-bar pattern that appears during a downtrend in the market. A pattern needs to meet the following conditions to be a bullish counterattack pattern. 

There must be a strong downtrend in the market for the formation of the bullish counterattack pattern. 

The first candle must be a long black candle with a real body. 

The second candle must also be a long (ideally, equal in size to the first candle) but a white candle with a real body. The second candle must close near the close of the first candle. 

The on neck pattern occurs after a downtrend when a long real bodied bearish candle is followed by a smaller real bodied bullish candle which gaps down on the open but then closes near the prior candle’s close.

The pattern is called a neckline because the two closing prices are the same or almost the same across the two candles, forming a horizontal neckline.

The Three Outside Up is multiple candlestick pattern which is formed after a downtrend indicating bullish reversal.

It consists of three candlesticks, the first being a short bearish candle, the second candlestick being a large bullish candle which should cover the first candlestick.

The third candlestick should be a long bullish candlestick confirming the bullish reversal.

The relationship of the first and second candlestick chart should be of the Bullish Engulfing candlestick pattern.

An Inverted Hammer is formed at the end of the downtrend and gives a bullish reversal signal.

In this candlestick, the real body is located at the end and there is a long upper shadow. It is the inverse of the Hammer Candlestick pattern.

This pattern is formed when the opening and closing prices are near to each other and the upper shadow should be more than twice the real body.

The Tweezer Bottom candlestick pattern is a bullish reversal candlestick pattern that is formed at the end of the downtrend.

It consists of two candlesticks, the first one being bearish and the second one being bullish candlestick.

Both the candlesticks make almost or the same low.When the Tweezer Bottom candlestick pattern is formed the prior trend is a downtrend.

A bearish tweezer candlestick is formed which looks like the continuation of the ongoing downtrend. On the next day, the second day’s bullish candle’s low indicates a support level.

The bottom-most candles with almost the same low indicate the strength of the support and also signal that the downtrend may get reversed to form an uptrend. Due to this the bulls step into action and move the price upwards.

This bullish reversal is confirmed the next day when the bullish candle is formed.