Candlesticks & Chart Patterns Master Resource

When a candle has a long wick extending below the body, it shows that sellers pushed price down, but buyers stepped in and pushed price back up. This is bullish rejection of lower prices. Buyers are protecting a support level. The longer the wick relative to the body, the stronger the rejection signal.

When a candle has a long wick extending above the body, it shows that buyers pushed price up, but sellers stepped in and pushed price back down. This is bearish rejection of higher prices. Sellers are defending a resistance level. The longer the wick relative to the body, the stronger the rejection signal.

When a candle has long wicks above and below the body, or when the body is very small (opening and closing at nearly the same price), it indicates indecision in the market. Neither buyers nor sellers have control. These are neutral candles that often appear at turning points or during consolidation phases. They suggest the market is pausing and deciding which direction to move next.

Hammer

A candle with a small body and a long lower wick. Appears at support levels or after a downtrend. Signals that sellers tried to push price down, but buyers stepped in. Bullish reversal signal when confirmed by the next candle.

Bullish Engulfing

A bullish candle (typically green) that completely engulfs the prior bearish candle (typically red) in terms of body size. Shows a strong shift from sellers to buyers. More powerful when it appears after a downtrend or at support.

Piercing Line

A green candle that opens below the prior red candle's close but closes above the midpoint of the red candle's body. Shows buyers aggressively buying, pushing price higher from a weak open. Bullish reversal signal.

Long-Body Green Candles

Candles with large green bodies and small or no wicks show strong buying pressure. Buyers are in control, closing well above the open. Common in uptrends and strong continuation moves.

Shooting Star

A candle with a small body and a long upper wick. Appears at resistance levels or after an uptrend. Shows that buyers pushed price up, but sellers stepped in and pushed it back down. Bearish reversal signal when confirmed by the next candle.

Bearish Engulfing

A bearish candle (typically red) that completely engulfs the prior bullish candle (typically green) in terms of body size. Shows a strong shift from buyers to sellers. More powerful when it appears after an uptrend or at resistance.

Dark Cloud Cover

A red candle that opens above the prior green candle's close but closes below the midpoint of the green candle's body. Shows sellers aggressively selling, pushing price lower from a weak open. Bearish reversal signal.

Long-Body Red Candles

Candles with large red bodies and small or no wicks show strong selling pressure. Sellers are in control, closing well below the open. Common in downtrends and strong continuation moves.

A three-candle pattern that signals a reversal from downtrend to uptrend:

1. 1. Long red candle — Continuation of downtrend
2. 2. Small body candle (green or red) — Indecision, often gaps down or has a small body
3. 3. Large green candle — Buyers take control, closing well above the midpoint of the first red candle

The Morning Star shows a transition from selling pressure to buying pressure. The small body in the middle represents a pause before bullish strength emerges.

A three-candle pattern that signals a reversal from uptrend to downtrend:

1. 1. Long green candle — Continuation of uptrend
2. 2. Small body candle (red or green) — Indecision, often gaps up or has a small body
3. 3. Large red candle — Sellers take control, closing well below the midpoint of the first green candle

The Evening Star shows a transition from buying pressure to selling pressure. The small body in the middle represents a pause before bearish strength emerges.

Double Bottom

Price moves down, bounces up, moves down again to a similar level (or slightly higher), then bounces up again. The two bottoms form support. After the second bounce, price rises above the peak between them. Signals bullish reversal. The pattern shows that sellers tested the low twice but couldn't break it. Buyers then take over.

Cup and Handle

Price forms a rounded U-shape (the cup), then pulls back slightly in a smaller downtrend (the handle), then breaks out upward. The handle is typically smaller than the cup. This is a continuation pattern that shows consolidation before a bullish breakout. Common on daily and longer timeframes.

Inverse Head and Shoulders

Price forms three valleys: a low (left shoulder), a lower low (head), then another low (right shoulder) that is higher than the head but similar to the left shoulder. A line can be drawn across the tops (neckline). When price breaks above the neckline with volume, it signals a bullish reversal. The pattern shows a series of lower lows that eventually fail to hold, signaling buyers are stepping in.

Ascending Triangle

Price forms higher lows (ascending support line) while testing a horizontal resistance level multiple times. The pattern shows buyers becoming increasingly willing to buy at higher prices while resistance holds. When price breaks above resistance, it signals bullish breakout. The ascending triangle shows strengthening buying pressure before the breakout.

Double Top

Price moves up, pulls back, moves up again to a similar level (or slightly lower), then pulls back again. The two tops form resistance. After the second pullback, price falls below the valley between them. Signals bearish reversal. The pattern shows that buyers tested the high twice but couldn't push higher. Sellers then take over.

Head and Shoulders

Price forms three peaks: a high (left shoulder), a higher high (head), then another high (right shoulder) that is lower than the head but similar to the left shoulder. A line can be drawn across the lows (neckline). When price breaks below the neckline with volume, it signals a bearish reversal. The pattern shows a series of lower highs that eventually fail to hold, signaling sellers are stepping in.

Descending Triangle

Price forms lower highs (descending resistance line) while testing a horizontal support level multiple times. The pattern shows sellers becoming increasingly willing to sell at lower prices while support holds. When price breaks below support, it signals bearish breakdown. The descending triangle shows strengthening selling pressure before the breakdown.

Bearish Flag

A sharp downward move (flagpole) followed by a consolidation period that trends slightly upward (the flag). The consolidation is contained between two resistance and support lines. When price breaks below the support of the flag, it signals continuation of the downtrend with force. Often seen in strong selloffs as a brief pause before selling resumes.

Channels

Bullish Channel (Uptrend): Price moves between an ascending support line and an ascending resistance line. Higher lows and higher highs. Traders buy near support and sell near resistance, expecting the pattern to continue until support breaks.

Bearish Channel (Downtrend): Price moves between a descending resistance line and a descending support line. Lower highs and lower lows. Traders short near resistance and cover near support, expecting the pattern to continue until resistance breaks.

Symmetrical Triangle

Price forms higher lows and lower highs, with both lines converging toward a point (the apex). The pattern represents decreasing volatility and indecision. When price breaks out above the upper line or below the lower line, it can signal a strong continuation move in that direction. The direction of the breakout is often determined by the trend that led into the triangle. The tighter the consolidation before the break, the stronger the breakout move tends to be.

Wedge

Bullish Wedge (Rising Wedge): Price forms higher lows and higher highs, but the highs are rising slower than the lows (narrowing pattern tilted upward). Often a bearish reversal pattern in strong uptrends. Breakdown below support signals selling.

Bearish Wedge (Falling Wedge): Price forms lower lows and lower highs, but the lows are falling slower than the highs (narrowing pattern tilted downward). Often a bullish reversal pattern in strong downtrends. Breakout above resistance signals buying.

Rectangle (Consolidation Box)

Price bounces between a horizontal support level and a horizontal resistance level multiple times without creating a clear trend. This shows consolidation, indecision, and contained price range. When price eventually breaks above resistance or below support with volume, it signals the direction of the next move. The longer the consolidation, the more significant the eventual breakout tends to be.