Bullish Harami (Reversal)

1st day with high volume in the existing downtrend brings complacency to the bears.

The next day trades in a small range within the previous day's real body. Light volume on the 2nd day should give rise to concern by the bears of an impending change of trend.

Look for higher prices over the coming days, especially if the next day provides confirmation of a trend change by closing higher.

Bullish Hammer (Reversal)

As with any single candlestick, confirmation is required.

The Bullish Hammer formation shows the price goes much lower than the open then closes near the opening price. This fact reduces the confidence of the bears.

Ideally, a white real body Hammer with a higher open the following day could be a bullish signal for the days ahead.

Piercing Line (Reversal)

The gap down on the 2nd day perpetuates the downtrend. However, the 2nd day's close is above the midpoint of the 1st day's body. This suggests to the bears that a bottom could be forming.

This price action is not nearly as discernable using bar charts as it is with candlestick charts. The more penetration of the close on the 2nd day to the 1st day's body, the more probable the reversal signal will succeed.

Morning Doji Star (Reversal)

The bullishness of the doji star created on the 1st two days is confirmed with the 3rd day. If the penetration of the 3rd day is more than 50 percent, then this formation has a much better chance to succeed for the trader.

If the penetration of the 3rd day is more than 50 percent, then this formation has a much better chance to succeed for the trader.

Bullish Engulfing (Reversal)

If not much volume occurs on the 1st day of the Bullish Engulfing formation compared to the 2nd day, then this increases the strength of the pattern.

The 2nd day opens below the close of the 1st day, however quickly rallies to close above the open of the 1st day.

This damages the spirits of the shorts and brings into question the bear trend which prompts additional buying in the coming days.

Hanging Man

Signify increased selling pressure rather than reversal

Moves lower but rallies to close above intraday low

3 Black Crows (Reversal)

Pervasive profit taking takes its toll on those who remain long. This induces a snowball selling effect in the coming days.

Bearish Engulfing (Reversal)

Occurs at the end of an uptrend

If not much volume occurs on the 1st day of the Bearish Engulfing formation compared to the 2nd day, then this increases the strength of the pattern. The 2nd day opens above the close of the 1st day, however quickly sells off to finally close below the open of the 1st day.

This damages the spirits of the longs and brings into question the bull trend which prompts additional selling in the coming days.

Bearish Harami (Reversal)

A long 1st day with high volume in the existing downtrend brings complacency to the bears. The next day trades in a small range within the previous day's real body.

Light volume on the 2nd day should give rise to concern by the bears of an impending change of trend.

Look for higher prices over the coming days, especially if the next day provides confirmation of a trend change by closing higher.

Dark Cloud Cover (Reversal)

Continues uptrend with long white candlestick...

NEXT day opens at new high THEN closes BELOW midpoint of of first day.

This is encouraging to the bulls. However, the 2nd day closes below the midpoint of the 1st day. Longs quickly question their strategy.

Evening Star (Reversal)

Continues uptrend followed by a GAPPED UP small body.

The 2nd day gaps higher, but trades in a small range. The bearishness of this indecision is confirmed by the lower close of the 3rd day. Look for lower prices.

Spinning Top (Possible Reversal)

Signals Indecision

Abandoned Baby (Bearish)

Gap up on the second day encourages the bulls, however the close on the second day is nearly the same as the open on the second day.

This could be a sign of temporary profit taking by the longs, however the third day reveals that the more likely scenario is indecision on the second day.

Watch for additional downside price action in the next few days.

Downside Tasuki Gap

The gap down on the 2nd day does not get filled by the 3rd day. This suggests that the downtrend will continue.

Downside Gap 3 Methods

The gap down on the 2nd day gets filled by the 3rd day. More investigation of the previous weeks is recommended in order to see if this is the first gap.

If so, then this pattern is probably displaying short covering to 'close the gap' created and the bearish trend should continue.

 Side By Side White Lines (Continuation) 

The 2nd and 3rd days are a failed attempt to rally. Shorts are basically taking profit here. The downtrend remains intact.

Advance Block

This formation is similar to the Bullish Three White Soldiers formation.

However, the Bearish Advance Block chart alerts traders to the weakness of the upside price action since the close of the second and third days are significantly less than their highs.

Bearish Falling Three Methods (Continuation)

This is a formation which shows the market taking a breather before continuing it's downtrend.

Notice that a new high is not seen during the 4 remaining days of this formation. This gives little confidence to the bulls, making way for the short sellers.

Bearish Falling 3 Methods (Continuation)

This is a formation which shows the market taking a breather before continuing it's downtrend.

Notice that a new high is not seen during the 4 remaining days of this formation. This gives little confidence to the bulls, making way for the short sellers.

Bearish Breakaway (Reversal)

The up trend is accelerated by a gap up. The next few days trend up, however start to run out of steam. The last day of the formation shows a breakdown and close below the previous 3 days, however the gap created on the 1st day remains unfilled.

Since the gap is not filled and the trend is obviously deteriorating, this implies the reversal signal.

Bearish 3 Line Strike (Continuation)

The 4th day is a powerful move up which could represent a lot of short covering. Since the reversal has already played out in a matter of one day, the risk is now higher for those who wish to bet on a reversal.

The downtrend should resume.

 Deliberation (Reversal)

This formation is very similar to the Bearish Advance Block. The key difference is that all of the weakness shows up on the 3rd day. The first two days have powerful upward moves.

The quick change in sentiment opens the window for daytraders to initiate shorts or capture profits.

3 Inside Down (Reversal)

Bearish Three Outside Down (Reversal)

This is the confirmation of the Engulfing formation.

Bearish Two Crows (Reversal)

The gap created on the 2nd day gets filled by the 3rd day. This quick pull back does not bode well for the bulls. This price action indicates a short term top.

Bearish Upside Gap Two Crows (Reversal)

The gap created on the 2nd day has already started to be tested by the 3rd day. Two consecutive lower closes places a damper on the bullishness. Look for lower prices and the gap to be filled soon.

Bearish In Neck (Continuation)

Bearish On Neck (Continuation)

The 2nd day is unable to close above the 1st day's low. This should bring some discomfort to the longs that entered on the 2nd day. The downtrend should continue shortly.

Separating Lines (Continuation)

The long white day produces skepticism in the bear market. The next day the long black day that forms eases concerns by the shorts. The downtrend should resume.

Bearish Thrusting (Continuation)

This formation underscores the lack of buyers. Even though the 2nd day is an up day, it's still unable to close above the midpoint of the previous day's body. This suggests that the downtrend will continue.

Bearish Harami Cross (Reversal)

The 2nd day's price range does not pierce the previous day's range and closes about where it opened. Volume on the 2nd day is low which indicates that traders are lacking enough information to decide whether to go long or short.

 Bearish Kicking (Reversal)

The gap created by the 2nd day becomes a resistance area. Expect lower prices and for the gap to be tested before breaking back to the upside.

Bearish Meeting Lines (Reversal)

The gap created by the 2nd day becomes a resistance area. Expect lower prices and for the gap to be tested before breaking back to the upside.

Bearish Shooting Star (Reversal)

The long upper shadow and small real body at the bottom of the trading range are cause for concern by the bulls. They wonder if this is the end of the uptrend and take measures to protect their gains.

Bearish Belt Hold (Reversal)

A significant gap up occurs. The remaining price action for the day occurs to the downside. This triggers new short positions to be taken. Concern over this price action re-enforces the selling.

Bearish Tweezer Top (Reversal)

Bullish Mat Hold (Continuation)

This is a resting pattern for the bulls. The 2nd day still closes at a new high and the 4th day still closes above the 1st day's open.

Bears worry that a reversal in not in the cards this time. Hence, the bullish trend continues on the 5th day.

Bullish Rising Three Methods (Continuation)

This is a formation which shows the market taking a breather before continuing its uptrend. Notice that a new low is not seen during the 4 remaining days of this formation. This gives confidence to the bulls, making way for the next move upward in price.

Bullish Breakaway (Reversal)

The down trend is accelerated by a gap down. The next few days trend down, however start to run out of steam. The last day of the formation shows a breakout and close above the previous 3 days, however the gap created on the 1st day remains unfilled.

Since the gap is not filled and the trend is obviously deteriorating, this implies the reversal signal.

Bullish Ladder Bottom (Reversal)

In a downtrend and after moving solidly down for three consecutive days, the bears feel in control. The 4th day prices trade near the open of the previous day, but close at another new low.

This draws attention to the bears who realize that markets do not go down forever. If the next day opens higher, then shorts will lock in profits. And if volume is high, then a reversal has probably occurred.

Bullish Three-Line Strike (Continuation)

The 4th day is a powerful move down which destroys the reversal sentiment. Since the reversal has essentially already played out in a matter of one day, the risk is now higher for those who wish to bet on a reversal.

The uptrend should resume.

Bullish Concealing Baby Swallow (Reversal)

The bears are in control for the 1st two days of this formation. However, the high on the 3rd day trades above the close of the previous day. And, a strong upward opening gap appears the last day.

Since the last day closes at a new low, then this is the perfect opportunity for shorts to cover their positions.

Strong short covering should propel the price upward in the coming days.

 Bullish Side-by-Side White Lines (Continuation)

The 2nd and 3rd days are a failed attempt to reverse the uptrend. The uptrend remains intact.

Bullish Upside Gap Three Methods (Continuation)

The gap up on the 2nd day gets filled by the 3rd day. More investigation of the previous weeks is recommended in order to see if this is the first gap.

If so, then this pattern is probably displaying short selling to 'close the gap' created and the bullish trend should continue.

Bullish Upside Tasuki Gap (Continuation)

The gap up on the 2nd day does not get filled by the 3rd day. This suggests that the uptrend will continue.

Bullish Abandoned Baby (Reversal)

The gap down on the second day encourages the bears, however the close on the second day is nearly the same as the open on the second day.

This could be a sign of temporary profit taking by the shorts, however the third day reveals that the more likely scenario is indecision on the second day. Watch for upside price action in the next few days.

Bullish Stick Sandwich (Reversal)

The price action of the 2nd day suggests that the downtrend is over. The next day opens higher, but sells off to close at the close of the 1st day. The 3rd day's close can be viewed as closing at a short term support level.

Watch for confirmation via a higher close the next day.

Bullish Morning Star (Reversal)

The 2nd day gaps lower, but trades in a small range. The bullishness of this indecision is confirmed by the higher close of the 3rd day. Look for higher prices.

Bullish Three Inside Up (Reversal)

This is the confirmation signal of the Bullish Harami formation.

Bullish Three Outside Up

This is the confirmation of the Engulfing formation.

Bullish Three Stars in the South

Notice that each day's price range is engulfed by the previous day's range. In a downtrend this gives rise to indecision and increased risk for the bears to remain short. Look for higher prices ahead.

3 White Soldiers (Reversal)

This formation represent powerful unabated buying. Shorts would be wise to stay away from this steam engine. Longs should be prepared for a rest before proceeding on to higher prices.

Bullish Unique Three River Bottom (Reversal)

The 1st day's long black candlestick enforces the bears position. The next day a new low is set, however it closes higher than the 1st day. The 3rd day produces some indecision on the part of the bears.

Watch for the reversal confirmation of a new high on the next day.

Bullish Separating Lines (Continuation)

The long black day produces skepticism in the bull market. The next day the long white day that forms eases concerns of the bulls. The uptrend should resume.

 Bullish Piercing Line (Reversal)

The gap down on the 2nd day perpetuates the downtrend. However, the 2nd day's close is above the midpoint of the 1st day's body. This suggests to the bears that a bottom could be forming.

This price action is not nearly as discernable using bar charts as it is with candlestick charts.

The more penetration of the close on the 2nd day to the 1st day's body, the more probable the reversal signal will succeed.

Bullish Meeting Lines (Reversal)

A down day followed by an up day that closes at the previous day's close gets traders to bet on a reversal. It's probably a good idea to wait for confirmation of the downtrend. This would be a higher close the next day.

Bullish Matching Low (Reversal)

Getting two days with equal closes should alert the shorts that an important support level may have been found in last 10 weeks. Higher prices may be ahead in the days to come. A higher close the next day would serve as confirmation of the reversal.

Bullish Kicking (Reversal)

The gap created by the 2nd day becomes a support area. Expect higher prices and for the gap to be tested before breaking back to the downside.

Bullish Inverted Hammer (Reversal)

The long upper shadow and small real body at the bottom of the trading range are cause for concern by the bears. They wonder if this is the end of the downtrend and take measures to protect their gains.

If the next day opens above the body of the Inverted Hammer, then expectations could be for shorts to cover and propel a reversal rally.

Bullish Homing Pigeon (Reversal)

The 2nd day shows a deterioration of the prior downtrend. If the prior downtrend is severe, then this offers the opportunity to exit short positions or initiate long positions.

Bullish Belt Hold (Reversal)

A significant gap down occurs. The remaining price action for the day occurs to the upside. This triggers a buying spree. Shorts cover their positions due to concern over this price action.

Bullish Tweezer Bottom (Reversal)

The price action has trended downward then 2 consecutive days of equal lows signal support. This could signal a short term bottom is forming.