1. Bullish Patterns (indicate potential upward movement)
These often appear at the end of a downtrend and suggest prices may rise.
Examples:
Hammer – small body, long lower shadow (buyers stepped in).
Bullish Engulfing – a large bullish candle fully engulfs the previous bearish one.
Morning Star – three candles: bearish, indecision (Doji/Small), then strong bullish.
Piercing Line – bullish candle closes above the midpoint of previous bearish candle.
2. Bearish Patterns (indicate potential downward movement)
These often appear at the end of an uptrend and suggest prices may fall.
Examples:
Shooting Star – small body, long upper shadow (buyers failed to hold).
Bearish Engulfing – large bearish candle fully engulfs the previous bullish one.
Evening Star – opposite of Morning Star, signals reversal to downside.
Dark Cloud Cover – bearish candle closes below the midpoint of the prior bullish candle.
3. Indecision / Continuation Patterns (market hesitation)
These suggest the market is pausing, could either continue or reverse depending on confirmation.
Examples:
Doji – open and close are almost the same (indecision).
Spinning Top – small body, long shadows both sides (uncertainty).
Three Methods (Rising/Falling) – a pause before trend continues.
