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Candle Stick
Doji

Illustration:
• Doji is a bullish or a bearish reversal pattern

• Doji: The price is and the close price are equal, hence there is no real body

• Doji is found at the top of an uptrend or at the bottom of the down trend

• Gravestone Doji is more effective at the top of an uptrend

• Dragonfly Doji is more effective at the bottom of a down trend

Psychology
Price may have been driven up and/or down from the open, but was driven back to close equal to or
almost equal to the opening price. This indecision in the market often precedes a change in trend to
either a sideways or a reverse direction trend.

The Gravestone Doji is more bearish and therefore more effective at a market top of an uptrend.

Dragonfly Doji is more bullish and therefore more effective at a market bottom of a down trend.
Hanging Man

Illustration:
• Hanging Man is a Bearish reversal pattern

• Hanging Man is found at the top of an uptrend

• Hanging Man can be ‘green or red’ in colour

• Hanging Man: lower shadow is at least 2 times the real body

Psychology
In the beginning the bulls were able to push the price above with a gap, but later the bears fought
back and were able to drive the price back lower, but the bulls were able to resist the downward
pressure. The trend reversal gets confirmed with a ‘Red Candle’ succeeding it.

The Red Hanging Man is more Bearish than the Green Hanging Man.
Hammer

Illustration:
• Hammer is a Bullish reversal pattern

• Hammer is found at the bottom of a downtrend

• Hammer can be ‘green or red’ in colour

• Hammer: lower shadow is at least 2 times the real body

Psychology
In the beginning the bears were able to push the price below with a gap, but later the bulls fought
back and were able to drive the price higher, but the bears were able to resist the upward pressure.
The trend reversal gets confirmed with a ‘Green Candle’ succeeding it.

The Green Hammer is more Bullish than the Red Hammer.

Shooting Star

Illustration:
• Shooting Star is a bearish reversal pattern

• Shooting Star is found at the top of an uptrend

• Shooting Star can be ‘green or red’ in colour

• Shooting Star: upper shadow is at least 2 times the real body

Psychology
In the beginning the bulls were in control and they drove the price up, to new highs with a gap, but
later the bears drive the price back down. The trendreversal gets confirmed with a ‘Red Candle’
succeeding it.

The ‘Red Shooting Star’ is more bearish than the Green Shooting Star.
Inverted Hammer

Illustration:
• Inverted Hammer is a bullish reversal pattern

• Inverted Hammer is found at the bottom of a downtrend

• Inverted Hammer can be ‘green or red’ in colour

• Inverted Hammer: Upper shadow is at least 2 times the real body

Psychology
In the beginning the bears were able to push the price below with a gap, but later the bulls fought
back and were able to drive the price back higher, but the bears were able to resist the upward
pressure. The trend reversal gets confirmed with a ‘Green Candle’ succeeding it.

The Green Inverted Hammer is more bullish than the Red Inverted Hammer candle.
Bullish Engulfing

Illustration:
• Bullish Engulfing is a bullish reversal pattern

• Bullish Engulfing is found at the bottom of a downtrend

• Bullish Engulfing: After a red candle the green candle succeeds it and completely engulfs the
red candle

Psychology
In the beginning the bears were able to take the price lower with a gap and the second candle opened
lower, but the bulls later were successful in driving the price back up. The red candle was completely
engulfed by a green bullish candle. This indicates the beginning of an uptrend.
Bearish Engulfing

Illustration:
• Bearish Engulfing is a bearish reversal pattern

• Bearish Engulfing is found at the top of an uptrend

• Bearish Engulfing: After a green candle the red candle succeeds it and completely engulfs the
green candle

Psychology
In the beginning the bulls were able to take the price higher with a gap and the second candle opened
higher, but the bears later were successful in driving the price back down. The green candle was
completely engulfed by a red Bearish candle. This indicates the beginning of a downtrend.
Piercing Pattern

Illustration:
• Piercing Pattern is a bullish reversal pattern

• Piercing Pattern is found at the bottom of a downtrend

• Piercing Pattern: The first candle has a red real body and the second candle opens below the
first candle, but it closes above the lower half of the first candle.

Psychology
In the beginning the bears were able to take the price lower with a gap and the second candle opened
lower, but the bulls were able to drive back the price and the candle closed above the lower half of
the previous red candle, indicating an uptrend.

Piercing Pattern is not as effective as Bullish Engulfing

Dark Cloud Cover

Illustration:
• Dark Cloud Cover is a bearish reversal pattern

• Dark Cloud Cover is found at the top of an uptrend

• Dark Cloud Cover: The first candle has a green real body and the second candle opens above
the first candle, but it closes below the upper half of the first candle.

Psychology
In the beginning bulls were able to take the price higher with a gap and the second candle opened
higher, but the bears were able to drive back the price and the candle closed below the upper half of
the previous green candle, indicating a down trend.

Dark Cloud Cover is not as effective as Bearish Engulfing

Harami

Illustration:
• Harami is a bullish/bearish reversal pattern

• Harami is found at the top of an uptrend or at the bottom of the down trend

• Harami: The first candle continues in the same trend but the second candle is contained
within the body of the first candle indicating a trend reversal. The second candle is red in case
of uptrend and green in case of down trend.

Psychology
In the beginning bulls/bears were able to push the price up or down respectively. But the second
candle, which is a small candle (with red or green real body respectively) contained within the body of
the first candle indicates a trend change. The stock is expected to move sideways before and big
move.
Harami Cross

Illustration:
• Harami Cross is a bullish/bearish reversal pattern

• Harami Cross is found at the top of an uptrend or at the bottom of the down trend

• Harami Cross: The first candle continues in the same trend but the second candle is a doji
contained within the body of the first candle indicating a trend change

Psychology
In the beginning bulls/bears were able to push the price up or down respectively. But the second
candle, which is a Doji is contained within the body of the first candle and it indicates a trend change.
Morning Star

Illustration:
• Morning Star is a bullish reversal pattern

• Morning Star is found at the bottom of a downtrend

• Morning Star: The first candle has a red real body and the second candle also has a small real
body (red or green) and the third candle, having a green real body opens above the star and closes
above it, indicating an uptrend.

Psychology
In the beginning bears managed to push the price below with great momentum, the small real body
of the second candle indicated a loss of bearish momentum. Lastly, the bulls pushed the price up and
the bullish momentum increased and the third candle closed with a green real body, indicating an
uptrend.
Evening Star

Illustration:
• Evening Star is a bearish reversal pattern

• Evening Star is found at the top of an uptrend

• Evening Star: The first candle has a green real body and the second candle also has a small real
body (red or green) and the third candle, having a red real body opens below the star and closes
below it, indicating a downtrend.

Psychology
In the beginning bulls managed to push the price above with great momentum, the small real body of
the second candle indicated a loss of bullish momentum. Lastly, the bears pushed the price down and
the bearish momentum increased and the third candle close with a red real body, indicating a down
trend.