Guide Candles Patterns
Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend.
Basic Candles - Two Line Patterns
1- Bearish Doji Star
Description:
The first Bearish Doji Star line has to be a white candle that appears as a long line (White Candle, Long White Candle, White Marubozu, White Marubozu Opening or White Closed Marubozu). The next candle is any doji candle except the four price Doji. The body of the doji is above the body of the previous candle. The length of the doji shadows does not matter.
Bearish star Doji appears in an uptrend and belongs to the group of bearish reversal patterns. Its appearance must be confirmed in the following candles.
This pattern is distinguished by a space between the high of the first candle and the low of the next candle or between the bodies of these two candles. The first confirmation is when the gap in the candlestick pattern is covered. It can be a black candle whose body is completely below the body of the doji. Another stronger type of confirmation is when an uptrend line or support zone is broken.
Building:
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• Or a doji candle
• Or one body above the body of the first candle
Example:
BAC,24 Jun, 2002. Chart 1d.
2- Bullish Separating Lines
Description:
The bullish parting lines are a two-line bullish continuation pattern. Her two candles appear as a long row. The first line is a black candle while the second is white. The name of the pattern comes from the fact that the opening price of the first candle is equal to the opening price of the second line, that is, the candles spread in opposite directions.
Building:
First candle
•Or an uptrend candle
•Or black body
•Or appears as a long line
Second candle
•Or white body
•Or the opening price is equal to the previous opening price
Example:
TRV,04 May, 2007. Chart 1d.
3- Matching High
Description:
Matching High is built with two marubozu sails that have white bodies. In other words, it can be a white Marubozu or a close-up white Marubozu.
The first line of the pattern appears as a long line, while the second can be long or short. Both lines of candles should close at the same level. Also, the open of the second candle must be higher than the open of the previous candle.
The Matching High belongs to the group of bullish reversal patterns. Its appearance on the chart must be confirmed in the following candles, that is, breaking the closest support zone, which can be formed by the first line of a Matching High pattern. The best confirmation is in the form of a black candle that the closing price is below the opening price of the line of the first pattern.
Building:
First candle
• Or a candle in an uptrend
• Or white body
• Or without upper shadow
• Or appears as a long line
Second candle
• Or white body
• Or the opening price is higher than the previous opening price
• Or the closing price is at the level of the previous closing price
• Or without upper shadow
Example:
PG,04 Nov, 2010. Chart 1d.
4- Bearish Engulfing
Description:
The Japanese name for the bearish enveloping pattern is tsutsumi, which means the Japanese art of packaging and is derived from the verb whose meaning is to wrap (a present). In English, we use the word wrap because the second line wraps (overlaps) the first line of the pattern.
Bearish Engulfing is a two-line pattern in which the body of the white candle in the first line is engulfed by the body of the black candle in the second line. The first line can be any basic white candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji. The second line is any black candle that appears as a long line: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
Shadows don't matter what is explained in the following article: Two-line patterns.
The pattern appears in an uptrend and predicts its reversal. If the volume of operations grows in the second line, the reliability of the pattern is higher. Bearish engulfing pattern needs confirmation on subsequent candles.
Morris created the Three Outside Down pattern as confirmation of the bearish engulfing. In general, it is recommended to confirm all patterns. Confirmation can be in the form of breaking out of the nearest support zone or a trend line.
It is crucial where on the chart a bearish envelope appears. Depending on the market context, the candlestick pattern may just be a short break before the market rallies. Especially if below a bearish engulfing there is a strong support area.
If a bearish engulfing pattern is confirmed, its second line may form a resistance zone.
Building:
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• O black body
• Or the body of the candle wraps around the body of the previous candle (white)
Example:
MCD ,20 Dec, 2012. Chart 1d.
5- Bullish Tasuki Line
Description:
The Tasuki bullish line belongs to the group of tasuki patterns and predicts a reversal of the downtrend. Both candles appear as a long row. The first line has a black body, while the second line has a white body. The length of the shadows doesn't matter; however, the volume (if available in the given market) of the second line is significant. The relation of the bodies is insignificant.
The pattern requires confirmation, that is, to break out of the nearest resistance zone or trend line.
It happens that a bullish Tasuki line appears as a second and third line of a falling Tasuki gap or three methods of falling gap.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or the high price above the previous low price
• Or appears as a long line
Second candle
• Or white body
• Or the opening price greater than or equal to the previous closing price
• Or the closing price above the previous opening price
• Or appears as a long line
Example:
DIS,16 Apr, 2012. Chart 1d.
6- Matching Low
Description:
The Matching Low belongs to the patterns that occur less frequently in the charts. Having two candles with no lower shadows in a row (i.e. closing Black Marubozu or Black Marubozu), closing at the same price, is an unusually rare situation.
The first line of the pattern appears as a long line in a downtrend. The second line opens below the line of the previous candle. As already mentioned, both candles close at the same level.
The pattern is bullish reversal and appears in a downtrend. It must be confirmed in the following candles. Your front line acts as a resistance zone.
The classic interpretation of the Matching Low pattern is composed of two candles with no lower shadows (the upper shadow is allowed). Bulkowski, however, relaxed this requirement, resulting in significantly more recognized patterns.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or no lower shadow
• Or appears as a long line
Second candle
• O black body
• Or the opening price is below the previous opening price
• Or the closing price is at the level of the previous closing price
• Or no lower shadow
Example:
NDAQ,21 Nov, 2003. Chart 1d.
7- Bearish Harami
Description:
Bearish Harami is a two-line pattern in which the body of the white candle in the first line wraps around the body of the black candle in the second line.
The first line can be any basic candle with a white body, appearing as a long line, i.e .: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles that are spinning tops, even with white bodies, cannot appear on the first line.
The second line can be any basic black candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji.
Shadows don't matter what is explained in the following article: Two-line patterns.
The pattern appears in an uptrend and predicts its reversal. The Bearish Harami pattern needs confirmation on subsequent candles.
Morris created the Three Inside Down pattern as confirmation of the Bearish Harami. The pattern can be confirmed by breaking the nearest support zone or a trend line.
If a candle that follows the appearance pattern closes above the opening price of the second line (i.e. black candle), the uptrend is likely to continue. On the contrary, when a candle that follows the pattern closes below its second line, there is a possibility that the uptrend will stop.
One should be careful when the front line of a bearish Harami has a long white body, as it can form a strong support zone.
The market context in which a bearish Harami is developing is more important than the bodies of the candles or the length of the shadows.
Building:
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• O black body
• Or the body of the candle wrapped by the body of the previous candle (white)
8- Dark Cloud Cover
Description:
Dark cloud cover is among the most popular candle patterns. Your first candle must be a white candle that appears as a long line (White Candle, Long White Candle, White Marubozu, White Marubozu Opening, or White Closed Marubozu). The second candle is a black candle that appears as a long line (Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, or Closing Black Marubozu).
The opening price of the second candle should be above the high of the previous candle. However, it is acceptable that these two prices are the same. The close of the second candle should be below the midpoint of the first candle, but not below its open.
Dark cloud cover is a classic bearish reversal pattern, appearing at the end of an uptrend. After definite rallies, the second candle in the pattern opens creating a price gap, however, it closes below the midpoint of the previous candle, demonstrating the weakness of the market.
The reliability of the pattern is higher if the trading volume increases on the second line. Like any other pattern, it must be confirmed by the following candles. Confirmation can be, for example, in the form of breaking a support level or a trend line.
If the pattern managed to reverse an uptrend, its second candle creates a strong resistance zone.
Building:
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• O black body
• Or the opening greater than or equal to the previous maximum
• Or the close below the midpoint of the previous candle
• Or the close above the previous open
Example:
JPM , 20 Sep, 10, 1d Chart.
9- On Neck
Description:
The On Neck is a two-line bearish continuation pattern. The first line is a candle that has a black body, which appears as a long line. The second line is a candle with a white body, but the length of the upper and lower shadows cannot exceed more than twice the length of the body.
The closing price of the second candle is at the level of the low price of the first candle.
The pattern appears in a downtrend and predicts its continuation. It should be confirmed in the following candles with a candle that closes below the opening price of the second line.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or appears as a long line
Second candle
• Or white body
• Or the opening price below the previous closing price
• Or the closing price is equal to the previous low price
Example:
NEM , 07 Oct, 2002, 1d Chart.
10- Bearish Harami Cross
Description:
The bearish Harami Cross is a bearish two-line reversal pattern. The first candle envelops the second, being a doji candle, including the shadows.
The first line of the pattern can be any white candle that appears as a long line, that is: White candle, Long white candle, White Marubozu, White Marubozu that opens, White Marubozu that closes. Tops with white bodies are not accepted. The second line is a doji candle that has two shadows that form a cross.
The Bearish Harami Cross appears in an uptrend and predicts its reversal. The patterns should be confirmed on the next closest candles. A doji candle appearing as the second line indicates market indecision. Interestingly, to recognize the pattern as valid, your first line must be a long white candle, which can become an important support zone. For this reason, care must be taken when such a pattern forms on the chart.
Building:
First candle
• Or a candle in an uptrend
• Or white body
• Or appears as a long line
Second candle
• Or a doji candle with two shadows
• Or the candle (including the shadows) is enveloped by the body of the previous candle
Example:
MRK, 06 Feb, 2009, 1d Chart.
11- Descending Hawk
Description:
The Descending Falcon is a bearish two-line reversal pattern that belongs to the harami family of patterns. The body of the candle in the first line wraps around the body of the second line. The shadows do not matter with respect to both candles.
The first line of the pattern can be any candle with a white body, which appears as a long line. The following candles are allowed: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles classified as doji or spinning top are not allowed.
The Descending Falcon's second candle can be any white candle, appearing as a long or short line, i.e., Short White Candle, White Candle, Long White Candle, White Marubozu, White Marubozu Opening, White Marubozu Closed. Candles classified as doji or spinning top are not allowed.
Controversies about how to consider bodies and shadows are described in this article: Two-line patterns.
The Descending Falcon appears in an uptrend predicting its reversal. It has to be confirmed in the following candles in the form of a breakout of the support area or a trend line and closing significantly below. Care must be taken in the first line that forms a support zone.
Building:
First candle
• Or a candle in an uptrend
• Or white body
• Or appears as a long line
Second candle
• Or white body
• Or the body of the candle wrapped by the body of the previous candle
• Either appears as a long or short line
Example:
KO , 08 Mar 9:00, 2011, 12h Chart.
12-Piercing
Description:
The Piercing is a bullish equivalent pattern of the bearish Dark Cloud Cover.
The first day of the pattern is a black candle that appears as a long line in a downtrend, except for the tops and doji candles. In other words, the first line can be one of the following basic candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
The candle in the second line is exactly opposite to the first line, that is, it can be one of the following basic candles: White candle, Long white candle, White Marubozu, Opening white Marubozu, Closing white Marubozu. The candle in the second line should appear as a long line. Its opening must be less than the low of the previous candle. However, it is acceptable that both prices are the same. The closing price of the second candle should be between the midpoint and the open of the previous candle.
The Piercing pattern can look like a classic reverse pattern due to its appearance. Price opens lower after the first black candle, however the market shows its strength and closes above the midpoint of the first line.
In the stock market, the reliability of the pattern is higher when an increase in trading volume can be observed on the second line.
Like any other pattern, the Piercing pattern must be confirmed by the following candles. Confirmation can be, for example, in the form of a breakout of a support zone or a trend line. If a perforation pattern is confirmed, its second line acts as a support area.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or white body
• Or the opening below or equal to the previous low
• Or the close above the midpoint of the previous candle's body
• Or the close below the previous opening
Example:
PFE, 06 Feb, 2012, 1d Chart.
13-Falling Window
Description:
The descending window is classified as a bearish continuation pattern. The lines of both patterns can be basic candles, appearing as a long or a short line. The only exception is the Four Price Doji, which cannot appear as part of the pattern. The pattern is characterized by a price gap that appears between the low of the first candle and the high of the second candle.
Windows are known in Western technical analysis and are often referred to as gaps. The Japanese are very particular about windows and claim that the trend will continue until the gap is closed. Shimizu mentions that in Japan they also call holes hollows.
Morris doesn't think of windows as patterns that look strange. That is, he is not doing the same with patterns like kick up / kick down, two candlestick shooting star / inverted hammer or others, where a price gap is also required.
Nison and Bulkowski also find windows as patterns, but note that Bulkowski's interpretation is somewhat different than ours (see Ascending Window for more details). Nison mentions that windows are among the most important candle patterns.
In our interpretation, for the descending window, it is sufficient that the closing price of the first candle is below the trend line, while the opening price can be located above. The assumption that the descending window pattern requires a few candles in a downtrend, before it occurs, can lead to missing very significant signals.
Particular attention should be paid to the second candle of the pattern, which may be part of another conflicting pattern, that is, a bullish pattern. In such unclear situations, the focus should be on the general market context and the resistance / support lines.
Building:
First candle
• Or any candle except the four price Doji
• Either a candle in a downtrend or closing below the trend line
Second candle
• Or any candle except the four price Doji
• Or the candle is high below the low of the previous candle
Example:
INTC ,21 Sep, 2012, 1d Chart.
14-Rising Window
Description:
The ascending window is classified as a bullish continuation pattern. The lines of both patterns can be basic candles, appearing as a long or a short line. The only exception is the Four Price Doji, which cannot appear as part of the pattern.
The pattern is characterized by a price gap that appears between the high of the first candle and the low of the second candle.
Nison and Bulkowski in their books provide examples with a visible uptrend prior to the occurrence of a pattern that can be confusing. In our interpretation, for the ascending window, it is sufficient that the closing price of the first candle is above the trend line, while the opening price can be below. The assumption that the ascending window pattern requires a few candles in an uptrend, before it occurs, can lead to missing very significant signals.
Windows are known in Western technical analysis and are often referred to as gaps. The classical interpretation says that after three occurrences of the ascending window, the trend can be reversed. Most often, the Popup Window acts as a support.
Nison claims that when a rising window is preceded by a bullish reversal pattern, its reliability is higher. Our research also says that if the second candle of a rising window forms at high volume, its reliability is better.
Special attention should be paid to the second candle in the pattern. A black candle or a doji candle can weaken the signal. The second line may be part of another conflicting pattern. Sometimes the Ascending Window can be recognized at the same time also as the Bearing Doji Star or the Two-Candle Shooting Star. In such unclear situations, the focus should be on the general market context and the resistance / support lines.
A warning is needed for traders who take a position on the second line of the pattern. That is, when the price opens higher, the candle can still close lower producing a black body. So instead of having a rising window, we can have a bearish reversal pattern, for example dark cloud cover or bearish engulfing.
Either way, the most important thing is to be consistent. Therefore, when presenting any statistics from the ascending window, it is important to remember which interpretation is used to compare apples to apples.
Building:
First candle
• Or any candle except the four price Doji
• Or a candle in an uptrend or closing above the trend line
Second candle
• Or any candle except the four price Doji
• Or the candle is low above the previous high candle
Example:
PFE, 06 Feb, 2012, 1d Chart.
You should have mastered the theory by now. So now it will only be the examples. Time to put it into practice.
15- Bearish Separating Lines
Description:
Bearish parting lines are classified as a bearish continuation pattern. The first line is a white candle that appears as a long line in a downtrend. The second line is a black body candle that appears as a long line. Both candles open at the same price level and then the prices separate.
The pattern appears very rarely on candlestick charts.
Building:
First candle
• Or a candle in a downtrend
• Or white body
• Or appears as a long line
Second candle
• O black body
• Or the opening price is equal to the previous opening price
Example:
PFE, 17 Jan, 2003, 1d Chart.
16- Homing Pigeon
Description:
The Homing Pigeon is a two-line bullish counterpart of the Descending Hawk. It is also closely related to the Bullish Harami pattern. All of these patterns belong to the harami family of patterns.
The first line, being a black candle, wraps around the second line, being also a black candle. The length of the candle shadows does not matter. The first candle in the pattern can be any black candle that appears as a long line, i.e .: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
The second candle can be any black candle that appears as a short or long line, that is, Short Black Candle, Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
As a bullish reversal pattern, the carrier pigeon must form in a downtrend because it predicts its reversal.
The pattern should be confirmed on subsequent candles. It can be, for example, a bullish breakout of a resistance zone or a trend line and a close above the pattern. Otherwise, the appearance of the pattern should be seen as a temporary pause from a price decline. One must be careful because the first line of the Homing Pigeon pattern forms an area of resistance.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• O black body
• Or the body of the candle wrapped by the body of the previous candle
Example:
JNJ , 15 Mar, 2011, 1d Chart.
17- Thrusting
Description:
Thrusting is a two-line bearish continuation pattern. It is very similar to the perforation pattern.
The first candle is a black candle that appears in a downtrend as a long line. It can be one of the following basic candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
The second candle also appears as a long line but has a white body and opens below the previous low. The second line closes between the midpoint of the previous candle and its closing price. It can be one of the following basic candles: White Candle, Long White Candle, White Marubozu, White Marubozu Opening, White Marubozu Closing.
Spinning tops and doji candles cannot appear as part of the pattern.
The Thrusting pattern appears in a downtrend that predicts its continuation. The forecast should be confirmed in the form of a black candle following the pattern. That candle should close below the opening price of the second line. If a volume data is relevant to a certain market (for example, stock market), it should increase for the candles that form the pattern.
If a white candle follows the pattern, a trend reversal can be expected. In that case, the white candle that follows the pattern should close above the opening price of the first line. Alternatively, the candle can break a trend line or the nearest resistance zone. It is good if a higher trading volume (if available for a given market) accompanies that candle.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or appears as a long line
Second candle
• Or white body
• Or the opening below the previous low
• Or the close above the close of the previous candle
• Or the close below the midpoint of the previous candle's body
• Or appears as a long line
Example:
XOM, 06 Sep, 2006, 1d Chart.
18- Bearish Tasuki Line
Description:
The Bearish Tasuki line is a bearish two-line reversal pattern, which belongs to the family of tasuki patterns.
The first line of the pattern is a white candle that appears as a long line. The second line also appears as a long line, but the candle is black. The length of the shadows doesn't matter; however, the volume (if available in the given market) of the second line is significant. The relationship of the bodies is not important.
The pattern requires confirmation, that is, to break out of the nearest resistance zone or trend line.
The bearish Tasuki line can appear as a second and third candlestick from patterns such as Upside Tasuki Gap or Upside Gap Three Methods. Since these patterns are bullish, we deal with so-called conflicting lines, that is, opposite patterns that occur at the same time.
Building:
First candle
• Or a candle in an uptrend
• Or white body
• Or the low price below the previous high price
• Or appears as a long line
Second candle
• O black body
• Or the opening price below or equal to the previous closing price
• Or the closing price below the previous opening price
• Or appears as a long line
Example:
HD , 26 Jan, 2011, 1d Chart.
19- In Neck
Description:
The In Neck pattern is a two-line bearish continuation pattern, which implies that the pattern appears in a downtrend. The first line is a black candle that appears in a downtrend. The second line is a white candle, and the length of the upper and lower shadow cannot exceed more than twice the length of the body. Also, the closing price of the second candle should be slightly above the previous closing price (up to 15% of the body of the first line).
The pattern should be confirmed by a subsequent candle that closes below the closing price of the second line.
The In Neck pattern rarely occurs on candlestick charts.
Building:
First candle
• A candle in a downtrend
• Black body
• Appears as a long line
Second candle
• White body
• The opening price below the previous closing price
• The closing price is slightly above the previous closing price (up to 15% of the body of the first line)
Example:
INTC, 19 Sep, 2012, 1d Chart.
20- Turn Down
Description:
The Turn Down pattern is a bearish reversal pattern.
Whenever we write about pattern confirmation, we mention that it can be, for example, in the form of a trend line breakout. The Turn Down pattern, and its bullish counterpart, the Turn Up pattern, works exactly like this.
The first candle in the pattern can be any basic candle except the four price Doji. It can appear as a long or short line. Your entire body should be above the trend line, although your lower shadow can reach below it.
The second line of the pattern has to be a black candle, which appears as either a long or a short line, except for the four price Doji. The body of the candle should be completely below the trend line. The volume of the second candle must be above the average of the last candles.
The size of the bodies does not matter. However, as usual, the market context in which the pattern appeared is critical.
The Turn Down pattern requires a confirmation on the following candles, in the form of breaking the closest support level.
It happens that a price gap is formed between the first and second lines of the pattern. In such cases, the reliability of the pattern is higher, assuming it does not appear within a strong support zone.
The reliability of the pattern decreases when the market retreats above the trend line.
Building:
First candle
• Or any uptrend candle except the four price Doji
• Or a candle with a body above the trend line
Second candle
• O black body
• Or a candle with a body below the trend line
Example:
PFE, 22 Oct, 2012, 1d Chart.
21- Bullish Doji Star
Description:
The first line of the bullish Doji Star is a black candle that appears as a long line (Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu). The next candle is any doji candle, except the four price Doji. The body of the doji is below the body of the previous candle. The length of the doji shadows does not matter.
The Bullish Doji star appears in a downtrend and belongs to the group of bullish reversal patterns. Its appearance must be confirmed in the following candles.
This pattern is characterized by a space between the low of the first candle and the high of the next candle or between the bodies of these two candles. The first confirmation is when the gap in the candlestick pattern is covered. It can be a white candle whose body is completely above the body of the doji. Another stronger type of confirmation is when a downtrend line or resistance zone breaks.
Morris and Bulkowski point out that doji shadows shouldn't be too long. It may indicate that only the doji candle that appears as a short line should be considered valid. However, our tests show that the introduction of this additional condition does not have a significant impact on the number of patterns found.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or a doji candle
• Or a body under the body of the first candle
Example:
MSFT, 30 Dec, 2005, 1d Chart.
22- Inverted Hammer
Description:
The inverted hammer pattern is made up of two candles. The first candle appears as a long line and has a black body. That means it can be one of the following candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. Candles that are spinning tops, even with black bodies, cannot appear on the first line.
The second candle can be a white or black spinning top, appearing as a long or short line. It can be one of the following candles: white top, black top, high wave. The lower shadow does not exist or is shorter than the body. The upper shadow must be at least 2.5 times longer than the body.
The pattern appears in a downtrend, predicting its reversal. It should be confirmed in the form of a breakout of a closer resistance zone or a trend line.
As always, the pattern requires confirmation on subsequent candles, which means that the nearest resistance zone or trend line should be suppressed. The market context in which the pattern appears is critical.
The pattern can occur within the Morning Star three-line pattern, being its confirmation.
Morris states that the upper shadow cannot be longer than the body of the candle. This is most likely a typo because the examples in the book feature candles with significantly longer shadows than the bodies.
Presumably Bulkowski has noticed this error because, although not directly, he mentions that there are different definitions of the upper shadow.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or a white or black small-bodied candle
• Either there is no lower shadow or the shadow cannot be longer than the body
• Or upper shadow at least 2.5 times longer than the body
• Or the opening below or at the level of the close of the previous candle
Example:
MRKSY , 08 Apr, 2015, 1d Chart.
23- Turn Up
Description:
The Turn Up pattern is a bullish reversal pattern.
Whenever we write about pattern confirmation, we mention that it can be, for example, in the form of a trend line breakout. The Turn Up pattern, and its counterpart, the Turn Down pattern, works exactly like this.
The first candle in the pattern can be any basic candle except the four price Doji. It can appear as a long or short line. Your entire body should be below a trend line, although your upper shadow may reach above it.
The second line of the pattern has to be a white candle, which appears as a long or short line, except for the four price Doji. The body of the candle should be completely above the trend line. The volume of the second candle must be above the average of the last candles.
The size of the bodies does not matter. However, as usual, the market context in which the pattern appeared is critical.
The Turn Up pattern requires a confirmation on the following candles, in the form of breaking the closest resistance level.
It happens that a price gap is formed between the first and second lines of the pattern. In such cases, the reliability of the pattern is higher, assuming that it does not appear within a zone of strong resistance.
The reliability of the pattern decreases when the market retreats below the trend line.
Building:
First candle
• Or any uptrend candle except the four price Doji
• Or a candle with a body below the trend line
Second candle
• Or white body
• Or a candle with a body above the trend line
Example:
JNJ , 05 Sep, 2012, 1d Chart.
24-Bullish Engulfing
Description:
The bullish engulfing is a two-line pattern, in which the body of the black candle on the first line is engulfed by the body of the white candle on the second line. The first line can be any basic black candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji. The second line is any white candle that appears as a long line: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, or Closing White Marubozu. Spinning tops and doji candles are not acceptable.
The length of the shadow does not matter, neither in the first nor in the second line.
The pattern appears in a downtrend and predicts its reversal. If trading volume data is available for a given market and grows on the second line, the reliability of the pattern is higher. The bullish engulfing pattern needs confirmation on subsequent candles.
Morris created the Three Outside Up pattern as confirmation of the Bullish Engulfing. In general, it is recommended to confirm all patterns. Confirmation can be in the form of breaking out of the nearest resistance zone or a trend line.
It is crucial where, on the chart, a bullish envelope appears. Depending on the market context, the candlestick pattern may just be a short break before the market declines. Especially if, above a bullish envelope, there is an area of strong resistance.
If a bullish engulfing pattern is confirmed, its second line may form a support zone.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or white body
• Or the body of the candle wraps around the body of the previous candle (black)
It is the opposite of Bearish Engulfing.
25- Kicking Down/Bearish Kicking
Description:
The Kicking Down pattern (also called Bearish Kicking) is made up of two marubozu candles that appear as long lines. The first candle in the pattern is a white Marubozu; the second line is a BlackMarubozu.
The opening of the second line is lower than the previous opening, which forms a price gap.
Depending on the trend in which the pattern appears, you can predict its continuation or reversal (see The Kicking Up article). The next candle determines the direction of the price.
The pattern is extremely rare, especially in liquid markets.
Building:
First candle
• Or a white Marubozu
• Or appears as a long line
Second candle
• Or a black Marubozu
• Or downward price gaps
• Or appears as a long line
Example:
BLK , 21 Apr, 2010, 1d Chart.
26- Tweezers Bottom
Description:
The bottom of the calipers is classified as a two-line pattern, although it can be made up of more than two candles.
The first line can be any candle of any color except the four price Doji. The following candles can be of any color and type, except for the four price Doji. Also, all low prices must be the same.
The bottom of the calipers can be part of other patterns in a downtrend. It must be confirmed in the following candles.
The pattern occurs rarely.
Building:
First candle
• Or a candle in a downtrend
• Or any color
• Or any candle except the four price Doji
Second candle
• Or any candle except the four price Doji
• Or any color
• Or the low price equal to the previous low price
All the following days
• Or any candle except the four price Doji
• Or any color
• Or the low price equal to the previous low price
Example:
PG , 23 Nov, 2011, 1d Chart.
27- Tweezers Bottom
Description:
The bottom of the calipers is classified as a two-line pattern, although it can be made up of more than two candles.
The first line can be any candle of any color except the four price Doji. The following candles can be of any color and type, except for the four price Doji. Also, all low prices must be the same.
The bottom of the calipers can be part of other patterns in a downtrend. It must be confirmed in the following candles.
The pattern occurs rarely.
Building:
First candle
• Or a candle in a downtrend
• Or any color
• Or any candle except the four price Doji
Second candle
• Or any candle except the four price Doji
• Or any color
• Or the low price equal to the previous low price
All the following days
• Or any candle except the four price Doji
• Or any color
• Or the low price equal to the previous low price
Example:
PG , 23 Nov, 2011, 1d Chart.
28- Bullish Harami
Description:
The Bullish Harami is a two-line pattern in which the body of the black candle in the first line wraps around the body of the white candle in the second line.
The first line can be any basic candle with a black body, appearing as a long line, that is: Black candle, Long black candle, Black Marubozu, Black opening Marubozu, Black closing Marubozu. Candles that are spinning tops, even with black bodies, cannot appear on the first line.
The second line can be any basic white candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji.
Shadows don't matter what is explained in the following article: Two-line patterns.
The pattern appears in a downtrend and predicts its reversal. The Bullish Harami pattern needs confirmation on subsequent candles.
Morris created the Three Inside Up pattern as confirmation of the Bullish Harami. The pattern can be confirmed by breaking the nearest resistance zone or a trend line.
If a candle that follows the appearance pattern closes below the opening price of the second line (i.e. white candle), the downtrend is likely to continue. On the contrary, when a candle that follows the pattern closes above its second line, there is a possibility that the downtrend will stop.
Care should be taken when the first line of a bullish Harami has a long black body, as it can form a strong resistance zone.
The market context in which a bullish Harami is developing is more important than the bodies of the candles or the length of the shadows.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or white body
• Or the body of the candle wrapped by the body of the previous candle (black)
Example:
BAC , 14 Nov, 2012, 1d Chart.
29- Tweezers Top
Description:
Description:
The upper part of the calipers is classified as a two-line pattern, although it can be made up of more than two candles. It acts as a bearish reversal.
The first line can be any uptrend candle of any color except the four price Doji. The following candles can be of any color and type except the Four Price Doji, but all high prices must be the same.
The tops of the calipers can be part of other patterns in an uptrend. It must be confirmed in the following candles.
Building:
First candle
• Or a candle in an uptrend
• Or any color
• Or any candle except the four price Doji
Second candle
• Or any candle except the four price Doji
• Or any color
• Or the high price is equal to the previous high price
All the following days
• Or any candle except the four price Doji
• Or any color
• Or the high price is equal to the previous high price
I did not find an example for this Pattern .. Sorry.
30- Kicking Up/Bullish Kicking
Description:
The Kicking Up pattern (also called the Bullish Kicking) is made up of two marubozu candles that appear as long lines. The first candle in the pattern is a black Marubozu; the second line is a white Marubozu.
The opening of the second line is higher than the previous opening, which forms a price gap.
We assume that the pattern can be reversible and continuous. Therefore, the trend prior to the occurrence of the pattern is not important: whenever we are faced with a Kicking Up pattern, the white candle signifies buying demand, predicting the price increase.
As Shimizu writes, the bullish line pattern can continue an uptrend or reverse a downtrend. Because the bullish parting lines are quite similar to momentum, we made the same assumption.
The pattern is extremely rare, especially in liquid markets. It can be seen as more of an exoticism rather than a seriously negotiated pattern.
Building:
First candle
• Or a black Marubozu
• Or appears as a long line
Second candle
• Or a white Marubozu
• Or upward price differences
• Or appears as a long line
I did not find an example for this Pattern .. Sorry.
31- Bullish Harami Cross
Description:
The Bullish Harami Cross is a bullish two-line reversal pattern. The first candle envelops the second, being a doji candle, including the shadows.
The first line of the pattern can be any black candle that appears as a long line, i.e .: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. Tops with black bodies are not accepted. The second line is a doji candle that has two shadows that form a cross.
The Bullish Harami Cross appears in a downtrend and predicts its reversal. The pattern should be confirmed on the next closest candles. A doji candle appearing as the second line indicates market indecision. Interestingly, to recognize the pattern as valid, your first line must be a long black candle, which can become a major resistance zone. For this reason, care must be taken when such a pattern forms on the chart.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or appears as a long line
Second candle
• Or a doji candle with two shadows
• Or the candle (including the shadows) is enveloped by the body of the previous candle
Example:
32- Last Engulfing Bottom
Description:
The definition of the latest engulfing bottom is exactly the same as the bearish engulfing pattern, except for the trend requirement. The bearish engulfing bottom appears within an uptrend, while the last engulfing bottom occurs within a bearish trend.
One wonders why such a pattern can reverse a downtrend. That is, there is a downtrend, but the bearish momentum slows down a bit because a small white candle appears. However, the next candle has a long black body, which confirms the strength of the bear. In general, most of us would intuitively say that we are facing a bearish continuation pattern.
The Last Engulfing Bottom is a good example to explain that the occurrence of a pattern is not equivalent to the price prediction.
In the case of the Last Engulfing Bottom pattern, its name gives us a clue that illustrates how it can work. The pattern must be preceded by a bearish engulfing pattern. So we can expect the downtrend to reverse if a price is confirmed on the next candles.
If a last engulfing bottom appears alone, that is, it is not preceded by a bearish engulfing pattern, a downtrend is likely to continue. It can be especially true if the next candle closes below the occurrence of the pattern.
Prediction of the reversal of the trend requires confirmation, that is, the next candle will close above the pattern.
If the volume data is relevant to the analyzed market, it should be taken into account. If it raises for candles with white bodies, the probability of reversing a downtrend increases.
Building:
First candle
• Or a candle in a downtrend
• Or white body
Second candle
• O black body
• Or the body of the candle wraps around the body of the previous candle
Example:
BAC, 25 Apr, 2011. Chart 1d.
33- Bullish Meeting Lines
Description:
The bullish meeting lines are a two-line bullish reversal pattern. The first line is a black candle that appears as a long line. The second candle also appears as a long line, but the body of the candle is white. Both candles close at the same level. Although the shape of the pattern is simple, it appears very rarely in charts.
The pattern should be confirmed on subsequent candles.
Visually, the pattern of bullish meeting lines is similar to that of the neck, being a bearish continuation pattern. However, the main difference is in the length of the body of the second line. In the case of the In Neck pattern, the body of the second candle is shorter.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or appears as a long line
Second candle
• Or white body
• Or the closing price is equal to the previous closing price
Example:
T , 28 Jul, 2011. Chart 1d.
34- Last Engulfing Top
Description:
The description of the latest engulfing top is precisely the same as the bullish engulfing pattern except for the trend requirement. The Bullish Engulfing appears within a downtrend, while the Last Engulfing Top occurs within an uptrend.
You may wonder why this pattern can reverse an uptrend. After all, it is not difficult to find short black candles that appear within an uptrend. It is not an unusual situation because, during an uptrend, the price often stops before going higher.
However, when the latest engulfing top appears, it should not be ignored, especially when preceded by a bullish engulfing pattern. The ideal setting is where we deal with both patterns on the chart; first having a bullish envelope (the price rises), and after a while a last engulfing ceiling.
As the name implies, the last engulfing top symbolizes the end of an uptrend. When such a pattern emerges, one should wait for what happens on the next candles. If a black candle appears and closes significantly lower, then we can expect the reversal of the trend. However, if we are faced with a candle that closes much higher, the uptrend is likely to continue.
Building:
First candle
• Or a candle in an uptrend
• O black body
Second candle
• Or white body
• Or the body of the candle wraps around the body of the previous candle
Example:
MSFT , 20 Sep, 2012. Chart 1d.
35- Two Black Gapping Candles
Description:
The Two Black Gapping Candles is a bearish continuation pattern.
The first and second lines of the pattern can be any candle with a black body, except doji candles. In other words, the following candles can appear within the pattern: Short Black Candle, Black Candle, Long Black Candle, Black Top, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. If a Black Spinning Top candle appears within the pattern, none of its shadow lengths can exceed more than twice the length of the body (for that reason, the High Have candle cannot appear within the pattern). Doji candles cannot appear within the pattern.
The opening price of the candle of the first pattern should be a gap lower than the previous candle.
The Two Black Gapping Candles pattern appears in a downtrend and predicts its continuation. As with any other pattern, this one should also be confirmed on the following candles. Your second line can become the first line of some bullish reversal pattern, for example a bullish Harami or a Carrier Pigeon. For that reason, to consider the pattern as confirmed, the next candle must be black with the closing price below the close of the previous candle. In markets where volume data is relevant, trading volume should increase on the candle following the pattern.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or opening price gaps lower than the previous candle
Second candle
• O black body
• Or the open below the open of the previous candle but higher than its low
• Or the close below the close of the previous candle
Example:
WMT , 01 Apr, 2002. Chart 1d.
36-Two-Candle Shooting Star
Description:
The first line of the pattern is a candle with a white body that appears as a long line. It can be one of the following candles: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles that are spinning tops, even with white bodies, cannot appear on the first line.
The second candle can be a white or black top that appears as a long or short line. It can be one of the following candles: white top, black top, high wave. The lower shadow does not exist or is shorter than the body. The upper shadow must be at least 2.5 times longer than the body.
The pattern appears in an uptrend, predicting its reversal. It should be confirmed in the form of a breakout of a closer support zone or a trend line.
The two-candle shooting star can be part of the evening star, being a three-line pattern. In such a case, reinforce the two-candle shooting star forecast.
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• Or a white or black small-bodied candle
• Either there is no lower shadow or the shadow cannot be longer than the body
• Or upper shadow at least 2.5 times longer than the body
• Either the opening above or at the level of the close of the previous candle
I did not find an example for this Pattern .. Sorry.
Remember that it is not necessary to learn all patterns by heart. Just master the theory of hollow candles and you can use these patterns only when necessary. Thank you very much for the support.
Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend.
Basic Candles - Two Line Patterns
1- Bearish Doji Star
Description:
The first Bearish Doji Star line has to be a white candle that appears as a long line (White Candle, Long White Candle, White Marubozu, White Marubozu Opening or White Closed Marubozu). The next candle is any doji candle except the four price Doji. The body of the doji is above the body of the previous candle. The length of the doji shadows does not matter.
Bearish star Doji appears in an uptrend and belongs to the group of bearish reversal patterns. Its appearance must be confirmed in the following candles.
This pattern is distinguished by a space between the high of the first candle and the low of the next candle or between the bodies of these two candles. The first confirmation is when the gap in the candlestick pattern is covered. It can be a black candle whose body is completely below the body of the doji. Another stronger type of confirmation is when an uptrend line or support zone is broken.
Building:
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• Or a doji candle
• Or one body above the body of the first candle
Example:
BAC,24 Jun, 2002. Chart 1d.
2- Bullish Separating Lines
Description:
The bullish parting lines are a two-line bullish continuation pattern. Her two candles appear as a long row. The first line is a black candle while the second is white. The name of the pattern comes from the fact that the opening price of the first candle is equal to the opening price of the second line, that is, the candles spread in opposite directions.
Building:
First candle
•Or an uptrend candle
•Or black body
•Or appears as a long line
Second candle
•Or white body
•Or the opening price is equal to the previous opening price
Example:
TRV,04 May, 2007. Chart 1d.
3- Matching High
Description:
Matching High is built with two marubozu sails that have white bodies. In other words, it can be a white Marubozu or a close-up white Marubozu.
The first line of the pattern appears as a long line, while the second can be long or short. Both lines of candles should close at the same level. Also, the open of the second candle must be higher than the open of the previous candle.
The Matching High belongs to the group of bullish reversal patterns. Its appearance on the chart must be confirmed in the following candles, that is, breaking the closest support zone, which can be formed by the first line of a Matching High pattern. The best confirmation is in the form of a black candle that the closing price is below the opening price of the line of the first pattern.
Building:
First candle
• Or a candle in an uptrend
• Or white body
• Or without upper shadow
• Or appears as a long line
Second candle
• Or white body
• Or the opening price is higher than the previous opening price
• Or the closing price is at the level of the previous closing price
• Or without upper shadow
Example:
PG,04 Nov, 2010. Chart 1d.
4- Bearish Engulfing
Description:
The Japanese name for the bearish enveloping pattern is tsutsumi, which means the Japanese art of packaging and is derived from the verb whose meaning is to wrap (a present). In English, we use the word wrap because the second line wraps (overlaps) the first line of the pattern.
Bearish Engulfing is a two-line pattern in which the body of the white candle in the first line is engulfed by the body of the black candle in the second line. The first line can be any basic white candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji. The second line is any black candle that appears as a long line: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
Shadows don't matter what is explained in the following article: Two-line patterns.
The pattern appears in an uptrend and predicts its reversal. If the volume of operations grows in the second line, the reliability of the pattern is higher. Bearish engulfing pattern needs confirmation on subsequent candles.
Morris created the Three Outside Down pattern as confirmation of the bearish engulfing. In general, it is recommended to confirm all patterns. Confirmation can be in the form of breaking out of the nearest support zone or a trend line.
It is crucial where on the chart a bearish envelope appears. Depending on the market context, the candlestick pattern may just be a short break before the market rallies. Especially if below a bearish engulfing there is a strong support area.
If a bearish engulfing pattern is confirmed, its second line may form a resistance zone.
Building:
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• O black body
• Or the body of the candle wraps around the body of the previous candle (white)
Example:
MCD ,20 Dec, 2012. Chart 1d.
5- Bullish Tasuki Line
Description:
The Tasuki bullish line belongs to the group of tasuki patterns and predicts a reversal of the downtrend. Both candles appear as a long row. The first line has a black body, while the second line has a white body. The length of the shadows doesn't matter; however, the volume (if available in the given market) of the second line is significant. The relation of the bodies is insignificant.
The pattern requires confirmation, that is, to break out of the nearest resistance zone or trend line.
It happens that a bullish Tasuki line appears as a second and third line of a falling Tasuki gap or three methods of falling gap.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or the high price above the previous low price
• Or appears as a long line
Second candle
• Or white body
• Or the opening price greater than or equal to the previous closing price
• Or the closing price above the previous opening price
• Or appears as a long line
Example:
DIS,16 Apr, 2012. Chart 1d.
6- Matching Low
Description:
The Matching Low belongs to the patterns that occur less frequently in the charts. Having two candles with no lower shadows in a row (i.e. closing Black Marubozu or Black Marubozu), closing at the same price, is an unusually rare situation.
The first line of the pattern appears as a long line in a downtrend. The second line opens below the line of the previous candle. As already mentioned, both candles close at the same level.
The pattern is bullish reversal and appears in a downtrend. It must be confirmed in the following candles. Your front line acts as a resistance zone.
The classic interpretation of the Matching Low pattern is composed of two candles with no lower shadows (the upper shadow is allowed). Bulkowski, however, relaxed this requirement, resulting in significantly more recognized patterns.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or no lower shadow
• Or appears as a long line
Second candle
• O black body
• Or the opening price is below the previous opening price
• Or the closing price is at the level of the previous closing price
• Or no lower shadow
Example:
NDAQ,21 Nov, 2003. Chart 1d.
7- Bearish Harami
Description:
Bearish Harami is a two-line pattern in which the body of the white candle in the first line wraps around the body of the black candle in the second line.
The first line can be any basic candle with a white body, appearing as a long line, i.e .: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles that are spinning tops, even with white bodies, cannot appear on the first line.
The second line can be any basic black candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji.
Shadows don't matter what is explained in the following article: Two-line patterns.
The pattern appears in an uptrend and predicts its reversal. The Bearish Harami pattern needs confirmation on subsequent candles.
Morris created the Three Inside Down pattern as confirmation of the Bearish Harami. The pattern can be confirmed by breaking the nearest support zone or a trend line.
If a candle that follows the appearance pattern closes above the opening price of the second line (i.e. black candle), the uptrend is likely to continue. On the contrary, when a candle that follows the pattern closes below its second line, there is a possibility that the uptrend will stop.
One should be careful when the front line of a bearish Harami has a long white body, as it can form a strong support zone.
The market context in which a bearish Harami is developing is more important than the bodies of the candles or the length of the shadows.
Building:
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• O black body
• Or the body of the candle wrapped by the body of the previous candle (white)
8- Dark Cloud Cover
Description:
Dark cloud cover is among the most popular candle patterns. Your first candle must be a white candle that appears as a long line (White Candle, Long White Candle, White Marubozu, White Marubozu Opening, or White Closed Marubozu). The second candle is a black candle that appears as a long line (Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, or Closing Black Marubozu).
The opening price of the second candle should be above the high of the previous candle. However, it is acceptable that these two prices are the same. The close of the second candle should be below the midpoint of the first candle, but not below its open.
Dark cloud cover is a classic bearish reversal pattern, appearing at the end of an uptrend. After definite rallies, the second candle in the pattern opens creating a price gap, however, it closes below the midpoint of the previous candle, demonstrating the weakness of the market.
The reliability of the pattern is higher if the trading volume increases on the second line. Like any other pattern, it must be confirmed by the following candles. Confirmation can be, for example, in the form of breaking a support level or a trend line.
If the pattern managed to reverse an uptrend, its second candle creates a strong resistance zone.
Building:
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• O black body
• Or the opening greater than or equal to the previous maximum
• Or the close below the midpoint of the previous candle
• Or the close above the previous open
Example:
JPM , 20 Sep, 10, 1d Chart.
9- On Neck
Description:
The On Neck is a two-line bearish continuation pattern. The first line is a candle that has a black body, which appears as a long line. The second line is a candle with a white body, but the length of the upper and lower shadows cannot exceed more than twice the length of the body.
The closing price of the second candle is at the level of the low price of the first candle.
The pattern appears in a downtrend and predicts its continuation. It should be confirmed in the following candles with a candle that closes below the opening price of the second line.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or appears as a long line
Second candle
• Or white body
• Or the opening price below the previous closing price
• Or the closing price is equal to the previous low price
Example:
NEM , 07 Oct, 2002, 1d Chart.
10- Bearish Harami Cross
Description:
The bearish Harami Cross is a bearish two-line reversal pattern. The first candle envelops the second, being a doji candle, including the shadows.
The first line of the pattern can be any white candle that appears as a long line, that is: White candle, Long white candle, White Marubozu, White Marubozu that opens, White Marubozu that closes. Tops with white bodies are not accepted. The second line is a doji candle that has two shadows that form a cross.
The Bearish Harami Cross appears in an uptrend and predicts its reversal. The patterns should be confirmed on the next closest candles. A doji candle appearing as the second line indicates market indecision. Interestingly, to recognize the pattern as valid, your first line must be a long white candle, which can become an important support zone. For this reason, care must be taken when such a pattern forms on the chart.
Building:
First candle
• Or a candle in an uptrend
• Or white body
• Or appears as a long line
Second candle
• Or a doji candle with two shadows
• Or the candle (including the shadows) is enveloped by the body of the previous candle
Example:
MRK, 06 Feb, 2009, 1d Chart.
11- Descending Hawk
Description:
The Descending Falcon is a bearish two-line reversal pattern that belongs to the harami family of patterns. The body of the candle in the first line wraps around the body of the second line. The shadows do not matter with respect to both candles.
The first line of the pattern can be any candle with a white body, which appears as a long line. The following candles are allowed: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles classified as doji or spinning top are not allowed.
The Descending Falcon's second candle can be any white candle, appearing as a long or short line, i.e., Short White Candle, White Candle, Long White Candle, White Marubozu, White Marubozu Opening, White Marubozu Closed. Candles classified as doji or spinning top are not allowed.
Controversies about how to consider bodies and shadows are described in this article: Two-line patterns.
The Descending Falcon appears in an uptrend predicting its reversal. It has to be confirmed in the following candles in the form of a breakout of the support area or a trend line and closing significantly below. Care must be taken in the first line that forms a support zone.
Building:
First candle
• Or a candle in an uptrend
• Or white body
• Or appears as a long line
Second candle
• Or white body
• Or the body of the candle wrapped by the body of the previous candle
• Either appears as a long or short line
Example:
KO , 08 Mar 9:00, 2011, 12h Chart.
12-Piercing
Description:
The Piercing is a bullish equivalent pattern of the bearish Dark Cloud Cover.
The first day of the pattern is a black candle that appears as a long line in a downtrend, except for the tops and doji candles. In other words, the first line can be one of the following basic candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
The candle in the second line is exactly opposite to the first line, that is, it can be one of the following basic candles: White candle, Long white candle, White Marubozu, Opening white Marubozu, Closing white Marubozu. The candle in the second line should appear as a long line. Its opening must be less than the low of the previous candle. However, it is acceptable that both prices are the same. The closing price of the second candle should be between the midpoint and the open of the previous candle.
The Piercing pattern can look like a classic reverse pattern due to its appearance. Price opens lower after the first black candle, however the market shows its strength and closes above the midpoint of the first line.
In the stock market, the reliability of the pattern is higher when an increase in trading volume can be observed on the second line.
Like any other pattern, the Piercing pattern must be confirmed by the following candles. Confirmation can be, for example, in the form of a breakout of a support zone or a trend line. If a perforation pattern is confirmed, its second line acts as a support area.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or white body
• Or the opening below or equal to the previous low
• Or the close above the midpoint of the previous candle's body
• Or the close below the previous opening
Example:
PFE, 06 Feb, 2012, 1d Chart.
13-Falling Window
Description:
The descending window is classified as a bearish continuation pattern. The lines of both patterns can be basic candles, appearing as a long or a short line. The only exception is the Four Price Doji, which cannot appear as part of the pattern. The pattern is characterized by a price gap that appears between the low of the first candle and the high of the second candle.
Windows are known in Western technical analysis and are often referred to as gaps. The Japanese are very particular about windows and claim that the trend will continue until the gap is closed. Shimizu mentions that in Japan they also call holes hollows.
Morris doesn't think of windows as patterns that look strange. That is, he is not doing the same with patterns like kick up / kick down, two candlestick shooting star / inverted hammer or others, where a price gap is also required.
Nison and Bulkowski also find windows as patterns, but note that Bulkowski's interpretation is somewhat different than ours (see Ascending Window for more details). Nison mentions that windows are among the most important candle patterns.
In our interpretation, for the descending window, it is sufficient that the closing price of the first candle is below the trend line, while the opening price can be located above. The assumption that the descending window pattern requires a few candles in a downtrend, before it occurs, can lead to missing very significant signals.
Particular attention should be paid to the second candle of the pattern, which may be part of another conflicting pattern, that is, a bullish pattern. In such unclear situations, the focus should be on the general market context and the resistance / support lines.
Building:
First candle
• Or any candle except the four price Doji
• Either a candle in a downtrend or closing below the trend line
Second candle
• Or any candle except the four price Doji
• Or the candle is high below the low of the previous candle
Example:
INTC ,21 Sep, 2012, 1d Chart.
14-Rising Window
Description:
The ascending window is classified as a bullish continuation pattern. The lines of both patterns can be basic candles, appearing as a long or a short line. The only exception is the Four Price Doji, which cannot appear as part of the pattern.
The pattern is characterized by a price gap that appears between the high of the first candle and the low of the second candle.
Nison and Bulkowski in their books provide examples with a visible uptrend prior to the occurrence of a pattern that can be confusing. In our interpretation, for the ascending window, it is sufficient that the closing price of the first candle is above the trend line, while the opening price can be below. The assumption that the ascending window pattern requires a few candles in an uptrend, before it occurs, can lead to missing very significant signals.
Windows are known in Western technical analysis and are often referred to as gaps. The classical interpretation says that after three occurrences of the ascending window, the trend can be reversed. Most often, the Popup Window acts as a support.
Nison claims that when a rising window is preceded by a bullish reversal pattern, its reliability is higher. Our research also says that if the second candle of a rising window forms at high volume, its reliability is better.
Special attention should be paid to the second candle in the pattern. A black candle or a doji candle can weaken the signal. The second line may be part of another conflicting pattern. Sometimes the Ascending Window can be recognized at the same time also as the Bearing Doji Star or the Two-Candle Shooting Star. In such unclear situations, the focus should be on the general market context and the resistance / support lines.
A warning is needed for traders who take a position on the second line of the pattern. That is, when the price opens higher, the candle can still close lower producing a black body. So instead of having a rising window, we can have a bearish reversal pattern, for example dark cloud cover or bearish engulfing.
Either way, the most important thing is to be consistent. Therefore, when presenting any statistics from the ascending window, it is important to remember which interpretation is used to compare apples to apples.
Building:
First candle
• Or any candle except the four price Doji
• Or a candle in an uptrend or closing above the trend line
Second candle
• Or any candle except the four price Doji
• Or the candle is low above the previous high candle
Example:
PFE, 06 Feb, 2012, 1d Chart.
You should have mastered the theory by now. So now it will only be the examples. Time to put it into practice.
15- Bearish Separating Lines
Description:
Bearish parting lines are classified as a bearish continuation pattern. The first line is a white candle that appears as a long line in a downtrend. The second line is a black body candle that appears as a long line. Both candles open at the same price level and then the prices separate.
The pattern appears very rarely on candlestick charts.
Building:
First candle
• Or a candle in a downtrend
• Or white body
• Or appears as a long line
Second candle
• O black body
• Or the opening price is equal to the previous opening price
Example:
PFE, 17 Jan, 2003, 1d Chart.
16- Homing Pigeon
Description:
The Homing Pigeon is a two-line bullish counterpart of the Descending Hawk. It is also closely related to the Bullish Harami pattern. All of these patterns belong to the harami family of patterns.
The first line, being a black candle, wraps around the second line, being also a black candle. The length of the candle shadows does not matter. The first candle in the pattern can be any black candle that appears as a long line, i.e .: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
The second candle can be any black candle that appears as a short or long line, that is, Short Black Candle, Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
As a bullish reversal pattern, the carrier pigeon must form in a downtrend because it predicts its reversal.
The pattern should be confirmed on subsequent candles. It can be, for example, a bullish breakout of a resistance zone or a trend line and a close above the pattern. Otherwise, the appearance of the pattern should be seen as a temporary pause from a price decline. One must be careful because the first line of the Homing Pigeon pattern forms an area of resistance.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• O black body
• Or the body of the candle wrapped by the body of the previous candle
Example:
JNJ , 15 Mar, 2011, 1d Chart.
17- Thrusting
Description:
Thrusting is a two-line bearish continuation pattern. It is very similar to the perforation pattern.
The first candle is a black candle that appears in a downtrend as a long line. It can be one of the following basic candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.
The second candle also appears as a long line but has a white body and opens below the previous low. The second line closes between the midpoint of the previous candle and its closing price. It can be one of the following basic candles: White Candle, Long White Candle, White Marubozu, White Marubozu Opening, White Marubozu Closing.
Spinning tops and doji candles cannot appear as part of the pattern.
The Thrusting pattern appears in a downtrend that predicts its continuation. The forecast should be confirmed in the form of a black candle following the pattern. That candle should close below the opening price of the second line. If a volume data is relevant to a certain market (for example, stock market), it should increase for the candles that form the pattern.
If a white candle follows the pattern, a trend reversal can be expected. In that case, the white candle that follows the pattern should close above the opening price of the first line. Alternatively, the candle can break a trend line or the nearest resistance zone. It is good if a higher trading volume (if available for a given market) accompanies that candle.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or appears as a long line
Second candle
• Or white body
• Or the opening below the previous low
• Or the close above the close of the previous candle
• Or the close below the midpoint of the previous candle's body
• Or appears as a long line
Example:
XOM, 06 Sep, 2006, 1d Chart.
18- Bearish Tasuki Line
Description:
The Bearish Tasuki line is a bearish two-line reversal pattern, which belongs to the family of tasuki patterns.
The first line of the pattern is a white candle that appears as a long line. The second line also appears as a long line, but the candle is black. The length of the shadows doesn't matter; however, the volume (if available in the given market) of the second line is significant. The relationship of the bodies is not important.
The pattern requires confirmation, that is, to break out of the nearest resistance zone or trend line.
The bearish Tasuki line can appear as a second and third candlestick from patterns such as Upside Tasuki Gap or Upside Gap Three Methods. Since these patterns are bullish, we deal with so-called conflicting lines, that is, opposite patterns that occur at the same time.
Building:
First candle
• Or a candle in an uptrend
• Or white body
• Or the low price below the previous high price
• Or appears as a long line
Second candle
• O black body
• Or the opening price below or equal to the previous closing price
• Or the closing price below the previous opening price
• Or appears as a long line
Example:
HD , 26 Jan, 2011, 1d Chart.
19- In Neck
Description:
The In Neck pattern is a two-line bearish continuation pattern, which implies that the pattern appears in a downtrend. The first line is a black candle that appears in a downtrend. The second line is a white candle, and the length of the upper and lower shadow cannot exceed more than twice the length of the body. Also, the closing price of the second candle should be slightly above the previous closing price (up to 15% of the body of the first line).
The pattern should be confirmed by a subsequent candle that closes below the closing price of the second line.
The In Neck pattern rarely occurs on candlestick charts.
Building:
First candle
• A candle in a downtrend
• Black body
• Appears as a long line
Second candle
• White body
• The opening price below the previous closing price
• The closing price is slightly above the previous closing price (up to 15% of the body of the first line)
Example:
INTC, 19 Sep, 2012, 1d Chart.
20- Turn Down
Description:
The Turn Down pattern is a bearish reversal pattern.
Whenever we write about pattern confirmation, we mention that it can be, for example, in the form of a trend line breakout. The Turn Down pattern, and its bullish counterpart, the Turn Up pattern, works exactly like this.
The first candle in the pattern can be any basic candle except the four price Doji. It can appear as a long or short line. Your entire body should be above the trend line, although your lower shadow can reach below it.
The second line of the pattern has to be a black candle, which appears as either a long or a short line, except for the four price Doji. The body of the candle should be completely below the trend line. The volume of the second candle must be above the average of the last candles.
The size of the bodies does not matter. However, as usual, the market context in which the pattern appeared is critical.
The Turn Down pattern requires a confirmation on the following candles, in the form of breaking the closest support level.
It happens that a price gap is formed between the first and second lines of the pattern. In such cases, the reliability of the pattern is higher, assuming it does not appear within a strong support zone.
The reliability of the pattern decreases when the market retreats above the trend line.
Building:
First candle
• Or any uptrend candle except the four price Doji
• Or a candle with a body above the trend line
Second candle
• O black body
• Or a candle with a body below the trend line
Example:
PFE, 22 Oct, 2012, 1d Chart.
21- Bullish Doji Star
Description:
The first line of the bullish Doji Star is a black candle that appears as a long line (Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu). The next candle is any doji candle, except the four price Doji. The body of the doji is below the body of the previous candle. The length of the doji shadows does not matter.
The Bullish Doji star appears in a downtrend and belongs to the group of bullish reversal patterns. Its appearance must be confirmed in the following candles.
This pattern is characterized by a space between the low of the first candle and the high of the next candle or between the bodies of these two candles. The first confirmation is when the gap in the candlestick pattern is covered. It can be a white candle whose body is completely above the body of the doji. Another stronger type of confirmation is when a downtrend line or resistance zone breaks.
Morris and Bulkowski point out that doji shadows shouldn't be too long. It may indicate that only the doji candle that appears as a short line should be considered valid. However, our tests show that the introduction of this additional condition does not have a significant impact on the number of patterns found.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or a doji candle
• Or a body under the body of the first candle
Example:
MSFT, 30 Dec, 2005, 1d Chart.
22- Inverted Hammer
Description:
The inverted hammer pattern is made up of two candles. The first candle appears as a long line and has a black body. That means it can be one of the following candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. Candles that are spinning tops, even with black bodies, cannot appear on the first line.
The second candle can be a white or black spinning top, appearing as a long or short line. It can be one of the following candles: white top, black top, high wave. The lower shadow does not exist or is shorter than the body. The upper shadow must be at least 2.5 times longer than the body.
The pattern appears in a downtrend, predicting its reversal. It should be confirmed in the form of a breakout of a closer resistance zone or a trend line.
As always, the pattern requires confirmation on subsequent candles, which means that the nearest resistance zone or trend line should be suppressed. The market context in which the pattern appears is critical.
The pattern can occur within the Morning Star three-line pattern, being its confirmation.
Morris states that the upper shadow cannot be longer than the body of the candle. This is most likely a typo because the examples in the book feature candles with significantly longer shadows than the bodies.
Presumably Bulkowski has noticed this error because, although not directly, he mentions that there are different definitions of the upper shadow.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or a white or black small-bodied candle
• Either there is no lower shadow or the shadow cannot be longer than the body
• Or upper shadow at least 2.5 times longer than the body
• Or the opening below or at the level of the close of the previous candle
Example:
MRKSY , 08 Apr, 2015, 1d Chart.
23- Turn Up
Description:
The Turn Up pattern is a bullish reversal pattern.
Whenever we write about pattern confirmation, we mention that it can be, for example, in the form of a trend line breakout. The Turn Up pattern, and its counterpart, the Turn Down pattern, works exactly like this.
The first candle in the pattern can be any basic candle except the four price Doji. It can appear as a long or short line. Your entire body should be below a trend line, although your upper shadow may reach above it.
The second line of the pattern has to be a white candle, which appears as a long or short line, except for the four price Doji. The body of the candle should be completely above the trend line. The volume of the second candle must be above the average of the last candles.
The size of the bodies does not matter. However, as usual, the market context in which the pattern appeared is critical.
The Turn Up pattern requires a confirmation on the following candles, in the form of breaking the closest resistance level.
It happens that a price gap is formed between the first and second lines of the pattern. In such cases, the reliability of the pattern is higher, assuming that it does not appear within a zone of strong resistance.
The reliability of the pattern decreases when the market retreats below the trend line.
Building:
First candle
• Or any uptrend candle except the four price Doji
• Or a candle with a body below the trend line
Second candle
• Or white body
• Or a candle with a body above the trend line
Example:
JNJ , 05 Sep, 2012, 1d Chart.
24-Bullish Engulfing
Description:
The bullish engulfing is a two-line pattern, in which the body of the black candle on the first line is engulfed by the body of the white candle on the second line. The first line can be any basic black candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji. The second line is any white candle that appears as a long line: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, or Closing White Marubozu. Spinning tops and doji candles are not acceptable.
The length of the shadow does not matter, neither in the first nor in the second line.
The pattern appears in a downtrend and predicts its reversal. If trading volume data is available for a given market and grows on the second line, the reliability of the pattern is higher. The bullish engulfing pattern needs confirmation on subsequent candles.
Morris created the Three Outside Up pattern as confirmation of the Bullish Engulfing. In general, it is recommended to confirm all patterns. Confirmation can be in the form of breaking out of the nearest resistance zone or a trend line.
It is crucial where, on the chart, a bullish envelope appears. Depending on the market context, the candlestick pattern may just be a short break before the market declines. Especially if, above a bullish envelope, there is an area of strong resistance.
If a bullish engulfing pattern is confirmed, its second line may form a support zone.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or white body
• Or the body of the candle wraps around the body of the previous candle (black)
It is the opposite of Bearish Engulfing.
25- Kicking Down/Bearish Kicking
Description:
The Kicking Down pattern (also called Bearish Kicking) is made up of two marubozu candles that appear as long lines. The first candle in the pattern is a white Marubozu; the second line is a BlackMarubozu.
The opening of the second line is lower than the previous opening, which forms a price gap.
Depending on the trend in which the pattern appears, you can predict its continuation or reversal (see The Kicking Up article). The next candle determines the direction of the price.
The pattern is extremely rare, especially in liquid markets.
Building:
First candle
• Or a white Marubozu
• Or appears as a long line
Second candle
• Or a black Marubozu
• Or downward price gaps
• Or appears as a long line
Example:
BLK , 21 Apr, 2010, 1d Chart.
26- Tweezers Bottom
Description:
The bottom of the calipers is classified as a two-line pattern, although it can be made up of more than two candles.
The first line can be any candle of any color except the four price Doji. The following candles can be of any color and type, except for the four price Doji. Also, all low prices must be the same.
The bottom of the calipers can be part of other patterns in a downtrend. It must be confirmed in the following candles.
The pattern occurs rarely.
Building:
First candle
• Or a candle in a downtrend
• Or any color
• Or any candle except the four price Doji
Second candle
• Or any candle except the four price Doji
• Or any color
• Or the low price equal to the previous low price
All the following days
• Or any candle except the four price Doji
• Or any color
• Or the low price equal to the previous low price
Example:
PG , 23 Nov, 2011, 1d Chart.
27- Tweezers Bottom
Description:
The bottom of the calipers is classified as a two-line pattern, although it can be made up of more than two candles.
The first line can be any candle of any color except the four price Doji. The following candles can be of any color and type, except for the four price Doji. Also, all low prices must be the same.
The bottom of the calipers can be part of other patterns in a downtrend. It must be confirmed in the following candles.
The pattern occurs rarely.
Building:
First candle
• Or a candle in a downtrend
• Or any color
• Or any candle except the four price Doji
Second candle
• Or any candle except the four price Doji
• Or any color
• Or the low price equal to the previous low price
All the following days
• Or any candle except the four price Doji
• Or any color
• Or the low price equal to the previous low price
Example:
PG , 23 Nov, 2011, 1d Chart.
28- Bullish Harami
Description:
The Bullish Harami is a two-line pattern in which the body of the black candle in the first line wraps around the body of the white candle in the second line.
The first line can be any basic candle with a black body, appearing as a long line, that is: Black candle, Long black candle, Black Marubozu, Black opening Marubozu, Black closing Marubozu. Candles that are spinning tops, even with black bodies, cannot appear on the first line.
The second line can be any basic white candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji.
Shadows don't matter what is explained in the following article: Two-line patterns.
The pattern appears in a downtrend and predicts its reversal. The Bullish Harami pattern needs confirmation on subsequent candles.
Morris created the Three Inside Up pattern as confirmation of the Bullish Harami. The pattern can be confirmed by breaking the nearest resistance zone or a trend line.
If a candle that follows the appearance pattern closes below the opening price of the second line (i.e. white candle), the downtrend is likely to continue. On the contrary, when a candle that follows the pattern closes above its second line, there is a possibility that the downtrend will stop.
Care should be taken when the first line of a bullish Harami has a long black body, as it can form a strong resistance zone.
The market context in which a bullish Harami is developing is more important than the bodies of the candles or the length of the shadows.
Building:
First candle
• Or a candle in a downtrend
• O black body
Second candle
• Or white body
• Or the body of the candle wrapped by the body of the previous candle (black)
Example:
BAC , 14 Nov, 2012, 1d Chart.
29- Tweezers Top
Description:
Description:
The upper part of the calipers is classified as a two-line pattern, although it can be made up of more than two candles. It acts as a bearish reversal.
The first line can be any uptrend candle of any color except the four price Doji. The following candles can be of any color and type except the Four Price Doji, but all high prices must be the same.
The tops of the calipers can be part of other patterns in an uptrend. It must be confirmed in the following candles.
Building:
First candle
• Or a candle in an uptrend
• Or any color
• Or any candle except the four price Doji
Second candle
• Or any candle except the four price Doji
• Or any color
• Or the high price is equal to the previous high price
All the following days
• Or any candle except the four price Doji
• Or any color
• Or the high price is equal to the previous high price
I did not find an example for this Pattern .. Sorry.
30- Kicking Up/Bullish Kicking
Description:
The Kicking Up pattern (also called the Bullish Kicking) is made up of two marubozu candles that appear as long lines. The first candle in the pattern is a black Marubozu; the second line is a white Marubozu.
The opening of the second line is higher than the previous opening, which forms a price gap.
We assume that the pattern can be reversible and continuous. Therefore, the trend prior to the occurrence of the pattern is not important: whenever we are faced with a Kicking Up pattern, the white candle signifies buying demand, predicting the price increase.
As Shimizu writes, the bullish line pattern can continue an uptrend or reverse a downtrend. Because the bullish parting lines are quite similar to momentum, we made the same assumption.
The pattern is extremely rare, especially in liquid markets. It can be seen as more of an exoticism rather than a seriously negotiated pattern.
Building:
First candle
• Or a black Marubozu
• Or appears as a long line
Second candle
• Or a white Marubozu
• Or upward price differences
• Or appears as a long line
I did not find an example for this Pattern .. Sorry.
31- Bullish Harami Cross
Description:
The Bullish Harami Cross is a bullish two-line reversal pattern. The first candle envelops the second, being a doji candle, including the shadows.
The first line of the pattern can be any black candle that appears as a long line, i.e .: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. Tops with black bodies are not accepted. The second line is a doji candle that has two shadows that form a cross.
The Bullish Harami Cross appears in a downtrend and predicts its reversal. The pattern should be confirmed on the next closest candles. A doji candle appearing as the second line indicates market indecision. Interestingly, to recognize the pattern as valid, your first line must be a long black candle, which can become a major resistance zone. For this reason, care must be taken when such a pattern forms on the chart.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or appears as a long line
Second candle
• Or a doji candle with two shadows
• Or the candle (including the shadows) is enveloped by the body of the previous candle
Example:
32- Last Engulfing Bottom
Description:
The definition of the latest engulfing bottom is exactly the same as the bearish engulfing pattern, except for the trend requirement. The bearish engulfing bottom appears within an uptrend, while the last engulfing bottom occurs within a bearish trend.
One wonders why such a pattern can reverse a downtrend. That is, there is a downtrend, but the bearish momentum slows down a bit because a small white candle appears. However, the next candle has a long black body, which confirms the strength of the bear. In general, most of us would intuitively say that we are facing a bearish continuation pattern.
The Last Engulfing Bottom is a good example to explain that the occurrence of a pattern is not equivalent to the price prediction.
In the case of the Last Engulfing Bottom pattern, its name gives us a clue that illustrates how it can work. The pattern must be preceded by a bearish engulfing pattern. So we can expect the downtrend to reverse if a price is confirmed on the next candles.
If a last engulfing bottom appears alone, that is, it is not preceded by a bearish engulfing pattern, a downtrend is likely to continue. It can be especially true if the next candle closes below the occurrence of the pattern.
Prediction of the reversal of the trend requires confirmation, that is, the next candle will close above the pattern.
If the volume data is relevant to the analyzed market, it should be taken into account. If it raises for candles with white bodies, the probability of reversing a downtrend increases.
Building:
First candle
• Or a candle in a downtrend
• Or white body
Second candle
• O black body
• Or the body of the candle wraps around the body of the previous candle
Example:
BAC, 25 Apr, 2011. Chart 1d.
33- Bullish Meeting Lines
Description:
The bullish meeting lines are a two-line bullish reversal pattern. The first line is a black candle that appears as a long line. The second candle also appears as a long line, but the body of the candle is white. Both candles close at the same level. Although the shape of the pattern is simple, it appears very rarely in charts.
The pattern should be confirmed on subsequent candles.
Visually, the pattern of bullish meeting lines is similar to that of the neck, being a bearish continuation pattern. However, the main difference is in the length of the body of the second line. In the case of the In Neck pattern, the body of the second candle is shorter.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or appears as a long line
Second candle
• Or white body
• Or the closing price is equal to the previous closing price
Example:
T , 28 Jul, 2011. Chart 1d.
34- Last Engulfing Top
Description:
The description of the latest engulfing top is precisely the same as the bullish engulfing pattern except for the trend requirement. The Bullish Engulfing appears within a downtrend, while the Last Engulfing Top occurs within an uptrend.
You may wonder why this pattern can reverse an uptrend. After all, it is not difficult to find short black candles that appear within an uptrend. It is not an unusual situation because, during an uptrend, the price often stops before going higher.
However, when the latest engulfing top appears, it should not be ignored, especially when preceded by a bullish engulfing pattern. The ideal setting is where we deal with both patterns on the chart; first having a bullish envelope (the price rises), and after a while a last engulfing ceiling.
As the name implies, the last engulfing top symbolizes the end of an uptrend. When such a pattern emerges, one should wait for what happens on the next candles. If a black candle appears and closes significantly lower, then we can expect the reversal of the trend. However, if we are faced with a candle that closes much higher, the uptrend is likely to continue.
Building:
First candle
• Or a candle in an uptrend
• O black body
Second candle
• Or white body
• Or the body of the candle wraps around the body of the previous candle
Example:
MSFT , 20 Sep, 2012. Chart 1d.
35- Two Black Gapping Candles
Description:
The Two Black Gapping Candles is a bearish continuation pattern.
The first and second lines of the pattern can be any candle with a black body, except doji candles. In other words, the following candles can appear within the pattern: Short Black Candle, Black Candle, Long Black Candle, Black Top, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. If a Black Spinning Top candle appears within the pattern, none of its shadow lengths can exceed more than twice the length of the body (for that reason, the High Have candle cannot appear within the pattern). Doji candles cannot appear within the pattern.
The opening price of the candle of the first pattern should be a gap lower than the previous candle.
The Two Black Gapping Candles pattern appears in a downtrend and predicts its continuation. As with any other pattern, this one should also be confirmed on the following candles. Your second line can become the first line of some bullish reversal pattern, for example a bullish Harami or a Carrier Pigeon. For that reason, to consider the pattern as confirmed, the next candle must be black with the closing price below the close of the previous candle. In markets where volume data is relevant, trading volume should increase on the candle following the pattern.
Building:
First candle
• Or a candle in a downtrend
• O black body
• Or opening price gaps lower than the previous candle
Second candle
• O black body
• Or the open below the open of the previous candle but higher than its low
• Or the close below the close of the previous candle
Example:
WMT , 01 Apr, 2002. Chart 1d.
36-Two-Candle Shooting Star
Description:
The first line of the pattern is a candle with a white body that appears as a long line. It can be one of the following candles: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles that are spinning tops, even with white bodies, cannot appear on the first line.
The second candle can be a white or black top that appears as a long or short line. It can be one of the following candles: white top, black top, high wave. The lower shadow does not exist or is shorter than the body. The upper shadow must be at least 2.5 times longer than the body.
The pattern appears in an uptrend, predicting its reversal. It should be confirmed in the form of a breakout of a closer support zone or a trend line.
The two-candle shooting star can be part of the evening star, being a three-line pattern. In such a case, reinforce the two-candle shooting star forecast.
First candle
• Or a candle in an uptrend
• Or white body
Second candle
• Or a white or black small-bodied candle
• Either there is no lower shadow or the shadow cannot be longer than the body
• Or upper shadow at least 2.5 times longer than the body
• Either the opening above or at the level of the close of the previous candle
I did not find an example for this Pattern .. Sorry.
Remember that it is not necessary to learn all patterns by heart. Just master the theory of hollow candles and you can use these patterns only when necessary. Thank you very much for the support.
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