Japanese Candlestick Patterns: Complete Visual Guide

Japanese candlestick patterns have been used to analyze markets for over 300 years. Developed by Japanese rice traders in the 18th century, these patterns remain as relevant today as ever. They provide a visual representation of market psychology that helps traders anticipate potential price movements.

This comprehensive guide covers the most important candlestick patterns, how to identify them, and how to trade them effectively.

Understanding Candlestick Anatomy

Before learning patterns, you must understand the individual candle structure.

The Four Price Points

Every candlestick displays four pieces of information:

• Open: Where price started the period
• High: The highest price reached
• Low: The lowest price reached
• Close: Where price ended the period

Body and Wicks

The Body:

• The thick central part
• Shows distance between open and close
• Filled/red = bearish (close < open)
• Hollow/green = bullish (close > open)

The Wicks (Shadows):

• Thin lines extending from body
• Upper wick shows high above the body
• Lower wick shows low below the body
• Represent price rejection

Reading the Candle

Large body: Strong conviction from buyers or sellers Small body: Indecision between buyers and sellers Long upper wick: Sellers rejected higher prices Long lower wick: Buyers rejected lower prices No wick: Strong directional movement without rejection

Single Candlestick Patterns

Doji

A doji forms when open and close are virtually equal.

Appearance:

• Very small or no body
• Looks like a cross or plus sign
• Upper and lower wicks may vary

Types of Doji:

• Standard Doji: Wicks roughly equal
• Long-Legged Doji: Very long upper and lower wicks (extreme indecision)
• Dragonfly Doji: Long lower wick, no upper wick (bullish after downtrend)
• Gravestone Doji: Long upper wick, no lower wick (bearish after uptrend)

What it means: The market is undecided. At the end of a trend, a doji can signal reversal.

Trading rules:

• Wait for confirmation candle
• More significant at support/resistance
• Context is crucial—doesn't mean anything mid-range

Hammer

A bullish reversal pattern found at the bottom of downtrends.

Appearance:

• Small body at the upper end of range
• Long lower wick (at least 2× body length)
• Little to no upper wick
• Color of body less important (green stronger)

What it means: Sellers pushed price down, but buyers stepped in strongly, pushing price back up. Rejection of lower prices.

Trading rules:

1. Must appear after a downtrend
2. Wait for bullish confirmation candle
3. Entry above hammer high
4. Stop loss below hammer low
5. Better at support levels

Inverted Hammer

A bullish reversal pattern found at bottoms.

Appearance:

• Small body at the lower end of range
• Long upper wick (at least 2× body length)
• Little to no lower wick

What it means: Buyers attempted to push higher during the session. Although they failed, it shows emerging buying interest.

Trading rules:

1. Must appear after downtrend
2. Requires strong bullish confirmation
3. Less reliable than standard hammer
4. Entry above confirmation candle

Shooting Star

A bearish reversal pattern found at tops.

Appearance:

• Small body at the lower end of range
• Long upper wick (at least 2× body length)
• Little to no lower wick
• Color less important (red stronger)

What it means: Buyers pushed price up, but sellers overwhelmed them, pushing price back down. Rejection of higher prices.

Trading rules:

1. Must appear after uptrend
2. Wait for bearish confirmation candle
3. Entry below shooting star low
4. Stop loss above shooting star high
5. Better at resistance levels

Hanging Man

A bearish reversal pattern found at tops.

Appearance:

• Identical to hammer
• Small body at top, long lower wick

What it means: During an uptrend, selling pressure appeared (long lower wick). Even though price recovered, it shows vulnerability.

Trading rules:

1. Must appear after uptrend
2. Requires bearish confirmation
3. Less reliable than shooting star
4. Entry below confirmation candle

Marubozu

A strong momentum candle with no wicks.

Appearance:

• Long body
• No upper or lower wick
• Opens at low (bullish) or high (bearish)
• Closes at high (bullish) or low (bearish)

What it means: Complete dominance by buyers (bullish marubozu) or sellers (bearish marubozu). Strong conviction.

Trading rules:

• Signals strong momentum
• Often continues in same direction
• Can mark important trend beginnings
• Don't fade these candles

Spinning Top

An indecision candle.

Appearance:

• Small body in the middle of range
• Upper and lower wicks of roughly equal length
• Body can be bullish or bearish

What it means: Neither buyers nor sellers won the battle. Market is pausing or uncertain.

Trading rules:

• Wait for break of spinning top range
• More significant after a strong move
• Often leads to consolidation or reversal

Double Candlestick Patterns

Bullish Engulfing

A bullish reversal pattern.

Appearance:

• First candle is bearish (red)
• Second candle is bullish (green)
• Second candle's body completely engulfs first candle's body

What it means: Buyers overwhelmed the previous day's sellers. Strong shift in momentum.

Trading rules:

1. Must appear after downtrend
2. Larger engulfing candle = stronger signal
3. Entry above engulfing candle high
4. Stop loss below engulfing candle low
5. Very reliable at support levels

Bearish Engulfing

A bearish reversal pattern.

Appearance:

• First candle is bullish (green)
• Second candle is bearish (red)
• Second candle's body completely engulfs first candle's body

What it means: Sellers overwhelmed the previous day's buyers. Strong shift in momentum.

Trading rules:

1. Must appear after uptrend
2. Larger engulfing candle = stronger signal
3. Entry below engulfing candle low
4. Stop loss above engulfing candle high
5. Very reliable at resistance levels

Bullish Harami

A potential bullish reversal pattern.

Appearance:

• First candle is large and bearish
• Second candle is small and bullish
• Second candle's body is contained within first candle's body

What it means: Selling momentum has paused. The small candle shows indecision within the previous range.

Trading rules:

1. Requires confirmation (third bullish candle)
2. Less powerful than engulfing pattern
3. More significant at support
4. Can indicate pause before continuation

Bearish Harami

A potential bearish reversal pattern.

Appearance:

• First candle is large and bullish
• Second candle is small and bearish
• Second candle's body is contained within first candle's body

What it means: Buying momentum has paused. Potential reversal brewing.

Trading rules:

1. Requires confirmation
2. Less reliable than engulfing
3. More significant at resistance
4. Wait for clear follow-through

Tweezer Tops

A bearish reversal pattern.

Appearance:

• Two or more candles
• Highs are at the same level
• First candle bullish, second bearish (typically)

What it means: Price hit the same ceiling twice and was rejected both times. Strong resistance.

Trading rules:

1. Must appear after uptrend
2. Matching highs are key
3. Stronger at known resistance
4. Entry below pattern low

Tweezer Bottoms

A bullish reversal pattern.

Appearance:

• Two or more candles
• Lows are at the same level
• First candle bearish, second bullish (typically)

What it means: Price hit the same floor twice and bounced both times. Strong support.

Trading rules:

1. Must appear after downtrend
2. Matching lows are key
3. Stronger at known support
4. Entry above pattern high

Piercing Line

A bullish reversal pattern.

Appearance:

• First candle is long and bearish
• Second candle opens below first candle's low
• Second candle closes above the midpoint of first candle

What it means: Bears gapped price down, but bulls reversed sharply, regaining over half the losses.

Trading rules:

1. Must appear after downtrend
2. The deeper the close into first candle, the stronger
3. Entry above second candle
4. Stop below pattern low

Dark Cloud Cover

A bearish reversal pattern.

Appearance:

• First candle is long and bullish
• Second candle opens above first candle's high
• Second candle closes below the midpoint of first candle

What it means: Bulls gapped price up, but bears reversed sharply, erasing over half the gains.

Trading rules:

1. Must appear after uptrend
2. Close below midpoint is essential
3. Entry below second candle
4. Stop above pattern high

Triple Candlestick Patterns

Morning Star

A bullish reversal pattern.

Appearance:

• First candle: Long bearish candle
• Second candle: Small body (any color), gaps down
• Third candle: Long bullish candle that closes into first candle's body

What it means: Downtrend pauses (small candle), then reverses strongly (bullish candle). Transition from bear to bull control.

Trading rules:

1. Gap between first and second candle preferred
2. Third candle should close into first candle's body
3. Entry above third candle
4. Stop below pattern low
5. Very reliable reversal signal

Evening Star

A bearish reversal pattern.

Appearance:

• First candle: Long bullish candle
• Second candle: Small body (any color), gaps up
• Third candle: Long bearish candle that closes into first candle's body

What it means: Uptrend pauses (small candle), then reverses strongly (bearish candle). Transition from bull to bear control.

Trading rules:

1. Gap between first and second candle preferred
2. Third candle should close into first candle's body
3. Entry below third candle
4. Stop above pattern high
5. Very reliable reversal signal

Three White Soldiers

A bullish continuation/reversal pattern.

Appearance:

• Three consecutive long bullish candles
• Each opens within previous candle's body
• Each closes near its high
• Minimal upper wicks

What it means: Strong, sustained buying pressure. Each candle shows buyers continuing to press higher.

Trading rules:

1. Most powerful after downtrend (reversal)
2. Also valid as continuation in uptrend
3. Entry on close of third candle or pullback
4. Stop below pattern low
5. Watch for exhaustion (candles getting smaller)

Three Black Crows

A bearish continuation/reversal pattern.

Appearance:

• Three consecutive long bearish candles
• Each opens within previous candle's body
• Each closes near its low
• Minimal lower wicks

What it means: Strong, sustained selling pressure. Each candle shows sellers continuing to press lower.

Trading rules:

1. Most powerful after uptrend (reversal)
2. Also valid as continuation in downtrend
3. Entry on close of third candle or pullback
4. Stop above pattern high
5. Watch for exhaustion (candles getting smaller)

Tips for Trading Candlestick Patterns

Context Is Everything

Patterns work best when they appear at significant levels:

• Support and resistance
• Trend lines
• Moving averages
• Fibonacci levels

A hammer at major support is much more meaningful than a hammer in the middle of a range.

Confirmation Matters

Don't act on patterns alone:

• Wait for the next candle to confirm
• Confirmation candle should support the expected direction
• Reduces false signals significantly

Combine with Other Analysis

Candlesticks work best as part of a complete approach:

• Use trend direction as a filter
• Confirm with indicators if desired
• Check volume if available

Not All Patterns Are Equal

Some patterns are more reliable than others:

Most Reliable:

• Engulfing patterns
• Morning/Evening Star
• Hammer/Shooting Star at key levels

Less Reliable:

• Harami patterns (need confirmation)
• Single doji
• Patterns in ranging markets

Volume Adds Confirmation

When available, check volume:

• Reversal patterns on high volume are stronger
• Low volume patterns may be false signals

Conclusion

Japanese candlestick patterns provide a window into market psychology. They show you the battle between buyers and sellers and help anticipate potential turning points.

Start by mastering the single candle patterns—doji, hammer, shooting star. Then move to the powerful two-candle engulfing patterns. Finally, learn the three-candle patterns like morning star and evening star.

Remember that patterns are probabilities, not certainties. Always use proper risk management, wait for confirmation, and consider the broader market context.

With practice, reading candlestick patterns will become intuitive. You'll see stories in the charts—stories of greed and fear, hope and despair, buyers and sellers battling for control.

Master this ancient art, and you'll have a powerful tool for understanding market behavior across any timeframe and any instrument.