Candlestick patterns are recurring combinations of Japanese candles that help determine market sentiment:

• who is stronger right now — buyers or sellers;
• whether a reversal or trend continuation is likely;
• whether the moment appears when the market “changes its mind.”

It’s important to understand: a pattern by itself is not a “buy/sell button.”
It works only in context:

• at support and resistance levels;
• during strong price movements;
• together with the trend and additional filters (oscillators, levels, market context).

1. Main patterns

Bullish and bearish engulfing

Bullish Engulfing
After a red (falling) candle appears a large green candle (bigger than the red one) that completely engulfs the body of the previous candle.

👉 This indicates that buyers suddenly became stronger — possible reversal upward.

Bearish Engulfing
After a green candle forms a larger red candle that covers the previous candle’s body.

👉 A signal of seller dominance and possible downward movement.

📌 These patterns work best:

• at key support/resistance levels;
• at the end of a prolonged move (long uptrend or downtrend).

The example shows bearish engulfing (highlighted in red) and bullish engulfing (highlighted in green)

Harami

Bullish Harami
After a decline a small green candle appears inside the body of a large red candle.
👉 This may signal slowing of the drop and a possible reversal upward.

Bearish Harami
After a rise forms a small red candle inside a large green one.
👉 A potential reversal downward.

💡 Key difference from engulfing:
in engulfing, the second candle is large and “eats” the first;
in harami, the small candle is inside the large one.

Bullish Harami, a small green candle inside a large red one

Three White Soldiers and Three Black Crows

Three White Soldiers
Three strong green candles in a row after a drop or a range.
👉 Often signals the formation of a new uptrend.

Three Black Crows
Three strong red candles in a row after growth.
👉 Sign of a possible reversal downward and start of a downtrend.

These patterns are used to confirm direction change, not to enter based on a single candle.

Hammer and Shooting Star

Hammer

• small body at the top of the candle;
• long lower shadow;
• appears after a decline.

👉 Shows that sellers tried to push the price down, but were bought out — possible growth.

Shooting Star

• small body at the bottom;
• long upper shadow;
• appears after a rise.

👉 Shows that buyers pushed the price up but were overwhelmed by sellers — possible reversal downward.

Evening Star and Morning Star

Evening Star — reversal pattern down after an uptrend.

Classic sequence:

1. Long green candle.
2. Small candle (doji or small body) with a gap.
3. Long red candle.

Morning Star — mirror model, reversal up after a downtrend.

💡 The gap between candles strengthens the pattern and often signals a shift in market sentiment.

2. How to find patterns on the chart

To quickly find candlestick combinations, you can:

• use the Pattern Detector indicator (available on our SpectraCharts platform);
• enable specific patterns: engulfing, harami, hammer, star, etc.;
• always check the pattern against support/resistance levels.

Patterns work best:

• at strong levels;
• when movement slows after a trend;
• in combination with various indicators.

3. How to filter false signals

Even a correct candlestick pattern may fail if you don’t consider market context. To filter out “noise”:

4. Important nuances

• Patterns do not work alone — especially during news or sharp impulses.
• There can be false engulfing if not confirmed by volume, trend, or levels.
• Candlestick analysis must always be combined with:
  • support/resistance,
  • overall trend direction,
  • additional indicators.

The key is learning to wait for the right situation, not entering every time you see a familiar candle shape.

5. How to learn to see patterns

To make candle combinations familiar:

• Use a demo account — mark where patterns appear and how price reacts afterward.
• Keep a trade journal:
  • which pattern appeared,
  • where it appeared (level/no level),
  • the result of the trade.
• Focus first on 3–4 basic patterns:
  • engulfing (bullish/bearish),
  • harami,
  • hammer,
  • shooting star.

Over time you will begin to spot patterns even without indicators.

✅ Conclusion

Candlestick patterns are a powerful tool if used together with market context, not separately.

They help:

• catch reversals in time;
• confirm indicator signals;
• make informed decisions, not press buttons randomly.

📚 Practice, mark patterns on history and in real trading, analyze their performance — and over time you will read the chart like a book.