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Basic single candle formations

Doji Market is at a juncture; there is indecision in the market. Buls and Bears are equal in
competition.

Important candle if found in a downtrend. Knows as “Pin Bars”. Price moved downwards
Dragonfly Doji from the open, where bulls stepped in and forced price back up. Strong Reversal signal.
See “Hammer” pattern.

Gravestone Doji Important if found in an uptrend, a strong bearish reversal signal. Prices above the open
were rejected by the Bears, see “Shooting Star” and “Pin Bars”.

Northern Doji Preceeding rally may be losing steam. Look to next candle patterns for confirmation.

Southern Doji Normally Doji’s in a downtred are not too too important. Look to other techniques for
confluence.

Small real bodies, either black or white. Bulls and bears are to-ing and fro-ing between
themselves. Long real bodies are being prevented from forming, with little range in price
Spinning Tops to form doji or Pin bars. High Wave candles are spinning tops with particularly long upper
and lower shadows. Translates into indecision.

Body can be Black or White. Prices are continuing in the direction of the trend;
opposing Bears (Bulls) pushed prices lower but Bulls (Bears) met new supply with
Hanging Man demand to close prices higher still. Weak signals overall, consider only in the
presence of additional confirmatory signals.

Reflect in the Horizontal for similar setup.

Top reversal sign. Long upper shadow, with small real body at or near lows of session.
Bearish reversal, so must appear during a rally. Shooting Star bodies can either be Black or
White. “Shooting star tells you the market is perhaps becoming overbought. Finally the
Bulls refuse to pay more, and cannot sustain prices near the highs of the session. Bears
come in and force the price downwards.
Strong Weak
Also see ”Pin bars”, “Hammer”, and “Gravestone Doji”.
Shooting Star

Hammer
Strong Weak
Bottom reversal pattern. Long lower shadow, with small real body at the highs of the
session. Bullish reversal, so must appear during a decline. Body can be either Black or
White. Confirmation of next close is above the close of the Hammer bar.
Basic single candle formations cont.

Bullish Belt Hold Price was tested at support and held out. Opens near bottom and closes near high. The
longer the real body of the candle, the stronger the signal al.

Support

Resistance

Price was tested at resistance but failed to break it. Opens near high and closes near
Bearish Belt Hold bottom. Longer real body means better signal.

Simple Two candle formations

2 1 Open[1] < Close[2]

Close[1] > Open [2] - [Open(2)-(Close(2)]


Close > 1/2 way
up into prev. Bar 2

1/2
Lower Open

Bullish Piercing Pattern Weak Hammer

Appears in a downtrend. Black body forms, next real is white and closes within real body of previous
candle. Opens below the low of the prior session. New lows have failed to hold. The longer the
white real body, the stronger the signal. Bullish reversal pattern.

Open higher than


previous high Open[1] > Close[2]

Close[1] < Open [2] - [Open(2)-(Close(2)]


Close below 50%
retracement of 2
previous bar

2 1

Dark Cloud Cover Weak Shooting Star

Appears in an uptrend. Real white body forms, followed by a real black body. Opens above the high
of the previous session. Price fails at resistance and falls to close over half way into the real white
body of the last session. Prices have failed to hold at these levels. Bearish reversal pattern.
Two candle formations cont.

2 1

Previous candle range


fits entirely in real
body of next candle
Open [1] < Low [2]

Close [1] > High [2]

Bullish engulfing pattern Strong Hammer

Appears in a downtrend. A black candle forms, then the next cnadle opens lower than the low of the
previous session. The real body wraps around the prior black candle, showing that buting pressure has
overcome selling pressure. Potential support under low of most recent bar.

Previous candle range


fits entirely in real
body of next candle
Open [1] > High [2]

2 1 Close [1] < Low [2]

Bearish engulfing pattern Strong Shooting Star

White real body engulfed by black real body. Top reversal pattern, most recent bar gaps open, with
a new lower close. Supply seems to have overpowered demand. High of pattern may act as resistance.

2 1
Open [1] < Close [2]

Second Candle opens Close [1] = Close [2]


lower, then rises to
and closes at same level *[-1 < Close (1) - Close (2) < 1]*
as previous session.
for the sake of computing, these two closes can be
+ / - 1 pip apart.

Bullish Counterattack Southern Doji

In a downtrend, a black candle is followed by a white candle with the same close. Combine to form a
Southern Doji, indicating a pause, and possible reversal, of the current downtrend. Not as potent as a
Bullish Piercing pattern.
Two candle formations cont.

Second Candle opens


higher, then falls to
and closes at same
level as previous
2 1 session. Open [1] > Close [2]

Close [1] = Close [2] *

Bearish Counterattack Northern Doji

Uptrend reversal signal. White real body is followed by black candle with equal close*. Second session
opens higher but price levels are rejected. Suggests a slowdown of momentum in current uptrend. As with
piercing patterns, the higher (or lower) the open of bar 1, the stronger the signal.

2 1

Spinning top enclosed Open [2] > High [1]


in an unusually long
real body.
Close [2] < Low [1]

Bullish Harami Weak Hammer

In a downtrend, an unusually long black candle followed by a small real spinning top (colour isn’t important)
The small range in the second session indicates uncertainty in the previous move; Harami patterns are
said to mean the current trend is running out of steam.

Spinning top enclosed


in an unusually long
real body.

Open [2] < Low [1]


2 1
Close [2] > High [1]

Bearish Harami Weak Shooting Star

In an uptrend, a long real white body followen by an enclosed Spinning Top. The Bulls are losing
momentum. If the 2nd candle in a Harami pattern is a Doji, the pattern is known as a Bullish / Bearish
Harami Cross.
Twin Top

Hanging Man Pattern High [1] = High [2] *


2 1
Close [2] > (Open + 50%) [1]

Discretionary
Tweezers top Hanging man Spinning Top

In an uptrend, long real white body. Second Candle is hanging man. Price was tested at twin top level, price
closed lower, but bulls failed to close price significantly below the twin top resistance. Bullish momentum
was tested by bears, but not exhausted. Very weak continuation signal.

Twin Top
High [1] = High [2] *
Doji

2 1 (Open [1] = Close [1] * ) > Open [2]

Discretionary

Tweezers top Harami Cross Spinning Top

In an uptrend, a long real white body followed by a Doji. Similar to Tweezer top Hanging man. High was
tested twice, and held. Second session showed confusion. Hesitancy signal.

Twin Top

Dark Cloud Pattern High [1] = High [2] *

2 1 Dark Cloud Pattern

Tweezers top Dark Cloud Cover Weak Shooting Star

In an uptrend, long white body followed by black body retracing over 50% way into prior bar.
Both have the same high. Reversal Pattern, stronger than Weak Shooting Star.
2 1
Low[2] = Low [1] *

[1] = Hammer

Tweezers bottom and hammer Hammer

In a downtrend, two bars form with equal lows. Second bar is a Hammer pattern, indicating
momentum away from support and a possible break to the north. Reversal Pattern.

2 1
Low [2] = Low [1] *

Discretionary

Tweezers Bottom and Harami Hammer

In a downtrend, weak reversal pattern. Two bars share same Low. Wait for confirmation of reversal.

2 1
Open [2] = Close [1] *

Low [2] = Low [1] *

Tweezers bottom Piercing pattern Southern Dragonfly Doji

In a downtrend, prices set two equal lows. Second candle is strong bullish bar, indicating firm
bounce of support. Good reversal signal.
Close above high Low [1] = Low [2] *
of previous
candle
Close [1] > High [1]

Double Bottom

2 1

Double Bottom Low High Close Hammer

In a downtrend, prices set two equal lows. Recent bar bounces off support and breaks high
of previous bar. Strong Bullish reversal signal.

Double Top High [1] = High [2] *

Close [1] < Low [2]


Close below Low
of previous candle

2 1

Double Top High Low Close Shooting Star

In an uptrend, prices struggle at equal resistances. Recent bar fails at resistance and falls to
close below the low of the previous bar. Strong Bearish reversal signal.

Three Candle Formations

Low [3] > Low [2] > Low [1]


1
High [3] > High [2] > High [1]
3

Three Black Crows Bearish Belt Hold

At swing highs, a reversal setup; in Downtrends, a continuation pattern. See E[1; 2; 3] entries.
High [3] < High [2] < High [1]
3
Low [3] < Low [2] < Low [1]
1

Three White Soldiers

In an uptrend, continuation pattern; at swings lows, reversal setup. All bars are strong
Bullish bars. See E[1; 2; 3] entries.

Discretionary
2

3 1

Evening Star Weak Shooting Star

In an uptrend, reversal setup. Good Bull bar, followed by low range spinning top or Harami,
then a strong Bear bar. Bar 2 should occur at the pattern top.

3 1
Discretionary

Morning Star Strong Hammer

In a downtrend, reversal setup. Good Bear bar, followed by low range spinning top or Harami,
then a strong Bull bar. Bar 2 should occur at the pattern low.
High [3] > High [2]

Close [2] < Close [1]

Low [1] > Low [2]

High [1] > High [2]


3 2 1

Entry above High (3)


Stop Loss set below Low (2)

High [3] > High [2]

Close [2] < Close [1]

Low [2] < Low [3]

Open [1] < Close [2]

Close [1] > Close [2]

3 2 1 Low [1] < Low [2]

Entry above High (2)


Stop Loss below Low (1)

High [3] > High [2]

Close [2] < Close [3]

Open [1] > Close [2]

High [1] > High [3]


3 2 1

Entry above High [1]


Stop Loss below Low [2]
High [3] > High [2]

High [2] > High [1]

Low [3] < Low [2]

Low [2] < Low [1]


3 2 1

Entry above High [3] / Below Low [3]


Stop Loss Below Low [3] / Above High [3]

Low [2] < Low [3]

Low [1] < Low [2]

High [3] > High [2]

High [2] > High [1]


3 2 1 ... Series of small bars...

Entry below Low [1]


Stop Loss above High [3]

High [4] < High [3]

Close [3] > Close [2]

Close [2] < Close [3]

Open [1] < Close [2]

4 3 2 1 Close [1] > Close [2]

Entry above High [3]


Stop Loss below [1]
High [3] < High [4]

Close [3] > Close [4]

High [2] > High [3]

Close [2] < Close [3]

Low [1] < Low [3]

4 3 2 1 Close [1] > Close [3]

Entry above High [2]


Stop Loss below Low [1]