1. Engulfing Patterns


Key Trait: When the body of the current candle is larger than the body of the previous candle.



  • Bullish Engulfing: Appears after a downtrend; a small red candle is followed by a larger green candle that completely engulfs it. This suggests strong buyer interest and potential reversal to the upside.


  • Bearish Engulfing: Appears after an uptrend; a small green candle is followed by a larger red candle, hinting at rising bearish pressure.



2. Consecutive Engulfings → Orderblock


Key Trait: When engulfing candles occur two or more times consecutively.



  • Bullish Orderblock: Multiple green engulfing candles show strong institutional buying interest.


  • Bearish Orderblock: Repeated red engulfing patterns may indicate aggressive selling by large players.


Pro Tip: Orderblocks are often seen as high-probability zones of support or resistance.



3. Doji Candles


Key Trait: When the open and close prices are nearly equal, forming a small or non-existent body.



  • Star Doji: Signals indecision. Appears at potential reversal points.


  • Dragonfly Doji: Strong potential for bullish reversal, especially after a downtrend.


  • Gravestone Doji: Signals bearish reversal, particularly at the end of an uptrend.


  • Spinning Tops: Small body with long upper and lower shadows—indicative of market indecision.



4. Long-Tailed Candles


Key Trait: A long wick (tail) on one side of the candle shows rejection of that price level.



  • Hammer: Long lower wick; indicates bullish reversal after a downtrend.


  • Inverted Hammer: Reversal signal with long upper wick, often confirmed by a strong green candle.


  • Shooting Star: Appears after an uptrend; bearish reversal sign.


  • Hanging Man: Similar to a hammer but after an uptrend, signaling a potential drop.


  • Tweezers:


    • Bullish Tweezer: Two candles at the bottom of a downtrend with matching lows.


    • Bearish Tweezer: Appears at the top with matching highs; signals possible reversal downward.



Bonus Insight:


The diagram also suggests that the reliability of candlestick patterns increases with higher timeframes. Patterns on daily, weekly, or monthly charts are generally more dependable than those on shorter intervals.



Conclusion:

Mastering candlestick reversal patterns empowers traders to anticipate market turning points with greater accuracy. Whether you're a beginner or seasoned investor, integrating these visual signals into your trading strategy can enhance timing, reduce risk, and boost confidence in every trade.

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