How to Use This Candlestick Cheat Sheet

This guide is designed as a comprehensive quick-reference for traders at all levels. Whether you are just learning to read candlestick charts or you are an experienced trader looking to refresh your knowledge, this cheat sheet covers every major pattern you need to know. We have organized patterns by type (single, dual, and triple candle) and labeled each with its signal direction and reliability rating.

Each pattern links to a detailed visual guide with real chart examples. Bookmark this page for quick reference during your trading sessions.

Understanding Candlestick Anatomy

Before diving into patterns, it is essential to understand what each part of a candlestick represents. A single candlestick contains four data points:

  • Open: The price at which the trading period began
  • Close: The price at which the trading period ended
  • High: The highest price reached during the period
  • Low: The lowest price reached during the period

The rectangular "body" of the candle shows the range between Open and Close. The thin lines extending above and below the body are called "wicks" or "shadows." A green (bullish) candle closes higher than it opens. A red (bearish) candle closes lower than it opens.

Single Candlestick Patterns

Single candlestick patterns provide signals based on the shape and position of just one candle. They are best used as confirmation tools rather than standalone signals.

| Pattern | Signal | Key Feature | Reliability | |---|---|---|---| | Hammer 📊 See real backtest data → | Bullish Reversal | Long lower wick, small body at top | ★★★★☆ | | Inverted Hammer 📊 See real backtest data → | Bullish Reversal | Long upper wick, small body at bottom | ★★★☆☆ | | Shooting Star 📊 See real backtest data → | Bearish Reversal | Long upper wick at uptrend top | ★★★★☆ | | Hanging Man 📊 See real backtest data → | Bearish Reversal | Long lower wick at uptrend top | ★★★☆☆ | | Doji 📊 See real backtest data → | Indecision/Reversal | Open ≈ Close, long wicks | ★★★☆☆ |

Hammer

Identification: Small body in the upper third of the candle, lower wick at least 2x the body length, little to no upper wick. Forms at the bottom of a downtrend. Signal: Buyers rejected lower prices and pushed the close back near the open. A strong bullish reversal signal when confirmed by the next candle closing higher.

Shooting Star

Identification: Small body in the lower third of the candle, upper wick at least 2x the body length, little to no lower wick. Forms at the top of an uptrend. Signal: Buyers pushed prices higher but sellers aggressively rejected the highs. A warning sign of an impending bearish reversal.

Doji

Identification: Open and Close are virtually identical, creating a cross or plus-sign shape. Can have wicks of varying lengths. Signal: Complete indecision — neither bulls nor bears are in control. Most powerful when it forms after a strong trend, signaling potential exhaustion and reversal.

Dual Candlestick Patterns

Two-candle patterns provide stronger signals than single candles because they show a clear shift in momentum between two consecutive periods.

| Pattern | Signal | Key Feature | Reliability | |---|---|---|---| | Bullish Engulfing 📊 See real backtest data → | Bullish Reversal | Green candle engulfs red candle | ★★★★★ | | Bearish Engulfing 📊 See real backtest data → | Bearish Reversal | Red candle engulfs green candle | ★★★★★ | | Dark Cloud Cover | Bearish Reversal | Red candle closes below 50% of green | ★★★★☆ | | Piercing Line 📊 See real backtest data → | Bullish Reversal | Green candle closes above 50% of red | ★★★★☆ |

Bullish Engulfing

Identification: A small red candle is followed by a larger green candle whose body completely covers the previous candle's body. Forms at the bottom of a downtrend. Signal: Bulls have completely overwhelmed bears. One of the most reliable two-candle reversal signals in technical analysis. Volume confirmation makes it even stronger.

Bearish Engulfing

Identification: A small green candle is followed by a larger red candle whose body completely covers the previous candle's body. Forms at the top of an uptrend. Signal: Bears have completely overwhelmed bulls. A strong warning to exit long positions or look for short entries.

Dark Cloud Cover

Identification: A strong green candle is followed by a red candle that opens above the green candle's close but closes below its 50% midpoint. Signal: Sellers are aggressively entering after a gap up, pushing the price back down. A bearish reversal signal that is most reliable at resistance levels.

Triple Candlestick Patterns

Three-candle patterns are the most reliable candlestick formations because they show a clear three-stage process of trend exhaustion and reversal.

| Pattern | Signal | Key Feature | Reliability | |---|---|---|---| | Morning Star 📊 See real backtest data → | Bullish Reversal | Red → Doji → Green | ★★★★★ | | Evening Star 📊 See real backtest data → | Bearish Reversal | Green → Doji → Red | ★★★★★ |

Morning Star

Identification: Three candles: (1) A long red candle continuing the downtrend, (2) A small-bodied candle (doji or spinning top) that gaps down, showing indecision, (3) A long green candle that closes well into the first candle's body. Signal: The downtrend is exhausting, indecision sets in, and bulls take control. One of the most powerful bullish reversal signals in all of technical analysis.

Evening Star

Identification: Three candles: (1) A long green candle continuing the uptrend, (2) A small-bodied candle that gaps up, showing indecision, (3) A long red candle that closes well into the first candle's body. Signal: The uptrend is exhausting and bears are taking control. A major warning sign at market tops.

Quick Reference: Pattern Context Rules

The most important rule in candlestick analysis is that context determines meaning. The same pattern can have completely different implications depending on where it forms:

  • Bullish patterns are only valid at the bottom of a downtrend — a Hammer at the top of an uptrend is meaningless or even bearish
  • Bearish patterns are only valid at the top of an uptrend — a Shooting Star at the bottom of a downtrend has no significance
  • Patterns at key support/resistance levels are more reliable — a Bullish Engulfing at a major support zone is far more powerful than one in the middle of a range
  • Higher timeframes produce more reliable signals — a Morning Star on the weekly chart outweighs the same pattern on a 15-minute chart

Combining Candlestick Patterns with Indicators

For the highest probability trades, always combine candlestick patterns with at least one momentum indicator:

RSI: A Hammer forming when the RSI is below 30 (oversold) is a much stronger signal than a Hammer with RSI at 50. Learn more about RSI Divergence strategies.

MACD: A Bullish Engulfing pattern that coincides with a MACD Bullish Crossover 📊 See real backtest data → provides double confirmation of the reversal.

Volume: Any candlestick pattern with a Volume Spike is significantly more reliable. High volume means institutional participation, not just retail noise.

Conclusion

Mastering candlestick patterns takes time and practice, but this cheat sheet gives you a solid foundation. Start by learning the most reliable patterns — Bullish/Bearish Engulfing, Morning Star, and Evening Star — before expanding to the full library. Always trade patterns in context, confirm with volume, and use indicators to filter false signals.

Explore our complete visual library: All Candlestick Patterns →