Japanese candlestick patterns
How to read a candle, what its shape tells you about the fight between buyers and sellers, and why a single pattern, without context, remains just a clue — not a guarantee.
Published 11 Jun 2026 · Updated 11 Jun 2026
Japanese candlesticks are the most widely used way to show price on a chart. Each candle packs four values from a time interval — the open, the high, the low, and the close — and its shape shows who was in control during that interval: buyers or sellers.
Candlestick patterns are part of technical analysis, specifically the chart-reading side, alongside chart patterns and price action. Here we explain them as they truly are: clues about how the market thinks, that only work in context and need confirmation. They are not buy buttons.
Anatomy of a candle
A candle has two parts. The body is the rectangle between the opening price and the closing price. The shadows (also called wicks) are the thin lines above and below it, showing how high and how low the price reached during that interval. Color gives the direction: green when the close is above the open, red when it's below.
How to read a candle
Before any named pattern, proportions matter. The size of the body, the length of the wicks, and where the price closes tell you almost everything. A few typical cases:
Buyers clearly dominated the interval.
Sellers clearly dominated the interval.
Total dominance by buyers. Called a Marubozu.
Total dominance by sellers. Red Marubozu.
The open and close coincide. Price pushed in both directions, with no winner. Uncertainty.
Sellers pushed the price down, but it came back. Buying pressure.
Buyers pushed the price up, but it fell back. Selling pressure.
One more thing matters just as much: where the candle appears. The same shape means something different at a support level, at a resistance level, or in the middle of a trend. Location matters as much as shape.
Single-candle patterns
The simplest signals, formed by a single candle. Many come in mirror pairs: the same shape, but an opposite message, depending on the trend they appear in.
Doji
What you see: an almost non-existent body (open ≈ close), with short shadows above and below.
What happened: buyers and sellers balanced each other out; no one won the interval.
What to expect: uncertainty. It can signal a reversal only after a long trend and only with confirmation.
Dragonfly Doji
What you see: the line (body) at the top, a long shadow below, no shadow above.
What happened: sellers pushed the price down, but buyers brought it all the way back.
What to expect: an upward bias, especially after a decline. Requires confirmation.
Gravestone Doji
What you see: the line (body) at the bottom, a long shadow above, no shadow below.
What happened: buyers pushed the price up, but sellers brought it all the way back.
What to expect: a downward bias, especially after a rally. Requires confirmation.
Long-Legged Doji
What you see: the line (body) in the middle, with long shadows both above and below.
What happened: a major struggle in both directions, with no winner.
What to expect: strong uncertainty and volatility. It doesn't give direction on its own.
Hammer
What you see: a small body at the top, a long lower shadow, no shadow above. Appears after a decline.
What happened: sellers pushed the price down, but buyers brought it back close to the open.
What to expect: a possible upward reversal. Confirmation: a higher close on the next candle.
Hanging Man
What you see: the exact same shape as the Hammer, but it appears after a rally. The shape is identical; what matters is the trend.
What happened: strong selling during the interval, only partly recovered. A sign that sellers are stepping in.
What to expect: a possible downward reversal. Needs confirmation (a lower close).
Inverted Hammer
What you see: a small body at the bottom, a long upper shadow, no shadow below. Appears after a decline.
What happened: buyers tested higher prices; sellers pushed them back, but without taking control.
What to expect: a possible upward reversal, only with clear confirmation.
Shooting Star
What you see: the same shape as the Inverted Hammer, but it appears after a rally.
What happened: buyers drove the price to a new high, then sellers brought it back down, close to the open.
What to expect: a possible downward reversal. Confirmation: a lower close.
Green Marubozu
What you see: a full green body, with no shadows (or almost none).
What happened: buyers controlled the entire interval, from open to close.
What to expect: usually a continuation of the rally. Against the trend, it can spark a reversal.
Red Marubozu
What you see: a full red body, with no shadows (or almost none).
What happened: sellers controlled the entire interval, from open to close.
What to expect: usually a continuation of the decline. Against the trend, it can spark a reversal.
Two-candle patterns
Combinations in which the second candle confirms or reverses the first. These also come in mirror pairs.
Bullish Engulfing
What you see: a large green candle whose body completely covers the previous red body. Appears after a decline.
What happened: selling stops, and buyers take control in a single move.
What to expect: an upward reversal. Above-average volume strengthens the signal.
Bearish Engulfing
What you see: a large red candle completely covers the previous green body. Appears after a rally.
What happened: buying stops, and sellers take control.
What to expect: a downward reversal.
Bullish Harami
What you see: a large red candle, followed by a small green one whose body fits inside the body of the previous one. Appears after a decline.
What happened: strong selling suddenly stops.
What to expect: an early alert of an upward reversal, not an entry signal. Requires confirmation.
Bearish Harami
What you see: a large green candle, followed by a small red one, contained within the body of the previous one. Appears after a rally.
What happened: strong buying loses momentum.
What to expect: an early alert of a downward reversal. Requires confirmation.
Three-candle patterns
Rarer sequences, but usually more reliable than single-candle signals.
Morning Star
What you see: a large red candle, then a small candle (often a doji, with a price gap), then a large green candle that climbs back into the first one's body.
What happened: selling, then uncertainty, then buyers take control.
What to expect: a reversal from the bottom. The further the third candle climbs into the first one's body, the stronger the signal.
Evening Star
What you see: a large green candle, then a small candle (often a doji, with a price gap), then a large red candle that drops back into the first one's body.
What happened: buying, then uncertainty, then sellers take control.
What to expect: a reversal from the top.
Three White Soldiers
What you see: three large green candles, one after another, each higher than the last, with small shadows.
What happened: sustained, decisive buying over three intervals in a row.
What to expect: an upward reversal. Caution: the signal arrives late, after part of the move has already happened.
Three Black Crows
What you see: three large red candles, one after another, each lower than the last, with small shadows.
What happened: sustained selling over three intervals in a row.
What to expect: a downward reversal. Here too, the signal arrives late.
These are the most widely used patterns. The rest — Piercing Line and Dark Cloud Cover, Tweezers, and the other rarer variants — we cover in depth, with chart examples, in the Trading.md Academy.
Limits and pitfalls
Here's the part marketing pages skip. Candlestick patterns aren't rules, they're observations. Taken alone, many fail often — and some "reversal patterns" from textbooks behave, on real data, almost randomly without context and confirmation.
Frequent false signals on small timeframes · a pattern without confirmation from the next candle · ignoring location (support, resistance, volume) · using a single pattern as a reason to enter, without risk management.
Those who use them seriously treat candles as one layer of information among others — alongside structure, levels, and risk management — not as a standalone system. And the statistics on reliability come from historical data and vary from one market to another and from one timeframe to another.
How to practice
Recognizing patterns is learned by eye, on real charts, with no money at risk. Three steps:
1. Demo account
Mark the patterns on the live chart and see what happens after them, with no financial exposure.
2. Journal
Write down every situation: what pattern, what context, what followed. After a few dozen examples, you start to see what holds up and what doesn't.
3. Backtesting
Check how the pattern would have performed historically, so you get a realistic sense of how often it works on your instrument.
Frequently asked questions
Which is the most reliable candlestick pattern?
There isn't a universal one. How well a pattern works depends on the instrument, the timeframe, and above all the context. A good pattern at a resistance level can be useless in the middle of a trend.
Can I trade based only on candlestick patterns?
It isn't recommended. A candle gives you a clue, but without levels, structure, volume, and a clear risk-management rule, it's only half the picture.
Which timeframe works best?
In general, the larger the timeframe (daily, weekly), the less the signals are affected by noise. On very small timeframes, many false signals appear.
Practice on a demo account, risk-free
The best way to learn candlestick patterns is to watch them on a real chart. We'll open a demo account for you with a regulated partner broker, or we can discuss directly what suits you.
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Disclaimer. This material is for educational and informational purposes only. It is not investment advice, a trading signal, or a guarantee of results. Trading and investing carry risk, including the risk of capital loss. Trading.md (Royal Consulting SRL) is an intermediary firm and does not guarantee profits.