The Dumpling Top

The Frypan Bottom is a bullish reversal candlestick pattern identified at the end of the downtrend.

It is the equivalent of the Western bullish pattern known as rounding bottom. As the volatility at the end of the downtrend tightens, the size of the real bodies becomes smaller.

The Evening Star

This is a three-candlestick reversal pattern at the end of the uptrend or a rally. The first candle is a long white body in the direction of the trend “showing off” the buyers’ strength.

The second, is a small black or white candle that may open higher the prior close.

Three Black Crows

The following bearish reversal pattern we will discuss consists of three Japanese candlesticks. It forms at the top of a rally or near a resistance area.

The first candle is a long black candle in the opposite direction of the established trend

The Tweezers Tops

Tweezers Top is a two-candlestick bearish reversal pattern during an uptrend or a rally. It signifies the end of the uptrend and the beginning of a sideways or downward move.

Remember that after a reversal pattern, a sideways movement may occur before the decline.

The Long White Body

A long white candlestick at the end of a decline is a strong indication that the sellers are running out of steam and the bulls are entering the market aggressively.

Now that we have defined it, we need to pause for a while and explain the term long. Well, long refers to the real body being longer than the average body-length of the recent candlestick-bodies.

The Bullish Hammer

The Hammer is a bullish reversal pattern.

It consists of just one candlestick and a prerequisite condition is the existence of a decline. We may consider this decline, a correction or retracement as it is also known, or even a downtrend. What I am trying to say here is that the Hammer may appear at the bottom of a short or long decline.

The Bullish Harami

Interesting fact, by the way, in Japanese Harami means “pregnant woman”! But let’s go ahead and shed some light on this pattern.

As you might have guessed, the first prerequisite of this pattern is the existence of a trend, a downtrend in this case. If there is no trend, then there is no reversal. Period!

The Bullish Engulfing

The bullish Engulfing reversal pattern consists of two Japanese candlesticks of opposing colors. It forms at the end of a downtrend or near a support area.

The first candle has a black real body as expected after all, to confirm the sellers’ intention to push prices even lower during the downtrend.

The Piercing Line

The next bullish reversal pattern that we are going to discuss, consists of two Japanese candlesticks.

The Piercing Line forms at the bottom of a decline or near a support area.

The first candle is a long black body confirming the direction of the prevailing trend and the bears’ intention to push prices lower.

The Inverted Hammer

The Inverted Hammer is nothing new but a variation of the Hammer or the Hanging Man if you prefer.

So, an Inverted Hammer at the bottom of a downtrend will indicate that the bears are running out of steam and the bulls are taking over.

The Inverted Hammer is nothing new but a variation of the Hammer or the Hanging Man if you prefer.

The Tweezers Bottom

The next Japanese Candlestick reversal pattern that we are going to explore is the Tweezers Bottom. It is a two-candlestick bullish reversal pattern during a downtrend or a decline.

It signifies the end of the downtrend and the beginning of a sideways or upward move. Remember that after a reversal pattern a sideways movement may occur before the rally.

The Three White Soldiers

The next bullish reversal pattern that we are going to discuss, consists of three Japanese candlesticks. It forms at the end of a downtrend or near a support area.

The first candle is a long white candle in the opposite direction of the established trend. This is enough to raise an eyebrow not to mention a warning for an impending reversal.

The Morning Star

This is a three-candlestick reversal pattern at the end of the downtrend or a decline. The first candle is a long black body in the direction of the trend, “showing off” the sellers’ strength. The second is a small black or white candle that may open below the prior close. The third candle is a long white body that closes well into the long black body, ideally above fifty percent. It signals the end of the uptrend downtrend.

The Frypan Bottom

The Frypan Bottom is a bullish reversal candlestick pattern identified at the end of the downtrend. It is the equivalent of the western bullish pattern known as rounding bottom.

As the volatility at the end of the downtrend tightens, the size of the real bodies becomes smaller.

The Long Black Body

A long black candlestick at the top of a rally is a strong indication that the buyers are running out of steam and the bears are entering the market aggressively. Now that we have defined it, we need to pause for a while and explain the term long.

Well, long refers to the real body being longer than the average body-length of the recent candlestick bodies. Some traders consider a long real body to be about 3 times longer than the size of the previous body. I take a slightly different approach. Consider the average length of the last 25 real bodies, then double the size. Perhaps you can come up with a different method. Why not?

The Hanging Man

The Hanging man is actually a Hammer at the top of a rally. It’s a bit dubious that the same candlestick pattern is both bullish and bearish. But let’s explore it more thoroughly so we can understand the traders’ psychology during its formation.

Well, during an uptrend, the opening of a new candle the bulls fail to pull prices higher but instead, sellers take control to push them lower. This is an indication or warning that the bulls are running out of steam as indicated also by the long lower shadow. Eventually, something happens and prices bounce up to close at the upper part of the candle.

The Bearish Harami

The Dark Cloud Cover consists of two Japanese candlesticks. It forms at the top of a rally or near a resistance area. The first candle is a long white body confirming the direction of the prevailing and the bulls’ intention to pull prices higher. Of course, in the markets, nothing is 100% and this was true during the formation of the Dark Cloud.

The Bearish Engulfing

The Bearish Engulfing reversal pattern consists of two Japanese candlesticks of opposing colors. It forms at the end of an uptrend or near a resistance area.

The first candle has a white real body as expected after all, to confirm the buyers’ intention to pull prices even higher during the uptrend.

The Dark Cloud Cover

The Dark Cloud Cover consists of two Japanese candlesticks. It forms at the top of a rally or near a resistance area. The first candle is a long white body confirming the direction of the prevailing and the bulls’ intention to pull prices higher. Of course, in the markets, nothing is 100% and this was true during the formation of the Dark Cloud.

The Dark Cloud Cover consists of two Japanese candlesticks. It forms at the top of a rally or near a resistance area.

The Shooting Star

The Shooting Star is nothing new but a variation of the Hammer. It is an inverted hammer to be more precise.

So, a Shooting star at the top of an uptrend will indicate that the bulls are running out of steam and the sellers are taking over. The long upper shadow displays the buyers’ intention to pull prices higher in the direction of the established trend but unfortunately for them, the market rejects the high prices as the sellers take over and push prices to close way lower.

Now, let’s take a look at the specifications of the Shooting Star: