# Candlestick Patterns Reference

A complete guide to candlestick patterns detected by the platform.

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## Understanding Candlesticks

Each candlestick shows four price points:
- **Open** — Price at start of period
- **Close** — Price at end of period
- **High** — Highest price during period
- **Low** — Lowest price during period

### Candle Anatomy
```
    ─┬─  High (Upper Wick)
     │
    ┌┴┐
    │ │  Body (Open to Close)
    └┬┘
     │
    ─┴─  Low (Lower Wick)
```

### Candle Colors
- **Green/White** — Close > Open (bullish)
- **Red/Black** — Close < Open (bearish)

---

## Single Candle Patterns

### Doji
**Shape**: Very small body, open ≈ close

**Meaning**: Indecision between buyers and sellers

**Types**:
| Type | Shape | Meaning |
|------|-------|---------|
| Standard Doji | Cross shape | Pure indecision |
| Dragonfly Doji | Long lower wick, no upper | Bullish reversal potential |
| Gravestone Doji | Long upper wick, no lower | Bearish reversal potential |
| Long-Legged Doji | Long wicks both sides | High volatility indecision |

**Trading**: Wait for confirmation candle before acting.

---

### Hammer
**Shape**: Small body at top, long lower wick (2x+ body size)

**Meaning**: Sellers pushed price down, but buyers recovered

**Signal**: Bullish reversal (especially after downtrend)

**Confirmation**: Next candle should close above hammer's close

**Reliability**: High when:
- Appears after sustained downtrend
- Lower wick is 2-3x body length
- Volume increases on formation

---

### Inverted Hammer
**Shape**: Small body at bottom, long upper wick

**Meaning**: Buyers tried to push up, met resistance

**Signal**: Potential bullish reversal (needs confirmation)

**Trading**: Enter on close above inverted hammer high

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### Shooting Star
**Shape**: Small body at bottom, long upper wick (2x+ body)

**Meaning**: Buyers pushed up but sellers took over

**Signal**: Bearish reversal (especially after uptrend)

**Confirmation**: Next candle should close below shooting star's close

---

### Hanging Man
**Shape**: Same as hammer but appears in uptrend

**Meaning**: Selling pressure emerging in uptrend

**Signal**: Bearish warning (needs confirmation)

**Trading**: Confirmation below hanging man's low is bearish

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### Spinning Top
**Shape**: Small body, wicks on both sides

**Meaning**: Neither buyers nor sellers in control

**Signal**: Indecision, possible trend pause or reversal

**Trading**: Wait for next candle for direction

---

### Marubozu
**Shape**: Full body, no wicks

**Meaning**: Complete domination by one side

**Types**:
- **Bullish Marubozu**: Opens at low, closes at high
- **Bearish Marubozu**: Opens at high, closes at low

**Signal**: Strong momentum in candle's direction

---

## Two Candle Patterns

### Bullish Engulfing
**Shape**:
1. Small red candle
2. Large green candle that completely engulfs first

**Meaning**: Buyers overwhelmed sellers

**Signal**: Strong bullish reversal

**Reliability**: Very high when:
- Appears at support
- Second candle has high volume
- Previous trend was down

---

### Bearish Engulfing
**Shape**:
1. Small green candle
2. Large red candle that completely engulfs first

**Meaning**: Sellers overwhelmed buyers

**Signal**: Strong bearish reversal

**Reliability**: Very high when:
- Appears at resistance
- Second candle has high volume
- Previous trend was up

---

### Bullish Harami
**Shape**:
1. Large red candle
2. Small green candle inside first candle's body

**Meaning**: Selling momentum weakening

**Signal**: Potential bullish reversal (moderate strength)

**Trading**: Wait for third candle confirmation

---

### Bearish Harami
**Shape**:
1. Large green candle
2. Small red candle inside first candle's body

**Meaning**: Buying momentum weakening

**Signal**: Potential bearish reversal (moderate strength)

---

### Tweezer Top
**Shape**: Two candles with same highs

**Meaning**: Resistance level tested twice

**Signal**: Bearish reversal

---

### Tweezer Bottom
**Shape**: Two candles with same lows

**Meaning**: Support level tested twice

**Signal**: Bullish reversal

---

### Piercing Line
**Shape**:
1. Long red candle
2. Green candle opens below prior low, closes above midpoint of red candle

**Meaning**: Buyers regaining strength

**Signal**: Bullish reversal

---

### Dark Cloud Cover
**Shape**:
1. Long green candle
2. Red candle opens above prior high, closes below midpoint of green candle

**Meaning**: Sellers gaining strength

**Signal**: Bearish reversal

---

## Three Candle Patterns

### Morning Star
**Shape**:
1. Long red candle
2. Small candle (any color) that gaps down
3. Long green candle that closes above midpoint of first candle

**Meaning**: Selling exhausted, buyers taking over

**Signal**: Strong bullish reversal

**Reliability**: Very high, one of most reliable patterns

---

### Evening Star
**Shape**:
1. Long green candle
2. Small candle (any color) that gaps up
3. Long red candle that closes below midpoint of first candle

**Meaning**: Buying exhausted, sellers taking over

**Signal**: Strong bearish reversal

**Reliability**: Very high

---

### Three White Soldiers
**Shape**: Three consecutive long green candles, each closing higher

**Requirements**:
- Each opens within prior body
- Each closes near its high
- Bodies roughly equal size

**Signal**: Very strong bullish continuation/reversal

**Caution**: May indicate overbought after extended move

---

### Three Black Crows
**Shape**: Three consecutive long red candles, each closing lower

**Requirements**:
- Each opens within prior body
- Each closes near its low
- Bodies roughly equal size

**Signal**: Very strong bearish continuation/reversal

**Caution**: May indicate oversold after extended move

---

### Three Inside Up
**Shape**:
1. Long red candle
2. Small green candle inside first (harami)
3. Green candle closing above first candle's open

**Signal**: Bullish reversal confirmation

---

### Three Inside Down
**Shape**:
1. Long green candle
2. Small red candle inside first (harami)
3. Red candle closing below first candle's open

**Signal**: Bearish reversal confirmation

---

## Pattern Reliability Guide

### Most Reliable Bullish
| Pattern | Reliability | Best Context |
|---------|-------------|--------------|
| Morning Star | Very High | After downtrend, at support |
| Bullish Engulfing | Very High | At support levels |
| Three White Soldiers | High | Trend reversal |
| Hammer | High | After downtrend |

### Most Reliable Bearish
| Pattern | Reliability | Best Context |
|---------|-------------|--------------|
| Evening Star | Very High | After uptrend, at resistance |
| Bearish Engulfing | Very High | At resistance levels |
| Three Black Crows | High | Trend reversal |
| Shooting Star | High | After uptrend |

### Patterns Requiring Confirmation
| Pattern | Why | How to Confirm |
|---------|-----|----------------|
| Doji | Just shows indecision | Wait for directional candle |
| Harami | Weak signal alone | Need third candle |
| Spinning Top | Pure indecision | Wait for direction |

---

## Using Patterns in the Platform

### Automatic Detection
The platform automatically detects all patterns:
1. Enable pattern overlays on charts
2. Patterns appear as labels
3. Click for details

### Pattern Alerts
Set alerts for specific patterns:
1. Go to **Patterns > Alerts**
2. Select pattern type
3. Choose symbols to watch
4. Set notification preferences

### In Trading Strategies
Use pattern signals:
```
bullish_candle_pattern — Any bullish pattern detected
bearish_candle_pattern — Any bearish pattern detected
hammer_detected — Specific hammer pattern
engulfing_detected — Engulfing pattern
```

---

## Best Practices

### Do
- **Confirm with context** — Patterns at support/resistance are stronger
- **Check the trend** — Reversal patterns need a trend to reverse
- **Use volume** — High volume confirmations are more reliable
- **Wait for confirmation** — Especially for weaker patterns
- **Combine with indicators** — RSI, MACD add confirmation

### Don't
- **Trade every pattern** — Not all are equal
- **Ignore the trend** — Counter-trend patterns fail more often
- **Skip confirmation** — Especially for doji, harami
- **Over-leverage** — Even reliable patterns fail
- **Use in isolation** — Patterns are one tool among many

---

## Common Mistakes

### Mistake 1: Seeing Patterns Everywhere
Not every candle formation is significant. Look for:
- Clean, well-formed patterns
- Proper context (trend, levels)
- Volume confirmation

### Mistake 2: Ignoring Timeframe
- Higher timeframes = more reliable signals
- 1-minute candles are noisy
- Daily/weekly patterns are more significant

### Mistake 3: No Risk Management
Even the best patterns fail. Always:
- Use stop losses
- Size positions appropriately
- Have an exit plan

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## Quick Reference Card

### Bullish Reversal (After Downtrend)
| Pattern | Strength | Confirmation Needed |
|---------|----------|---------------------|
| Hammer | Strong | Close above high |
| Bullish Engulfing | Very Strong | Immediate |
| Morning Star | Very Strong | Immediate |
| Piercing Line | Moderate | Helpful |
| Dragonfly Doji | Moderate | Required |

### Bearish Reversal (After Uptrend)
| Pattern | Strength | Confirmation Needed |
|---------|----------|---------------------|
| Shooting Star | Strong | Close below low |
| Bearish Engulfing | Very Strong | Immediate |
| Evening Star | Very Strong | Immediate |
| Dark Cloud Cover | Moderate | Helpful |
| Gravestone Doji | Moderate | Required |

### Continuation
| Pattern | Direction | Signal |
|---------|-----------|--------|
| Three White Soldiers | Bullish | Strong momentum |
| Three Black Crows | Bearish | Strong momentum |
| Marubozu | Either | Momentum continues |

### Indecision
| Pattern | Meaning | Action |
|---------|---------|--------|
| Doji | Market undecided | Wait |
| Spinning Top | No clear control | Wait |
| Harami | Momentum slowing | Watch closely |

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*Candlestick patterns are probability indicators, not guarantees. Always use proper risk management.*