58 Candlestick Patterns PDF Manual: FREE Download

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Candlestick patterns are a key part of trading. They are like a special code on a chart that shows how prices are moving. Imagine each pattern as a hint about what might happen next in the stock market.

History of Candlestick Charting

Candlestick charting started over 200 years ago in Japan with rice traders. A smart trader named Munehisa Homma first used it. He saw that prices didn’t just change because of supply and demand, but also because of how traders felt. This idea led to the birth of candlestick charts. Much later, a man named Steve Nison introduced these charts to the Western world.

Why Candlestick Patterns Matter in Trading

Candlestick patterns are like a quick snapshot of the market’s mood. Each pattern is made of candles, and every candle tells a story about the price – where it opened, where it closed, how high and low it went. This helps traders guess if prices might go up or down.

Think of it this way: If you see a pattern that usually means prices will go up, you might decide to buy. If you see one that means prices might go down, you might sell. These patterns work for all kinds of trading – whether you’re looking at prices every day or once in a while.

In short, candlestick patterns are important because they help traders understand the market better and make smarter decisions.

Basics of Candlestick Patterns

Candlestick patterns are made up of individual “candles,” each showing the price movement for a certain time period. Let’s break down the basics:

Basic Components of a Candlestick

  1. Body: The thick part of the candle. It shows the difference between the opening and closing prices. If the close is higher than the open, the body is often colored in (or black), showing prices went up. If the close is lower, the body might be empty (or white), showing prices went down.
  2. Shadow: These are the thin lines above and below the body. They show the highest and lowest prices during that time period. The top shadow shows the high, and the bottom shadow shows the low.
  3. Open: This is where the price started at the beginning of the time period. It’s either the top or bottom of the body, depending on whether prices went up or down.
  4. Close: This is where the price ended at the end of the time period. Like the open, it’s at the top or bottom of the body.
  5. High: The peak point of the top shadow. It’s the highest price in that time period.
  6. Low: The bottom of the lower shadow. It’s the lowest price in that time period.

Bullish and Bearish Candles

Types of Candlestick Patterns

Candlestick patterns can be grouped into four main types based on how many candles they consist of. Each type can tell us something different about the market.

Single Candlestick Patterns

These are formed by just one candle. They can give quick signals about the market’s mood. Examples include:

  1. Bearish Marubozu
  2. Bullish Marubozu
  3. Inside Bar
  4. Shooting Star
  5. Inverted Hammer
  6. Gravestone Doji
  7. Dragonfly Doji
  8. Doji Star
  9. Doji Candlestick
  10. Spinning Top
  11. Long Legged Doji
  12. Takuri Candlestick
  13. Closing Marubozu
  14. Hammer
  15. Hanging Man
  16. Key Reversal Bar
  17. Bullish Belt Hold
  18. Harami Cross
  19. High Wave
  20. Kicking Candlestick
  21. Short Line
  22. Cradle Candlestick

Double Candlestick Patterns

These patterns are made up of two candles and often signal stronger market moves than single patterns. Examples include:

  1. Dark Cloud Cover
  2. Bearish Engulfing
  3. Bullish Engulfing
  4. Piercing Line
  5. Thrusting Candlestick
  6. Matching Low
  7. In-neck Candlestick
  8. On-neck Candlestick
  9. Stick Sandwich
  10. Above The Stomach

Triple Candlestick Patterns

These are formed by three candles and are usually stronger indicators than single or double patterns. Examples include:

  1. Bullish Morning Doji Star
  2. Bearish Evening Doji Star
  3. Three Black Crows
  4. Abandoned Baby Candlestick
  5. Three Inside Down
  6. Three Inside Up
  7. Three-Line Strike
  8. Three Outside Up
  9. Three Outside Down
  10. Three Stars in the South
  11. Island Reversal
  12. Three White Soldiers
  13. Stalled Candlestick

Complex Candlestick Patterns

These are formed by more than three candles and are usually stronger indicators than single or double patterns. Examples include:

  1. Falling Three Methods
  2. Rising Three Methods
  3. Hikkake Candlestick
  4. Separating Lines
  5. Mat Hold
  6. The Modified Hikkake
  7. Upside Gap Three Methods
  8. Downside Gap Three Methods
  9. Tasuki Gap
  10. Breakaway Candlestick
  11. Advance Block Candlestick
  12. Ladder Top
  13. Ladder Bottom Candlestick

List of 58 candlestick patterns

Here’s the explanation of each candlestick pattern, along with the trend and signal generated by each candlestick pattern. i have explained almost all the candlestick patterns.

1. Bearish Marubozu Candlestick Pattern

bearish marubozu

2. Bullish Marubozu Candlestick Pattern

bullish Marubozu Candlestick

3. Inside Bar Candlestick Pattern

inside bar candlestick pattern

4. Shooting Star Candlestick Pattern

shooting star candlestick pattern

5. Inverted Hammer Candlestick Pattern

inverted hammer

6. Gravestone Doji Candlestick Pattern

gravestone doji candlestick

7. Dragonfly Doji Candlestick Pattern

dragonfly doji pattern

8. Doji Star Candlestick Pattern

Doji Star Candlestick

9. Doji Candlestick Pattern

Doji Candlestick

10. Spinning Top Candlestick Pattern

Spinning Top candlestick pattern

11. Long Legged Doji Candlestick Pattern

Long Legged Doji Candlestick

12. Takuri Candlestick Pattern

takuri candlestick pattern

13. Closing Marubozu Candlestick Pattern

Closing Marubozu candlestick pattern

14. Hammer Candlestick Pattern

Hammer candlestick pattern

15. Hanging Man Candlestick Pattern

16. Key Reversal Bar Candlestick Pattern

key reversal bar candlestick patterns

17. Bullish Belt Hold Candlestick Pattern

bullish belt hold candlestick pattern

18. Harami Cross Candlestick Pattern

harami cross candlestick pattern

19. High Wave Candlestick Pattern

20. Kicking Candlestick Pattern

kicker candlestick pattern

21. Short Line Candlestick Pattern

22. Cradle Candlestick Pattern

23. Dark Cloud Cover Candlestick Pattern

Dark Cloud Cover Candlestick

24. Bearish Engulfing Candlestick Pattern

25. Bullish Engulfing Candlestick Pattern

bullish engulfing candlestick pattern

26. Piercing Line Candlestick Pattern

Piercing Line Candlestick Pattern

27. Thrusting Candlestick Pattern

28. Matching Low Candlestick Pattern

matching low candlestick pattern

29. In-neck Candlestick Pattern

30. On-neck Candlestick Pattern

31. Stick Sandwich Candlestick Pattern

32. Above The Stomach Candlestick Pattern

33. Bullish Morning Doji Star Candlestick Pattern

morning doji star candlestick

34. Bearish Evening Doji Star Candlestick Pattern

Evening doji star

35. Three Black Crows Candlestick Pattern

three black crows candlestick pattern

36. Abandoned Baby Candlestick Pattern

abandoned baby candlestick

37. Three Inside Down Candlestick Pattern

bearish three inside down

38. Three Inside Up Candlestick Pattern

Three Inside Up Candlestick Pattern

39. Three-Line Strike Candlestick Pattern

three line strike candlestick patterns

40. Three Outside Up Candlestick Pattern

three outside up candlestick pattern

41. Three Outside Down Candlestick Pattern

three outside down candlestick pattern

42. Three Stars in the South Candlestick Pattern

three star in south candlestick

43. Island Reversal Candlestick Pattern

iseland reversal candlestick pattern

44. Three White Soldiers Candlestick Pattern

three white soldiers Candlestick pattern

45. Stalled Candlestick Pattern

46. Falling Three Methods Candlestick Pattern

falling three methods candlestick pattern

47. Rising Three Methods Candlestick Pattern

Rising three methods candlestick pattern

48. Hikkake Candlestick Pattern

hikkake candlestick pattern

49. Separating Lines Candlestick Pattern

Separating Lines Candlestick Pattern

50. Mat Hold Candlestick Pattern

Mat Hold Candlestick Pattern

51. The Modified Hikkake Candlestick Pattern

52. Upside Gap Three Methods Candlestick Pattern

upside gap three methods candlestick pattern

53. Downside Gap Three Methods Candlestick Pattern

downside gap three methods candlestick pattern

54. Tasuki Gap Candlestick Pattern

tasuki gap candlestick pattern

55. Breakaway Candlestick Pattern

breakaway candlestick pattern

56. Advance Block Candlestick Pattern

advance block candlestick pattern

57. Ladder Top Candlestick Pattern

ladder top candlestick pattern

58. Ladder Bottom Candlestick Pattern

ladder bottom candlestick pattern

Common mistakes to avoid

Common MistakesExplanationImpact on TradingHow to Avoid
Overtrading on Patterns AloneRelying exclusively on candlestick patterns without considering other analysis tools.Can lead to misinterpreting market signals and making uninformed decisions.Combine candlestick patterns with other technical analysis tools and indicators.
Ignoring the TrendUsing candlestick patterns to trade against the prevailing market trend.Increases the risk of trades as candlestick patterns are more reliable when following the trend.Always consider the overall market trend and use candlestick patterns that align with it.
Lack of ConfirmationEntering trades based on unconfirmed candlestick patterns.Premature decisions can result in false signals and losses.Wait for the pattern to complete and look for additional confirmation signals before trading.
Ignoring Market NewsOverlooking economic events and news that can affect market sentiment.Important market events can drastically change the market condition, rendering the pattern analysis ineffective.Stay updated with market news and economic events, and factor them into your trading strategy.
Forgetting the BasicsNeglecting fundamental principles like supply and demand, support and resistance levels.Can lead to a one-dimensional view of the market, missing key factors that influence price movements.Maintain a balanced approach by considering fundamental market principles along with candlestick patterns.

Conclusion

To sum it up in trading terms, candlestick patterns are like pieces of a puzzle. They can provide valuable insights, but it’s important not to rely on them alone. Combining candlestick patterns with other tools, sticking with the trend, confirming patterns, staying updated with market news, and remembering the basics can lead to more successful trading.

Avoiding common mistakes ensures a smoother trading journey. So, use candlestick patterns wisely, and they’ll be a helpful part of your trading strategy.