Candlestick Pattern Dictionary
Candlestick chart patterns are very popular, and some say very effective pattern recognition technique. Besides viewing listings with candlesticks for target securities, users can take advantage of the model scanning module to scan the North American markets for stocks displaying famous lighthouse patterns. All schema modules, users can switch between line, bar and candlestick chart.
Candlestick charts (models) are on record as the oldest type of charts used for price prediction. They date from 1700, when they were used for predicting rice prices. In fact, during this era in Japan, Munehisa Homma become a legendary rice trader and gained a huge fortune using candlestick analysis. The candlesticks themselves and the structures they form are given colorful names by the Japanese traders. Due in part to the military environment of the Japanese feudal system during this era, candlestick formations developed names such as "promotion of three soldiers."
Candlestick charts are much more visually appealing than the standard two-dimensional bar chart. As in a standard bar chart, there are four elements necessary to build a table lamp in the open, high, low and closing price for a certain period of time. Below are examples of candlesticks and a definition for each candlestick component:
The body of the candlestick is called the real body and represents the range between the open and closing prices.
Black or filled in the body that is close in that time period is less than the open, (normally considered bearish) and when the body is open or white, it means that close was higher than the open (normally bullish).
The thin vertical line above and / or below the real body is called the upper / lower shadow, representing high / low price extremes for the period.
Basic templates thanks to a text candlestickchart.com
Long days
Long days indicate a large price difference between open and close price for the trading day. Shadow lines are much shorter than the right body.
Short days
In short days showed little difference between the open price and close price for the trading day. The body and the shadow lines are very short.
Marubozu Marubozu means no shadows of bodies.
White Marubozu long white body with no shadows indicating bullish trend. It usually becomes the first part of a bullish continuation or bearish reversal pattern.
Black Marubozu A long black body with no shadows. It usually implies bearish continuation or bearish reversal.
Spinning tops
Spinning tops have a longer shadow of the real body. The color of the real bodies are not very important. The model shows indecision between the bullish and bearish trends.
Stars and Rain Drops
A Star occurs when a small body, long body cavities ABOVE the previous day. The stars are part of the lighthouse more complicated models, especially reversal patterns.
A drop of rain occurs when a small body gaps BELOW long body the previous day. Drops of rain are part of more complicated models, especially the reversal patterns.
Reversal Patterns
Dark Cloud Cover
The uptrend in the market gaps open, but loses ground to fall below the middle of the previous day. The Dark Cloud Cover pattern suggests an opportunity for the shorts to capitalize on open the next day: a warning sign to bullish investors. The Dark Cloud Cover pattern is contrary to the piercing line pattern.
A white body followed by a black body.
The black body passes the midpoint of the previous white body.
It appears in the uptrend.
Trend: bearish
Reliability: High
Covers
Appears in the downtrend, reflecting the opening of a shock to a new low, followed by a high buy-in that closes at or above the previous open day. This means that the downtrend losing momentum and bulls can gain strength.
Color indicates the first day of trading day trend.
The second real body should have the opposite color of the first real body.
The body of the second day to fully cover the body of the previous day.
Trend: bearish
Reliability: Moderate
Appears in the uptrend, reflecting the opening of a shock to new high, followed by large-scale sell-off that closes at or below previous day's open. This means that the uptrend is injured and brings you to gain strength.
Color indicates the first day of trading day trend.
The second real body should have the opposite color of the first real body.
The body of the second day to fully cover the body of the previous day.
Trend: bullish
Reliability: Moderate
Evening Star
The uptrend, the market builds strength on a long white day and gaps open on the second day. However, the second day trades in a small range and closes at or near the open. This scenario generally shows an erosion of confidence in the current trend. Confirmation of this trend reversal is the black third day.
The first day is a long white day.
The second day gap larger than the first day.
The third day is a long black day and close below the midpoint of the first daylight.
Trend: bearish
Reliability: High
Harami
After a long white day at the high end of the uptrend, a black candlestick opens lower than the previous day's close. Trading is typically light and the day ends with a close lower than open and the body of the first day that the current uptrend signal loses strength. The Harami indicator should be confirmed by the beacon of the next trading day trend reversal.
A long body followed by a body shot with the opposite color.
A short body is completely within the prior day's long body.
The color of the second candle (the baby) is not important.
Trend: bearish
Reliability: Low
After a long black day at the low end of a downtrend, a white candlestick opens higher than the previous day's close. The price varies by as many shorts are covered, which encourages further buy-ins. The Harami indicator should be confirmed by the beacon of the next trading day trend reversal.
A long body followed by a body shot with the opposite color.
A short body is completely within the prior day's long body.
The color of the second candle (the baby) is not important.
Trend: bullish
Reliability: Low
Morning Doji
In a downtrend, the market reinforces the bearish trend with a long black day and gaps open on the second day. However, the second day trades in a small range and closes at or near the open. This scenario generally shows the potential to rally as many places have changed. Confirmation of this trend reversal is given by the White third day.
The first day is a black day which indicates market trends.
The second day must be a day Doji.
The third day is daylight and supports the reversal of this trend.
Trend: bullish
Reliability: High
Piercing Line
In a downtrend the market gaps open, but strong rallies to close above the previous day environment. This model offers an opportunity for bulls to enter the market and support the trend reversal. The sharpness of the line model is contrary to the Dark Cloud Cover.
A long black body followed by a white body.
The white body breaks to the middle of the prior white body.
It occurs in a downtrend.
Trend: bullish
Reliability: Moderate
Three Black Crows
The uptrend three long black days occur with consecutively lower closes. This model shows that the market price is high for too long, and investors are beginning to compensate for it.
Three black days occur, each with a close below the previous day.
Each day opens within the body of the previous day.
Each day closes near or at a low level of the day.
Trend: bearish
Reliability: High
Three white soldiers
The downtrend three long white days occur with consecutively higher closes. Generally this suggests future market strength, such reversal is underway that is building a moderate growth steps.
Three long white days occur, each with a higher close than the previous day.
Each day opens within the body of the previous day.
Each day closes near or in the middle of the day.
Trend: bullish
Reliability: High
Continuation Patterns
Falling three methods
In a downtrend, long black day occurs after three days of small real bodies that fall short in the uptrend. The fifth day brings in strong to close at a new low. This small uptrend, between two long black days, in line with investors vacation. The down should continue.
The first day is a long black day.
The second, third and fourth days of small real bodies and follow a brief uptrend pattern, but stay within the scope of the first day.
The fifth day is a long black day that closes below the end of the first day.
Trend: bearish
Reliability: High
Rising three methods
The uptrend, long white day occurs after three days of small real bodies that fall short in a downtrend. On the fifth day, the bulls are in strong to close at a new high. This small downtrend between two long white days, in line with investors vacation. The uptrend should continue.
The first day is a long white day.
The second, third and fourth days of small real bodies and follow a short downtrend pattern, but stay within the scope of the first day.
The fifth day is a long white day that closes above the end of the first day.
Trend: bullish
Reliability: High
Single Candle Patterns
Dragonfly Doji
There is a sharp sell at market opens during the uptrend. However, by the end of trading day, the market closes at or near its high for the day. This indicates potential for further sell-off. The Hanging Man reliability indicator is low, a trend reversal can be confirmed with a black candlestick or a gap down the next trading day accompanied by a lower close. If open and close are identical, the indicator is considered a Dragonfly Doji. The Dragonfly Doji has a higher reliability associated with it by a hammer.
The long lower shadow is about two to three times the real body.
Little or no upper shadow.
The real body is at the upper end of the trading range.
The color of the real body is not important.
Trend: bearish
Reliability: Moderate
Gravestone Doji
As the market opens below the end of the previous day, the bulls rally briefly, but not enough to close before closing the previous day. As this leaves shorts in loss of position, the Inverted Hammer presents the potential for an upcoming rally. Confirmation of this trend would twist the opening above the body of the Inverted Hammer for the next trading day. If open and close are identical, the indicator is considered a gravestone Doji.
Small real body at the upper end of the trading range.
Upper shade usually at least three times until the real body
No (or almost no) lower shadow
Trend: bullish
Reliability: Moderate
Hammer
There is a sharp sell at market opens during a downtrend. However, by the end of trading day, the market closes at or near its high for the day. This means a weakening of the previous bearish sentiment, especially if the real body is white (the end is higher than the open price). The hammer safety indicator is low, a trend reversal can be confirmed by a higher open and is even closer to the next trading day. If open and close are identical, the indicator is considered
Dragonfly Doji.
The long lower shadow is about two to three times the real body.
Little or no upper shadow.
The real body is at the upper end of the trading range.
The color of the real body is not important.
Trend: bullish
Reliability: Low / Moderate
Meteor
The market gaps open above the previous day close uptrend. It rallies the new high then loses strength and closes near its low: a bearish change of momentum. Confirmation of this trend would twist the opening below the body of the meteor on the next trading day. If open and close are identical, the indicator is considered a gravestone Doji. The gravestone Doji has a higher reliability associated with it by a meteor.
Many long upper shadow.
Small real body at the lower end of the price spectrum.
The real body gaps away from the real body.
Trend: bearish
Reliability: Low / Moderate
Hollow Red Candles
Shares that have red, hollow candlestick at the end of their daily pattern.
Filled Black Candles
Shares, which have a black, filled the lighthouse at the end of their daily pattern.
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