Here’s a comprehensive guide on candlestick chart patterns, categorized into single, double, and triple candlestick patterns. Each includes detailed explanations, their meanings, and how they can be traded. We'll use **XAU/USD** for trading examples.
Single Candlestick Patterns
1. Doji
- Description: A Doji forms when the opening and closing prices are nearly identical, indicating indecision in the market. There are different types of Doji patterns (standard Doji, Dragonfly Doji, Gravestone Doji).
- Meaning: The Doji signals indecision or a potential reversal, depending on the context.
- How to Trade:
- Bullish Doji: In a downtrend, if a Doji forms near a support level, it may signal a potential reversal to the upside.
- Bearish Doji: In an uptrend, a Doji at a resistance level might signal a potential reversal downward.
- Stop Loss: Place below the low of the Doji in bullish scenarios or above the high in bearish scenarios.
Example (XAU/USD): If a Doji forms at $1,900 after a downtrend, you can buy above $1,910, placing a stop loss at $1,880, targeting $1,950.
2. Hammer
- Description: A small body with a long lower wick and little to no upper wick, forming after a downtrend.
- Meaning: A bullish reversal signal, indicating that buyers have started pushing the price up after initial selling pressure.
- How to Trade:
- Bullish: Enter long after the hammer confirms with a bullish candle.
- Stop Loss: Below the hammer’s low.
Example (XAU/USD): If a hammer forms at $1,850, buy above $1,860, with a stop loss at $1,830, and a target of $1,900.
3. Inverted Hammer
- Description: A small body with a long upper wick and little to no lower wick, forming after a downtrend.
- Meaning: A potential bullish reversal signal where the market rejected higher prices but is starting to reverse.
- How to Trade:
- Bullish: Enter long on the next bullish candle.
- Stop Loss: Below the low of the inverted hammer.
**Example (XAU/USD)**: If an inverted hammer forms at $1,870, buy above $1,880, stop loss at $1,860, target $1,920.
4. Shooting Star
- Description: A small body with a long upper wick and little to no lower wick, forming after an uptrend.
- Meaning: A bearish reversal signal, showing that buyers tried to push the price higher but failed.
- How to Trade:
- Bearish: Enter short after a confirmation bearish candle forms.
- Stop Loss: Above the high of the shooting star.
Example (XAU/USD): If a shooting star forms at $1,950, sell below $1,940, stop loss at $1,970, target $1,900.
5. Spinning Top
- Description: A candlestick with a small real body and long wicks on both sides, indicating indecision in the market.
- Meaning: It signals indecision between buyers and sellers, often leading to a reversal or continuation.
- How to Trade:
- Bullish: Buy if the next candle is bullish, indicating reversal.
- Bearish: Sell if the next candle is bearish.
- Stop Loss: Place below the low for bullish, or above the high for bearish setups.
Example (XAU/USD): If a spinning top forms at $1,920 after an uptrend, you can sell below $1,910, stop loss at $1,950, and target $1,880.
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Double Candlestick Patterns
6. Bullish Engulfing
- Description: A large bullish candle that completely engulfs the previous smaller bearish candle.
- Meaning: A strong bullish reversal signal, showing that buyers are taking control.
- How to Trade:
- Bullish: Enter long after the engulfing candle closes.
- Stop Loss: Below the low of the engulfing candle.
Example (XAU/USD): If a bullish engulfing forms at $1,900, buy above $1,920, stop loss at $1,890, target $1,950.
7. Bearish Engulfing
- Description: A large bearish candle that completely engulfs the previous smaller bullish candle.
- Meaning: A strong bearish reversal signal, showing that sellers are taking control.
- How to Trade:
- Bearish: Enter short after the engulfing candle closes.
- Stop Loss: Above the high of the engulfing candle.
Example (XAU/USD): If a bearish engulfing forms at $1,940, sell below $1,930, stop loss at $1,960, target $1,900.
8. Piercing Pattern
- Description: A bearish candle followed by a bullish candle that opens lower and closes above the midpoint of the bearish candle.
- Meaning: A bullish reversal pattern that indicates buyers are gaining control.
- How to Trade:
- Bullish: Enter long when the next candle confirms the reversal.
- Stop Loss: Below the low of the bullish candle.
Example (XAU/USD): If a piercing pattern forms at $1,890, buy above $1,900, stop loss at $1,880, target $1,950.
9. Dark Cloud Cover
- Description: A bullish candle followed by a bearish candle that opens higher but closes below the midpoint of the bullish candle.
- Meaning: A bearish reversal pattern that indicates sellers are taking control.
- How to Trade:
- Bearish: Enter short after confirmation with a bearish candle.
- Stop Loss: Above the high of the bearish candle.
Example (XAU/USD): If dark cloud cover forms at $1,940, sell below $1,930, stop loss at $1,960, target $1,900.
10. Tweezer Bottom
- Description: Two candlesticks with identical or nearly identical lows, indicating strong support.
- Meaning: A bullish reversal pattern signaling that selling pressure has been exhausted.
- How to Trade:
- Bullish: Enter long when the next candle confirms the reversal.
- Stop Loss: Below the tweezer bottom’s low.
Example (XAU/USD): If a tweezer bottom forms at $1,850, buy above $1,860, stop loss at $1,840, target $1,900.
11. Tweezer Top
- Description: Two candlesticks with identical or nearly identical highs, indicating strong resistance.
- Meaning: A bearish reversal pattern signaling that buying pressure has been exhausted.
- How to Trade:
- Bearish: Enter short when the next candle confirms the reversal.
- Stop Loss: Above the tweezer top’s high.
Example (XAU/USD): If a tweezer top forms at $1,950, sell below $1,940, stop loss at $1,960, target $1,900.
Triple Candlestick Patterns
12. Morning Star
- Description: A three-candle pattern: a long bearish candle, followed by a small indecisive candle (Doji or Spinning Top), and then a large bullish candle.
- Meaning: A strong bullish reversal pattern, indicating a shift from sellers to buyers.
- How to Trade:
- Bullish: Enter long after the bullish candle closes.
- Stop Loss: Below the low of the indecisive candle.
Example (XAU/USD): If a morning star forms at $1,890, buy above $1,900, stop loss at $1,880, target $1,950.
13. Evening Star
- Description: A three-candle pattern: a long bullish candle, followed by a small indecisive candle, and then a large bearish candle.
- Meaning: A strong bearish reversal pattern, signaling a shift from buyers to sellers.
- How to Trade:
- Bearish: Enter short after the bearish candle closes.
- Stop Loss: Above the high of the indecisive candle.
Example (XAU/USD): If an evening star forms at $1,940, sell below $1,930, stop loss at $1,960, target $1,900.
14. Three White Soldiers
- Description: Three consecutive long bullish candles with small or no wicks, indicating strong buying pressure.
- Meaning: A bullish continuation or reversal pattern.
- How to Trade:
- Bullish: Enter long after the third candle closes.
- Stop Loss: Below the low of the first soldier.
Example (XAU/USD): After three white soldiers form from $1,880 to $1,920, buy above $1,920, stop loss at $1,890, target $1
,960.
15. Three Black Crows
- Description: Three consecutive long bearish candles with small or no wicks, indicating strong selling pressure.
- Meaning: A bearish continuation or reversal pattern.
- How to Trade:
- Bearish: Enter short after the third candle closes.
- Stop Loss: Above the high of the first crow.
Example (XAU/USD): After three black crows form from $1,950 to $1,910, sell below $1,910, stop loss at $1,940, target $1,870.
Additional Single Candlestick Patterns
16. Marubozu
- Description: A candlestick with no wicks (or very small wicks), meaning that the price opened at the low (for a bullish Marubozu) or high (for a bearish Marubozu) and closed at the opposite extreme.
- Meaning: Strong momentum either up or down, depending on whether it's bullish or bearish.
- How to Trade:
- Bullish Marubozu: Indicates a continuation of an uptrend.
- Bearish Marubozu: Indicates strong selling pressure and a continuation of a downtrend.
- Stop Loss: Below the low for a bullish Marubozu, or above the high for a bearish Marubozu.
Example (XAU/USD): A bullish Marubozu forms at $1,900. Buy at $1,910, stop loss at $1,890, target $1,950.
17. Paper Umbrella (Hanging Man)
- Description: A small body with a long lower wick, appearing after an uptrend.
- Meaning: A bearish reversal signal, where buyers pushed the price higher but were eventually overwhelmed by sellers.
- How to Trade:
- Bearish: Enter short after confirmation of the reversal.
- Stop Loss: Above the high of the hanging man.
Example (XAU/USD): If a hanging man forms at $1,950, sell below $1,940, stop loss at $1,960, target $1,900.
18. Paper Umbrella (Hammer)
- Description: Same appearance as the hanging man, but forms after a downtrend and signals a bullish reversal.
- Meaning: The long lower wick indicates that sellers tried to push the price lower, but buyers gained control.
- How to Trade:
- Bullish: Enter long after confirmation of the reversal.
- Stop Loss: Below the low of the hammer.
Example (XAU/USD): If a hammer forms at $1,870, buy above $1,880, stop loss at $1,860, target $1,920.
Additional Double Candlestick Patterns
19. Harami (Bullish and Bearish)
- Bullish Harami:
- Description: A small bullish candle forms inside a preceding large bearish candle.
- Meaning: A potential bullish reversal pattern, signaling indecision and a possible trend change.
- How to Trade: Buy after confirmation with a bullish candle. Place a stop loss below the low of the second candle.
Example (XAU/USD): A bullish harami forms at $1,900. Buy at $1,910, stop loss at $1,880, target $1,950.
- Bearish Harami:
- Description: A small bearish candle forms inside a preceding large bullish candle.
- Meaning: A potential bearish reversal pattern.
- How to Trade: Sell after confirmation with a bearish candle. Place a stop loss above the high of the second candle.
Example (XAU/USD): A bearish harami forms at $1,950. Sell below $1,940, stop loss at $1,960, target $1,900.
20. Inside Bar
- Description: A candle where the entire range (high to low) is contained within the range of the previous candle.
- Meaning: Signals a period of consolidation or indecision, usually followed by a breakout in either direction.
- How to Trade:
- Bullish: Buy if the price breaks above the high of the previous candle.
- Bearish: Sell if the price breaks below the low of the previous candle.
- Stop Loss: Place above the inside bar for a short trade, or below it for a long trade.
Example (XAU/USD): If an inside bar forms at $1,920, buy above $1,930, stop loss at $1,900, target $1,960.
Additional Triple Candlestick Patterns
21. Three Inside Up
- Description: A three-candle bullish reversal pattern consisting of a large bearish candle, followed by a smaller bullish candle that closes within the first, and then a third bullish candle that closes higher.
- Meaning: Indicates a bullish reversal after a downtrend.
- How to Trade:
- Bullish: Buy after the third candle closes.
- Stop Loss: Below the low of the first candle.
Example (XAU/USD): A three inside up pattern forms at $1,880. Buy at $1,890, stop loss at $1,870, target $1,940.
22. Three Inside Down
- Description: A three-candle bearish reversal pattern consisting of a large bullish candle, followed by a smaller bearish candle that closes within the first, and then a third bearish candle that closes lower.
- Meaning: Indicates a bearish reversal after an uptrend.
- How to Trade:
- Bearish: Sell after the third candle closes.
- Stop Loss: Above the high of the first candle.
Example (XAU/USD): A three inside down pattern forms at $1,940. Sell at $1,930, stop loss at $1,960, target $1,900.
23. Three Line Strike
- Bullish Three Line Strike:
- Description: Three consecutive bullish candles followed by a fourth large bearish candle that closes below the first bullish candle’s open.
- Meaning: Despite the bearish fourth candle, this is a bullish continuation pattern.
- How to Trade: Buy after the fourth candle completes.
- Stop Loss: Below the low of the fourth candle.
Example (XAU/USD): A three-line strike forms at $1,910. Buy at $1,920, stop loss at $1,890, target $1,970.
- Bearish Three Line Strike:
- Description: Three consecutive bearish candles followed by a fourth large bullish candle that closes above the first bearish candle’s open.
- Meaning: Despite the bullish fourth candle, this is a bearish continuation pattern.
- How to Trade: Sell after the fourth candle completes.
- Stop Loss: Above the high of the fourth candle.
Example (XAU/USD): A bearish three-line strike forms at $1,950. Sell at $1,940, stop loss at $1,960, target $1,900.
24. Rising Three Methods
- Description: A bullish continuation pattern with a long bullish candle followed by three small bearish candles, and then another long bullish candle.
- Meaning: Signals a continuation of the uptrend after a brief consolidation.
- How to Trade: Buy after the fifth candle closes bullish.
- Stop Loss: Below the low of the last bearish candle.
Example (XAU/USD): Rising three methods form at $1,900. Buy at $1,910, stop loss at $1,880, target $1,950.
25. Falling Three Methods
-Description: A bearish continuation pattern with a long bearish candle followed by three small bullish candles, and then another long bearish candle.
- Meaning: Signals a continuation of the downtrend after a brief consolidation.
- How to Trade: Sell after the fifth candle closes bearish.
- Stop Loss: Above the high of the last bullish candle.
Example (XAU/USD): Falling three methods form at $1,940. Sell at $1,930, stop loss at $1,960, target $1,900.
Complex Candlestick Patterns
26. Rising/Falling Window
- Description: A gap between two candles, indicating a break in price levels.
- Meaning: A **rising window** indicates bullish continuation, while a **falling window** signals bearish continuation.
- How to Trade: Trade in the direction of the window with confirmation from subsequent candles.
- Stop Loss: Below the low of the rising window for bullish trades or above the high of the falling window for bearish trades.
Example (XAU/USD): If a rising window forms at $1,900, buy at $1,910, stop loss at $1,880, target $1,950.
Additional Candlestick Patterns
27. Heikin Ashi Candles
- Description: Heikin Ashi candlesticks average the opening and closing prices to smooth out price action. Each candle is formed differently than regular candlesticks, focusing on trends rather than volatility.
- Meaning: Used to identify trends more easily.
- How to Trade:
- Bullish: Look for consecutive bullish candles (no lower wicks).
- Bearish: Look for consecutive bearish candles (no upper wicks).
- Stop Loss: Below/above the recent low/high.
Example (XAU/USD): If Heikin Ashi candles show consecutive bullish candles from $1,900 to $1,920, buy at $1,925, stop loss at $1,890, target $1,960.
More Complex and Rare Patterns
28. Belt Hold
- Description:
- Bullish Belt Hold: A strong bullish candle without a lower wick that opens near the low and closes at or near the high.
- Bearish Belt Hold: A strong bearish candle without an upper wick that opens near the high and closes at or near the low.
- Meaning: Both indicate strong buying or selling pressure depending on whether it is bullish or bearish.
- How to Trade:
- Bullish: Buy at the close of the candle.
- Bearish: Sell at the close of the candle.
- Stop Loss: Below the low for a bullish belt hold and above the high for a bearish belt hold.
Example (XAU/USD): A bullish belt hold forms at $1,900. Buy at $1,910, stop loss at $1,880, target $1,960.
29. Kicking Pattern
- Description: The Kicking pattern consists of a gap between two candlesticks—one being a strong bullish or bearish Marubozu and the other being the opposite direction.
- Bullish Kicking: A bearish Marubozu followed by a bullish Marubozu with a gap between the two.
- Bearish Kicking: A bullish Marubozu followed by a bearish Marubozu with a gap between the two.
- Meaning: Indicates a strong reversal.
- How to Trade:
- Bullish: Buy after the second bullish Marubozu.
- Bearish: Sell after the second bearish Marubozu.
- Stop Loss: Below the gap for bullish setups and above the gap for bearish setups.
Example (XAU/USD): A bullish Kicking pattern forms at $1,850 with a gap. Buy at $1,860, stop loss at $1,840, target $1,900.
30. Deliberation Pattern
- Description: Three candles in the same direction, the third of which shows indecision or a smaller body after two strong candles.
- Meaning: Signals indecision after a strong trend and potentially a reversal or a pause in the current trend.
- How to Trade:
- Bullish: Buy after confirmation of the next candle.
- Bearish: Sell after confirmation of the next candle.
- Stop Loss: Above/below the third candle.
Example (XAU/USD): A bearish deliberation pattern forms at $1,950. Sell below $1,940, stop loss at $1,960, target $1,900.
Candlestick Patterns Combined with Trendlines and Gaps
31. Breakaway Pattern
- Bullish Breakaway:
- Description: A downtrend pattern that starts with three bearish candles followed by a gap and a bullish reversal.
- Meaning: Signals a breakaway from the trend.
- How to Trade: Buy after confirmation of the reversal.
- Stop Loss: Below the gap.
Example (XAU/USD): A bullish breakaway pattern forms at $1,860. Buy at $1,870, stop loss at $1,850, target $1,920.
- Bearish Breakaway:
- Description: An uptrend pattern that starts with three bullish candles followed by a gap and a bearish reversal.
- Meaning: Signals a breakaway from the uptrend.
- How to Trade: Sell after confirmation of the reversal.
- Stop Loss: Above the gap.
Example (XAU/USD): A bearish breakaway pattern forms at $1,950. Sell below $1,940, stop loss at $1,970, target $1,900.
32. Mat Hold
- Bullish Mat Hold:
- Description: A long bullish candle followed by a small consolidation of bearish or small bullish candles, then a resumption of the uptrend with another strong bullish candle.
- Meaning: A bullish continuation pattern, signaling strength after a short pause.
- How to Trade: Buy after the strong bullish candle.
- Stop Loss: Below the consolidation.
Example (XAU/USD): A bullish mat hold forms at $1,900. Buy at $1,910, stop loss at $1,880, target $1,950.
- Bearish Mat Hold:
- Description: A long bearish candle followed by a small consolidation of bullish or small bearish candles, then a resumption of the downtrend with another strong bearish candle.
- Meaning: A bearish continuation pattern.
- How to Trade: Sell after the strong bearish candle.
- Stop Loss: Above the consolidation.
Example (XAU/USD): A bearish mat hold forms at $1,950. Sell below $1,940, stop loss at $1,970, target $1,900.
33. Separating Lines
- Bullish Separating Lines:
- Description: A bullish candle that follows a bearish candle, but both candles have the same open price, forming a strong upward continuation.
- Meaning: A strong continuation of the bullish trend.
- How to Trade: Buy after the second candle.
- Stop Loss: Below the low of the bearish candle.
Example (XAU/USD): Bullish separating lines form at $1,900. Buy at $1,910, stop loss at $1,880, target $1,950.
- Bearish Separating Lines:
- Description: A bearish candle that follows a bullish candle, both with the same open price, signaling a continuation of the downtrend.
- Meaning: A strong continuation of the bearish trend.
- How to Trade: Sell after the second candle.
- Stop Loss: Above the high of the bullish candle.
Example (XAU/USD): Bearish separating lines form at $1,950. Sell below $1,940, stop loss at $1,960, target $1,900.
34. Abandoned Baby
- Bullish Abandoned Baby:
- Description: A Doji candle that gaps below a bearish candle, followed by a gap above a bullish candle, signaling a strong bullish reversal.
- Meaning: Indicates a potential bullish reversal after a significant downtrend.
- How to Trade: Buy after the bullish candle.
- Stop Loss: Below the low of the Doji.
Example (XAU/USD): A bullish abandoned baby forms at $1,860. Buy at $1,870, stop loss at $1,850, target $1,920.
- Bearish Abandoned Baby:
- Description: A Doji candle that gaps above a bullish candle, followed by a gap below a bearish candle, signaling a strong bearish reversal.
- Meaning: Indicates a potential bearish reversal after a significant uptrend.
- How to Trade: Sell after the bearish candle.
- Stop Loss: Above the high of the Doji.
Example (XAU/USD): A bearish abandoned baby forms at $1,950. Sell below $1,940, stop loss at $1,970, target $1,900.
35. Takuri Line
- Description: Similar to the hammer pattern but with a longer lower wick, forming after a downtrend.
- Meaning: Signals a strong potential for a bullish reversal.
- How to Trade: Buy after confirmation of a bullish candle.
- Stop Loss: Below the low of the Takuri Line.
Example (XAU/USD): A Takuri Line forms at $1,870. Buy at $1,880, stop loss at $1,860, target $1,920.
Some Rare and Exotic Patterns
36. Dragonfly Doji
- Description: A Doji with a long lower wick and no upper wick, forming after a downtrend.
- Meaning: A bullish reversal pattern, indicating buyers have taken control after initial selling pressure.
- How to Trade: Buy after confirmation of a bullish candle.
- Stop Loss
: Below the low of the Dragonfly Doji.
Example (XAU/USD)**: A Dragonfly Doji forms at $1,880. Buy at $1,890, stop loss at $1,870, target $1,930.
37. Gravestone Doji
- Description: A Doji with a long upper wick and no lower wick, forming after an uptrend.
- Meaning: A bearish reversal pattern, indicating sellers have taken control after initial buying pressure.
- How to Trade: Sell after confirmation of a bearish candle.
- Stop Loss: Above the high of the Gravestone Doji.
Example (XAU/USD): A Gravestone Doji forms at $1,950. Sell below $1,940, stop loss at $1,970, target $1,900.