Bullish & Bearish Candlestick Patterns Every Trader Should Know
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Why Candlestick Patterns Matter in Trading
In the previous articles of this technical analysis series, you learned what candlestick charts are, how a single candle is formed, and why traders all over the world prefer candlestick charts over line or bar charts. Now it’s time to move one step deeper into real market behavior.
Candlestick patterns are like the language of price action. They reflect the psychology of buyers and sellers at a particular moment in the market. When you learn to read bullish candlestick patterns and bearish candlestick patterns, you start understanding what big traders, institutions, and smart money might be thinking.
This article is designed especially for beginners. We will not rush. We will not use complex terminology. Instead, we will focus on clear explanations, real market logic, and practical understanding so that by the end of this guide, you can confidently identify important candlestick patterns on your own charts.
What Are Bullish and Bearish Candlestick Patterns?
Candlestick patterns are specific formations created by one or more candles on a price chart. These formations indicate a possible change in market direction or continuation of the existing trend.
Bullish candlestick patterns suggest that buyers are gaining strength and prices may move upward.
Bearish candlestick patterns suggest that sellers are gaining control and prices may move downward.
These patterns appear in all financial markets including stocks, forex, commodities, and cryptocurrencies. Whether you are trading Indian markets or US stocks, the psychology behind these patterns remains the same.
Understanding Market Psychology Behind Candlestick Patterns
Before memorizing any pattern, it is crucial to understand why these patterns work.
The market moves because of fear and greed. Buyers want prices to go up. Sellers want prices to go down. Candlestick patterns visually represent this struggle.
A bullish pattern usually forms when sellers try to push the price down but fail, and buyers step in strongly.
A bearish pattern forms when buyers try to push prices higher but lose momentum, allowing sellers to take control.
Once you understand this emotional battle, candlestick patterns stop feeling confusing and start making sense.
Bullish Candlestick Patterns Every Trader Should Know
Bullish candlestick patterns generally appear after a downtrend or during price consolidation. They indicate that selling pressure is weakening and buyers may take over.
Let’s understand the most important bullish candlestick patterns step by step.
Hammer Candlestick Pattern
The hammer is one of the most popular bullish candlestick patterns and is often the first pattern beginners learn.
A hammer has a small body near the top of the candle and a long lower shadow. The upper shadow is very small or absent.
This pattern shows that sellers pushed the price down strongly during the session, but buyers entered aggressively and pushed the price back near the opening level.
The key message of the hammer pattern is rejection of lower prices.
A hammer is most reliable when it appears after a clear downtrend and near a support level. It shows that buyers are ready to defend that price zone.
Inverted Hammer Candlestick Pattern
The inverted hammer looks opposite to the hammer. It has a small body near the bottom and a long upper shadow.
This pattern indicates that buyers attempted to push the price higher, but sellers resisted. Even though sellers pushed the price back down, the strong buying attempt is a sign that momentum may shift.
An inverted hammer is considered bullish only when it appears after a downtrend. Confirmation from the next candle is very important before taking any trade.
Bullish Engulfing Pattern
The bullish engulfing pattern is one of the strongest bullish candlestick patterns.
It consists of two candles. The first candle is bearish and relatively small. The second candle is bullish and completely engulfs the body of the previous candle.
This pattern shows a sudden shift in control from sellers to buyers. Buyers not only recovered the losses of the previous session but also pushed prices higher with strength.
Bullish engulfing patterns work best near support levels and after a prolonged downtrend. High trading volume adds more reliability to this pattern.
Piercing Line Pattern
The piercing line pattern is another two-candle bullish reversal pattern.
The first candle is bearish. The second candle opens below the low of the previous candle but closes above the midpoint of the first candle.
This pattern shows that sellers initially remained strong, but buyers stepped in and pushed prices significantly higher by the close.
The piercing line pattern indicates weakening bearish momentum and possible trend reversal.
Morning Star Candlestick Pattern
The morning star is a powerful three-candle bullish reversal pattern.
The first candle is a long bearish candle, showing strong selling pressure.
The second candle is small and represents indecision in the market. It can be bullish or bearish.
The third candle is a strong bullish candle that closes well into the body of the first candle.
This pattern reflects a complete shift in sentiment from bearish to bullish. It is considered highly reliable when it appears after a strong downtrend.
Three White Soldiers Pattern
This pattern consists of three consecutive long bullish candles.
Each candle opens within the body of the previous candle and closes near its high.
The three white soldiers pattern shows consistent buying pressure and strong bullish momentum.
This pattern usually appears at the end of a downtrend and signals a potential trend reversal or strong continuation move.
Bearish Candlestick Patterns Every Trader Should Know
Bearish candlestick patterns indicate that buying pressure is weakening and sellers may take control.
These patterns usually appear after an uptrend or near resistance levels.
Let’s now understand the most important bearish candlestick patterns.
Shooting Star Candlestick Pattern
The shooting star looks similar to the inverted hammer but appears after an uptrend.
It has a small body near the bottom and a long upper shadow.
This pattern shows that buyers pushed prices higher, but sellers entered strongly and forced prices back down before the close.
The shooting star indicates rejection of higher prices and possible trend reversal.
Hanging Man Candlestick Pattern
The hanging man looks exactly like a hammer but appears after an uptrend.
It has a small body near the top and a long lower shadow.
The pattern shows that sellers managed to push prices significantly lower during the session, even though buyers recovered somewhat by the close.
This selling pressure is a warning sign that the uptrend may be losing strength.
Bearish Engulfing Pattern
The bearish engulfing pattern is the opposite of the bullish engulfing pattern.
It consists of a small bullish candle followed by a large bearish candle that completely engulfs the previous candle’s body.
This pattern signals that sellers have taken control and buyers are losing momentum.
Bearish engulfing patterns are most effective near resistance levels and after a strong uptrend.
Evening Star Candlestick Pattern
The evening star is the bearish counterpart of the morning star.
The first candle is a strong bullish candle.
The second candle is small and indicates market indecision.
The third candle is a strong bearish candle that closes deep into the body of the first candle.
This pattern reflects a shift from bullish sentiment to bearish sentiment and often marks the beginning of a downtrend.
Dark Cloud Cover Pattern
The dark cloud cover pattern is a two-candle bearish reversal pattern.
The first candle is bullish.
The second candle opens above the high of the first candle but closes below its midpoint.
This pattern shows that buyers lost control and sellers stepped in aggressively.
Three Black Crows Pattern
The three black crows pattern consists of three long consecutive bearish candles.
Each candle opens within the body of the previous candle and closes near its low.
This pattern shows strong selling pressure and often signals the start of a new downtrend.
How to Trade Using Candlestick Patterns Safely
Candlestick patterns should never be used alone. Many beginners make the mistake of entering trades just because they spot a pattern.
To increase accuracy, always follow these principles.
First, identify the overall trend. Bullish candlestick patterns work best in downtrends or near support. Bearish candlestick patterns work best in uptrends or near resistance.
Second, wait for confirmation. Entering a trade without confirmation is risky.
Third, use stop loss. Every trade should have a predefined risk.
Fourth, combine candlestick patterns with technical indicators like moving averages, RSI, or volume.
Common Mistakes Beginners Make
Many beginners try to memorize too many patterns at once. This creates confusion.
Some traders ignore market context and trade patterns blindly.
Others forget risk management and overtrade.
Focus on mastering a few high-probability patterns instead of chasing every setup.
Mastering Candlestick Patterns Takes Time
Bullish candlestick patterns and bearish candlestick patterns are powerful tools, but they require patience and practice.
Do not expect instant success. Study charts daily. Observe how patterns behave in different market conditions.
In the next article of this series, we will move forward and connect candlestick patterns with support and resistance, which is where real trading confidence begins.
Keep learning, keep practicing, and trade responsibly.
