This document defines and describes various candlestick patterns used in technical analysis for stock trading, including bullish patterns like hammer and piercing line that indicate reversals from downtrends, as well as bearish patterns like hanging man, dark cloud cover, and doji variations that signal potential trend changes. It provides brief explanations of common candlestick formations and their implications for identifying bullish or bearish market momentum.

1. Copyright 2014 by Jan de Wit – http://www.investment-guru.com
Hammer: bullish
pattern after significant
downtrend
Bullish Doji: indicates
a reversal, direction
still unknown. Wait for
next candle.
Piercing Line: the bull
candle opens lower
than the bear’s low,
closes above bear’s
middle.
Bullish engulfing lines:
strong bullish if after
strong downtrend.
Bigger than previous
bear.
Morning star: indicates
a possible reversal,
confirmed by bullish
candle
Long bearish candle:
price opens near the high
and closes near the low.
Hanging man: small candle
bodies and long shadow.
Can also be bullish
Dark Cloud Cover: more
significant if second candle’s
body is below centre of first one.
Bullish: uptrend
Bearish: downtrend

2. Copyright 2014 by Jan de Wit – http://www.investment-guru.com
Spinning tops: neutral
pattern. Distance between
open close is small.
Doji: no trend. Open and
close are the same.
Double doji: a big breakout
will follow shortly
Harami: bearish candle is smaller
than the bullish body. Bullish
momentum has decreased.
Long-legged Doji: open and
close are the same, big range
between high and low –
turning point coming.
Dragonfly Doji: open and
close are the same, low
significantly lower than open
– turning point coming.
Gravestone Doji: open and
close are the same, high
significantly higher than
open – turning point coming.
Stars: a reversal is indicated.
The second candle is in the
shadow of the first.
Neutral trends