Candlestick Charts display the open, high, low, and closing prices in a format similar to modern-day bar chart, but in a manner that extenuates the relationship between the opening and closing prices. Candlestick Charts are simply a new way of looking at prices; they don't involve any calculations.

Each Candlestick represents one period (e.g., one day or one hour) of data. The elements of a candle are displayed as follow:

Trend: Bullish
Reliability: High
In a downtrend, the market bolsters the bearish trend with a long black day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario definitely shows the potential for a rally, as many positions have been changed. Confirmation of the trend reversal is given by the white third day, and is well defined by the upward gap.

Trend: Bearish
Reliability: High
In an uptrend, the market builds strength on a long white day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario definitely shows an erosion of confidence in the current trend. Confirmation of the trend reversal is the black third day, which is given extra validation by the downward gag.

Trend : Bullish
Reliability : Moderate
In a downtrend, the market bolsters the bears with a long black day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario generally shows the potential for a rally, as many positions have been changed. Confirmation of the trend reversal would be a higher open on the next trading day.

Trend : Bearish
Reliability : Moderate
In an uptrend, the market builds strength on a long white day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario generally shows erosion of confidence in the current trend. Confirmation of a trend reversal would be a lower open on the next trading day.

Trend: Bullish
Reliability: High
A large black body is followed by a small body (white or black) that gaps below the black body. The third candlestick is a white body that closes well into the black body.
This is a bullish pattern signifying a potential bottom. The Star indicates a possible reversal and the bullish (empty) line confirms this. The Star can be empty or filled in.

Trend: Bullish
Reliability: High
A large black body followed by a Doji that gaps below the black body. The third candlestick is a white body that closes well into the black body.
A bottom reversal signal that is more bullish than the regular Morning Star pattern because of the Doji.

Trend: Bullish
Reliability: Moderate
This pattern occurs when a small black line is followed by, and contained within (engulfed), a large white line. This pattern is very bullish if it occurs after a significant decline.

Trend: Bearish
Reliability: Moderate
This pattern occurs when a small white line is followed by, and contained within (engulfed), a large black line. This pattern is very bearish if it occurs after a significant uptrend.

top

Trend: Bullish
Reliability: Low/Moderate
A Hammer is identified by a small real body (i.e., a small range between the open and closing prices) and a long lower shadow (i.e., the low is significantly lower than the open, high, and close). The body can be empty or filled.
This is a bullish line if it occurs after a significant downtrend. If the line occurs after a significant uptrend, it is called a Hanging Man.

Trend: Bearish
Reliability: Low/Moderate
A small body (whit or black) is near the high, with a long lower shadow with little or no upper shadow. The lower shadow should be two or three times the height of the body.
These lines are bearish if they occur after a significant uptrend. If this pattern occurs after a significant downtrend, it is called a Hammer.

Trend: Bullish
Reliability: Low
A small white body is contained within an unusually large black body. This implies a decrease in bearish momentum when it occurs in a downtrend.

Trend: Bearish
Reliability: Low
A small black body is contained within an usually large white body. This implies a decrease in bullish momentum when it occurs in an uptrend.

Trend: Bullish,
Reliability: High
This pattern is a strong sign that the market is headed upward. With this indicator, the previous market direction is not as important as with other indicators.

Trend : Bearish
Reliability: High
This pattern is a strong sign that the market is headed downward. With this indicator, the previous market direction is not as important as with other indicators.

top

Trend: Bullish
Reliability: Moderate
This is a bullish pattern and the opposite of a dark cloud cover. The first line is a long black line and the second line is a long white line. The second line opens lower than the first line's low, but it closes more than halfway above the first line's real body.

Trend: Bullish
Reliability: High
Three white candlesticks have consecutively higher closes that close near or at their high prices.
This is a bullish sign that indicates a reversal when it occurs during a downtrend or a continuation of an uptrend if it occurs during an uptrend.