REVERSAL PATTERNS – Part I

Bullish Engulfing Pattern Bearish Engulfing Pattern Dark‐cloud Cover Piercing Line Morning Star

Resistance
Resistance

Support
Support Support

vol vol vol vol red or green

— Bullish signal  Strong
signal reversal
— Bottom in downtrend
— Bearish signal  Strong — Bearish signal  Strong — Bullish signal  Strong signal — Bullish signal  Strong
signal reversal signal reversal reversal signal reversal
— Top in uptrend — Top in uptrend — Bottom in downtrend — Bottom in downtrend
— Green candle must penetrate — An ideal pattern has a gap 
at least 50% in red one between their candles

Shooting Star Candle Inverted Hammer Candle Evening Doji Star Morning doji star Evening Star

Green or red Red or

Bullish confirmation
Resistance green Resistance

Green or red Support

Bearish confirmation As a traffic light

— Bearish signal  Potential signal — Bullish signal  Potential signal — Bearish signal  Strong — Bullish signal  Strong — Bearish signal  Strong
reversal reversal signal reversal signal reversal signal reversal
— Top in uptrend — Bottom in downtrend — Top in uptrend — Bottom in downtrend — Top in uptrend
— Potential weakness — Potential weakness — An ideal pattern has a gap  — An ideal pattern has a gap  — An ideal pattern has a gap 
— Low volume  pause — Low volume  pause between their candles between their candles between their candles
— Avg and high volume  potential — Avg and high volume  potential
reversal reversal
— After the candle must be a  — After the candle must be a bullish
bearish confirmation candle confirmation candle

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 REVERSAL PATTERNS – Part II
Hammer Candle
green or red
Support
— Bullish signal  Potential signal
reversal
— Bottom in downtrend
— Strength in the price action
— Low and avg volume  pause
— High volume  potential reversal
— The lower wick should be more  — The lower wick should be more  — More important:  — This candle helps to change
than twice the spread
Bullish Harami Cross
green or red
— Bullish signal  Potential signal
reversal, but less powerfull
— Bottom in downtrend
— More potent reversal sign than
the regular harami pattern
— It’s important to observe  — We should look at what
additional bullish signal,  additional bullish signal,  additional bearish signal,  environment since there is
reinforcing the possible reversal
Hanging Man Candle
Resistance
green or red
— Bearish signal  Potential signal
reversal
— Top in uptrend
— Potential weakness
— Low and avg volume  pause
— High volume  potential reversal
than twice the spread
— Need a bearish confirmation
Bearish Harami Pattern
green or red
— Bearish signal  Less
powerfull reversal signals
— Top in uptrend
— The market is “losing its
breath”
— It’s important to observe  — It’s important to observe  they are in a trading range
reinforcing the possible
reversal
Northern Doji Candle
overbought
RSI
— Bearish signal  Warnings
of potential signal reversal
— Top in uptrend (more  — Top in uptrend
important)
— Indecision in the market
overbought or after a tall
green candle
Bullish Harami Pattern
green or red
— Bullish signal  Less
powerfull reversal signals
— Bottom in downtrend
— The market is “losing its
breath”
reinforcing the possible
reversal
Long‐Legged Doji Candle Gravestone Doji Candle
More significant in uptrend
red or green
red or green long upper and 
lower wicks
long upper wick
open/close low
— Bearish signal  Warnings of 
potential signal reversal — Bearish signal  Warnings
of potential signal reversal
— Top in uptrend
— Confused/indecision market
— This candle doesn’t implies a 
— Low volume (anomaly)
large move lower
insiders move the market
— High volume  insiders enter
the trend from bullish to 
in the market (up or
neutral
downtrend)
Doji in a box range Dragonfly Doji Candle
red or green
open/close high
long low wick
— No bullish or bearish signal
— In a trading range
— The market in a box is
undecided, so doji have little — Bullish signal  Warnings of 
potential signal reversal
forecasting implications if
— Bottom in downtrend
no trend to reverse happened before the signal 
(additional confirmation)
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 REVERSAL PATTERNS – Part III
Bearish Harami Cross Tweezers Top
Harami Cross Hanging Man Shooting Star Dark‐cloud Cover

Highs match or near to match Highs match or near to match Highs match or near to match Highs match or near to match

green or red

— Bearish signal  Potential signal

reversal, but less powerfull
— Top in uptrend
— More potent reversal sign than The second candle is not a small real 
body, but it formed a dark‐cloud
the regular harami pattern — Bearish signal  Potential signal reversal, but less powerfull cover, adding a more negative impact
— It’s important to observe  — Top in uptrend
additional bearish signal,  — Need a bearish confirmation
reinforcing the possible reversal — Ideally the tweezers should have a long first candle and a small real body as the next session
— Tweezer on the weekly and monthly candlestick charts made by consecutive candlesticks could be important reversal pattern 

Upside‐gap Two Crows Bearish Belt‐hold Bullish Belt‐hold Tweezers Bottom

It opens over the previous open  Opens at or Hammer Piercing Line

and closes under the previous close near, the high
It open under the
prior day’s low, but
Gap between Closes at, or Closes at, or it could open under
opens near, the low near, the high the prior day’s close
Opens at, or
near, the low
Lows match or near to match Lows match or near to match
— Bearish signal  Less — Bullish signal  Less
powerfull reversal signals powerfull reversal signals
— Top in uptrend — Bottom in downtrend
— If the next candle closes — If the next candle closes — Bullish signal  Potential signal reversal, but less powerfull
— Bearish signal  Less powerfull above a bearish belt‐hold under the bullish belt‐hold — Bottom in downtrend
reversal signals line, this should mean a  line, this implies a renewal of  — Need a bullish confirmation
— Top in uptrend resumption of the uptrend selling pressure — Ideally the tweezers should have a long first candle and a small
— It’s important to observe 
real body as the next session
additional bearish signal, 
Belt‐hold lines are more important if: — Tweezer on the weekly and monthly candlestick charts made by 
reinforcing the possible reversal
— they confirm resistance or other belt‐hold lines, or consecutive candlesticks could be important reversal pattern 
— they have not appeared for a while 3
 REVERSAL PATTERNS – Part IV
Three Black Crows
Ideally, each of the openings should also
be within the prior session’s real body
— Bearish signal  Less powerfull
reversal signals
— Top in uptrend
— This pattern presages lower prices if
they appear at high price levels or
after a mature advance
Three Advancing White Soldiers Advance Block Pattern Stalled Pattern
Small real bodies or
long upper shadows
Ideally, each of the openings
should also be within or near the — Bearish signal  Warnings of 
prior session’s green real body potential signal pause
— Top in uptrend or bottom in 
— Bearish signal  Warnings of 
— Bullish signal  Less powerfull reversal downtrend
potential signal pause 
signals — Trend temporarily exhausted after
— Top in uptrend (mature trend)
— Bottom in downtrend this formation
— The rally could be losing force
— If it appears at a low price area or after a  — It should be used to liquidate or
— It should be used to liquidate or
period of stable prices  sign of strength protect longs, but usually not to 
protect longs, but usually not to short
short
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 CONTINUATION PATTERNS – Part I
Rising Window Falling Window

Top of 
window Sell on bounces
Window Support

Buy on dips Resistance

Window
Bottom of 
window

— Bullish signal — Bearish signal

— In an uptrend — In a downtrend
— A rising window should be a zone of support on pullbacks. If pullback closes under the  — A falling window should be a zone of resistance on pullbacks. If pullback closes over 
bottom of the window, the prior uptrend is voided the top of the window, the prior downtrend is voided
— If you are aggressively bullish, you can consider buying near to the top of the window — If you are aggressively bearish, you can consider selling near to the bottom of the
and not within the window. The stop should be the bottom of the rising window window and not within the window. The stop should be the top of the falling window

Upward Gapping Tasuki Downward Gapping Tasuki

Rising window
or
Falling window Resistance
Support
or

— Bullish signal — Bearish signal

— In an uptrend — In a downtrend
— The two candles of the tasuki should be about the same size — The two candles of the tasuki should be about the same size
— A close under the support would turn the trend down — A close over the resistance would turn the trend up

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 CONTINUATION PATTERNS – Part II
High‐price Gapping Play Low‐price Gapping Play Upgap Side‐by‐side Downgap Side‐by‐side
White Lines White Lines

This congestion band 

stabilized a steep decline
Rising window
Falling window
Rising window Falling window
Consolidation with a 
series of small real bodies
Short covering

— Bullish signal — Bearish signal — Bearish signal

— In an uptrend, after a consolidation area — In a downtrend, after a consolidation — Bullish signal — In a downtrend
(CA) area (CA) — In an uptrend — After a falling gap, both red candles
— The CA is a group of small real bodies — The CA is a group of small real bodies — After a rising gap, both green candles have similar‐sized
after a strong green session  relieving after a strong red session  relieving have similar‐sized — If the second red candle closes over the
overbought condition oversold condition resistance, it negates the bearish
outlook of the pattern

Rising Three Methods Falling Three Methods Bullish Separating Lines Bearish Separating Lines

Close above the first

session of the pattern Open below the
previous close session
Open above the
previous close session Close below the first A bullish belt‐hold
session of the pattern ↓ A bearish belt‐hold
same open as the ↓
previous open session same open as the
vol vol
previous open session

— Bullish signal — Bearish signal — Bullish signal

— In an uptrend or finishing a downtrend
— The ideal number of the group of falling or
lateral small real body candles is 3, but
could be 2 or more than 3. These candles
hold within the long green candle’s high‐
low range
— In a downtrend or finishing an uptrend — In an uptrend or finishing a downtrend — Bearish signal
— The ideal number of the group of falling or — In a downtrend or finishing an
lateral small real body candles is 3, but uptrend
could be 2 or more than 3. These candles
hold within the long red candle’s high‐low
range
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