Candlestick patterns are a classification system for reading the battle between buyers and sellers within a single bar, two bars, or three bars on a chart. This guide organizes the 20 most commonly traded patterns by reliability tier — reversal, continuation, and indecision — and provides the precise identification rules that separate valid signals from noise. The interactive tool above lets you filter patterns by category and explore each one’s failure conditions.
How to Use
Use the pattern browser to filter by category and timeframe. Each pattern entry includes identification rules, the minimum context required, and the failure condition that tells you the pattern has resolved against you.
| Filter | Purpose | Example |
|---|---|---|
| Pattern Category | Narrow to reversal, continuation, or indecision | Reversal |
| Timeframe | Focus on daily (most reliable) or intraday | Daily |
| Volume Filter | Surface only patterns where signal candle had above-average volume | On |
The reliability tier shown for each pattern (single, two-candle, three-candle) corresponds directly to its historical accuracy range. Use this as a confidence weighting when sizing positions.
Pattern Identification Rules
Candlestick patterns fall into three reliability tiers based on how much information they encode:
Single-candle patterns (doji, hammer, shooting star): ~55-60% accuracy
Two-candle patterns (engulfing, harami, piercing line): ~63-65% accuracy
Three-candle patterns (morning star, evening star, three white soldiers): ~68-72% accuracy
Reversal Patterns signal an impending change in trend direction and require prior trend context to be valid.
The hammer requires three specific conditions: lower wick at least 2x body length, body closing in the upper 25% of the candle’s total range, and placement after a minimum 3-candle downtrend. Without all three, it is a generic candle, not a hammer. The bullish engulfing requires the second candle’s body to fully contain the first — open-to-close engulfs open-to-close, wicks excluded. A green candle that only covers the prior wick does not qualify. The morning star is a three-candle sequence: a large red candle, a small-body or doji candle that gaps below the first candle’s close, then a large green candle closing above the midpoint of the first candle. Both gap conditions must be present for full validity.
Continuation Patterns signal that the prevailing trend will resume after a brief pause.
The three white soldiers pattern consists of three consecutive green candles where each closes above the prior candle’s close and opens within the prior candle’s body. The formation loses credibility if any candle opens at or above the prior close (a gap-up entry introduces exhaustion risk). On trending large-cap ETFs like SPY, this pattern resolves higher 65-70% of the time when accompanied by above-average volume on all three candles.
Indecision Patterns reflect equilibrium between buyers and sellers — their directional meaning is entirely dependent on context.
A doji (open and close within 5% of each other) in the middle of a consolidation range is noise. The same doji at a well-defined support level after 5 consecutive red candles, with volume expanding, carries a 65%+ bullish resolution rate according to Bulkowski’s dataset of 4.7M candles. Context transforms indecision into signal.
Example Calculations
Scenario 1: Bullish Engulfing at Support (AAPL)
AAPL forms a bullish engulfing at the $170 support level after a 6-day decline from $185.
- Day 1 (red): Open $174.00, close $171.00 — body = $3.00
- Day 2 (green): Open $170.00 (below Day 1 close), close $175.50 (above Day 1 open) — body = $5.50, fully engulfs Day 1
- Volume: Day 2 volume is 1.8x the 20-day average
- Entry: $175.50 on Day 3 open
- Stop: $168.50 (below the engulfing candle low)
- Target: $185.00 (prior swing high)
- Risk: $7.00/share | Reward: $9.50/share | R:R = 1.35:1
- Position size ($30,000 account, 1% risk = $300): 300 / 7 = 42 shares
The engulfing body, confirmed by 1.8x volume at a known support level, puts this trade in the higher-reliability tier. The stop placement below the entire two-candle formation accounts for the pattern failing.
Scenario 2: Evening Star at Resistance (SPY)
SPY reaches a prior high at $510 with an evening star formation after a 9-day rally.
- Day 1: Large green candle, close $509.50
- Day 2: Small-body doji gapping to $510.50, closing at $510.20 — gaps above Day 1 close
- Day 3: Large red candle opening at $509.00, closing at $505.00 — closes below Day 1’s midpoint ($505.75 would be the exact midpoint; $505.00 satisfies the condition)
- RSI at Day 2: 73 (above 70 threshold)
- Expected resolution: ~72% bearish per Bulkowski’s data for evening stars at overbought RSI
This setup is among the highest-probability bearish signals in the pattern library. The overbought RSI combined with prior resistance and the three-candle sequence compound the edge.
Scenario 3: Doji Failure at Resistance
A doji appears on the TSLA daily chart at the $260 resistance level. Without volume confirmation (volume is 0.7x the 20-day average) and with the broader market in a strong uptrend, this pattern has ~51-54% predictive accuracy. A trader relying on this doji alone as a reversal signal has near-coin-flip odds. The correct action is to wait for a confirming candle or additional confluence before committing capital.
When to Use This Guide
- Trade entry screening: Before entering any technically-based trade, verify whether the entry candle or recent candle sequence matches a high-reliability pattern with valid context
- Stop placement: Pattern failure conditions define where the setup is invalidated — use the pattern’s invalidation level as your stop location
- Timeframe selection: Use this guide to understand why a pattern visible on a 5-minute chart deserves far less confidence than the same pattern on a daily chart
- Volume filtering: Apply the volume filter to eliminate low-conviction signals where the pattern appears but institutional participation is absent
- Position sizing: Assign larger position sizes to three-candle patterns at key levels with volume confirmation; reduce size for single-candle signals
The 5 Highest-Probability Patterns to Master First
Rather than memorizing 20+ patterns, traders who master these five — in order of reliability — build a complete practical toolkit:
- Bullish/Bearish Engulfing — Two-candle, ~63-65% accuracy, clear mechanical rules, applicable across all markets
- Morning Star / Evening Star — Three-candle, ~68-72% at RSI extremes, strongest edge of all common patterns per Bulkowski
- Hammer / Shooting Star — Single-candle, ~55-60% but improves sharply with support/resistance confluence
- Three White Soldiers / Three Black Crows — Three-candle continuation, ~65-70% with volume, best used in trending markets
- Doji at Confluence — Single-candle, ~51-54% standalone but ~65%+ at support with volume; trains pattern context awareness
Related Tools
- Fibonacci Retracement Calculator — Identify the support and resistance levels that give candlestick patterns their context; a hammer at a 61.8% retracement level carries more weight than one in open space
- Pivot Point Calculator — Calculate daily, weekly, and monthly pivot levels where reversal patterns appear most frequently
- Risk/Reward Calculator — Once a pattern confirms your entry, calculate whether the trade meets your minimum R:R threshold before sizing
- Stop Loss Calculator — Place stops at pattern invalidation levels rather than arbitrary percentages
Frequently Asked Questions
What is the most reliable candlestick pattern?
Three-candle patterns (morning star, evening star) are the most reliable, reaching ~68-72% accuracy when volume confirms the signal, per Bulkowski’s backtests of 4.7M candles. The evening star at RSI above 70 reaches ~72% bearish reversal rate. Single-candle patterns like the doji hover around 51-54% accuracy on their own.
How do you identify a valid bullish engulfing pattern?
A valid bullish engulfing requires the second candle’s body (open to close) to fully engulf the first candle’s body — wicks do not count. The second candle must open below the prior close and close above the prior open. It carries most weight after a downtrend of at least 3 consecutive declining candles.
Do candlestick patterns work on intraday charts?
Candlestick patterns are less reliable on intraday charts than on daily charts. Daily engulfing patterns on large-cap stocks resolve correctly about 63% of the time; intraday versions underperform this benchmark due to increased noise and thinner context.
What is the hammer candlestick rule?
A valid hammer has a lower wick at least 2x the body length, a body closing in the upper 25% of the candle’s total range, and appears after a downtrend of at least 3 declining candles. The body color (red or green) is secondary — the wick-to-body ratio and context are what define the pattern.
How does volume affect candlestick pattern reliability?
Volume is a reliability multiplier. A doji on its own has 51-54% accuracy; the same doji at a key support level with above-average volume reaches 65%+. Above-average volume on the signal candle confirms that the price action reflects genuine institutional participation rather than low-liquidity noise.
