When a news headline moves a stock, the first question is whether the price reaction is a real shift or a short-lived spike. Candle patterns help you read that reaction on the chart.
A pattern is a visual clue, not a standalone buy or sell signal. Confirm with trend, volume, and indicators before acting.
Bullish reversal patterns
- Hammer: small body at the top with a long lower wick — sellers pushed price down, buyers reclaimed control.
- Morning Star: three-candle reversal from downtrend — bearish candle, indecision, then bullish close.
- Bullish Engulfing: bullish candle fully engulfs the prior bearish body — momentum shift.
Bearish reversal patterns
- Shooting Star: small body at the bottom with a long upper wick — buyers failed to hold gains.
- Evening Star: mirror of Morning Star at a top — bearish follow-through after indecision.
- Bearish Engulfing: bearish candle engulfs the prior bullish body.
Continuation or indecision
- Doji: open and close nearly equal — market equilibrium; watch the next candle for direction.
- Spinning Top: small body with wicks on both sides — indecision, often inside a range.
We always ask: where is the pattern on the chart? A Hammer at support with rising volume is very different from the same shape in the middle of a range.