The school · candlestick patterns

Candlestick patterns, explained

A candlestick pattern is a named shape made by one, two or three candles — a hammer, a doji, an engulfing pair, a morning star. Each records something specific about the fight between buyers and sellers in those bars: where price went, where it was pushed back, and where it closed. A pattern is not a forecast. The same shape means different things in different places, so location matters more than the shape: a hammer after a long fall into a level is a different record from a hammer in the middle of a range. The honest way to use a pattern is to define it precisely before you look, wait for the confirming close, and know the price that would prove it wrong. This page lists every pattern the syllabus teaches, with the definition each lesson uses.

Do candlestick patterns work?

Some named patterns have been tested by independent researchers and many have not; results depend heavily on how the pattern is defined, where it appears and what counts as success. The school teaches how to check a pattern yourself instead of trusting its name — define it in writing first, record every instance, and count the outcomes the same way every time.

Which candlestick patterns should a beginner learn first?

Start with what a single candle records — open, high, low and close, the body and the wicks — and the difference between a price being touched and a candle closing beyond it. Then the single-candle shapes (hammer, shooting star), the doji family, and two-candle reversals such as engulfing pairs. Three-candle patterns and continuations come after.

Module · free

What a candle is saying

Open, high, low, close — and why touching a price is not closing beyond it The module

Candle: One fixed slice of time drawn as four numbers: the first price, the highest, the lowest and the last. Also called a bar. Change the slice and the bar changes; the market does not.
OHLC: Open, high, low, close — the four prices every candle records. Every other feature of a bar, from its colour to its wicks, is calculated from these four.
Timeframe: The length of time one candle covers — five minutes, one hour, one day. Any statement about closes, levels or trends is incomplete until it names the timeframe.
Body: The filled block between the open and the close. It measures net progress: where price started against where it actually finished.
Wick: The thin line out to the high or the low. Prices that were genuinely traded inside the period and then left behind before it ended. Also called a shadow or tail.
Range: The high minus the low of a bar: the total distance travelled, wicks included. Range is the journey; the body is the destination.
Body as a share of range: How much of the distance a bar covered it actually kept. A high share means it moved and held the move; a low share means it moved and gave it back.
ATR: Average True Range: the average size of the last n bars, commonly fourteen, including any gap from the previous close. The yardstick that turns "a big bar" into a checkable number.
Rejection: Shorthand for a long wick: the market traded at those prices during the period and did not stay there by the close. It records what happened, not who did it or why.
Liquidity: How many orders are resting near the current price, ready to trade. Thin liquidity means a modest order can move price a long way — which is how long wicks get printed.
Spread: The gap between the bid (the price to sell at) and the ask (the price to buy at). It widens in thin conditions, and a wide spread can print extremes few people traded at.
Stop order: An instruction to buy or sell automatically once a set price trades. Clusters of them tend to sit just beyond obvious prices, and triggering them can print a sharp wick.
Close: The last traded price of the period. The one number that has to survive the whole period to exist, and the only one that cannot be taken back once the bar ends.
Close versus touch: Trading above a price and finishing above it are two different events. Everything in the product that says "broke" or "held" means the second one, on a named timeframe.
Unfinished bar: A candle whose period has not ended. Its apparent body runs from the open to the last traded price, which is still moving — so it has no close yet.

Module

Single-candle signals

The same shape means opposite things in different places The module

Hammer: A small body near the top of the range with a long lower wick, printed after a decline. It records prices below that were traded and not kept. A close below its low retires the reading.
Hanging man: The hammer's exact shape printed after a rise, read the opposite way. The proof that a candle's name comes from its location, not its proportions.
Inverted hammer: A small body near the bottom of the range with a long upper wick, printed after a decline: a push up that was tried and not held.
Shooting star: The inverted hammer's shape printed after a rise. Prices above were traded and refused by the close. A close above its high retires the reading.
Long wick: A wick long against its own body and against the ATR. The general case behind hammers and stars: a stretch of prices visited and handed back, whether or not it earns a name.
Marubozu: A bar that is all body — it opened at one extreme and closed at the other. A record of one-way progress in that period, and not a forecast of the next.
Belt hold: A bar that opens at its extreme and runs the other way, with a wick only at the closing end. The bullish one opens on its low after a decline.
Spinning top: A small body in the middle of the range, wicks on both sides. Both directions were tried and neither was kept — a record of balance, and very common in quiet hours.
Location over shape: A candle's reading comes from where it sits — after which move, at which level — before it comes from its proportions. Without a location, a named candle is a described candle.
Prior move: The bars that led into a candle. The only difference between a hammer and a hanging man, and between an inverted hammer and a shooting star.
Confirming close: Waiting for the next bar to close in the direction a candle reading implies. Slower, and still a record: it says the next period agreed, not that the one after will.
The candle's own extreme: Where a single-candle reading stops being true: a close beyond the high or low the candle itself refused. It names the price at which the shape was wrong.

Module

The doji family

An hour that ended where it began — a record of balance, not a warning The module

Doji: A bar whose close is at or very near its open. The period finished where it started, and everything it travelled was handed back.
Doji cutoff: The body size, as a share of the range, below which a charting package calls a bar a doji. It is a convention and it differs between packages, so the same bar can be named differently.
Indecision as a record: "Indecision" describes the finished period accurately: neither direction was kept. It says nothing about the next period, and hearing it as a warning turns a record into a forecast.
Long-legged doji: A doji with long wicks on both sides: a long way travelled in both directions, and no progress kept.
Dragonfly doji: Open, close and high at one price, with a long lower wick — the limit of a hammer. A close below its low retires the reading.
Gravestone doji: Open, close and low at one price, with a long upper wick — the limit of a shooting star. A close above its high retires the reading.
Doji as a change: A doji carries a reading only when it differs from what came before — after bars that kept their range, or at a level after a run. Inside a quiet range it is just more of the same.
Doji star: A doji whose body sits beyond the previous bar's body. In the classic definition there is a gap between them; on continuously traded markets there usually is not.
Evening doji star: A strong rising bar, a doji star above it, then a falling bar closing below the middle of the first body. The doji is the pause; the third bar is the event. A close above the star's high refutes the reading.
Abandoned baby: A doji separated from the bars either side by true gaps, wicks included. It needs two real gaps, so it is rare on stocks and nearly absent intraday on continuously traded markets.
Bullish tri-star: Three dojis in a row after a decline, the middle one gapped below the other two. Three balanced periods in one place — a record of three hours, not a forecast of the fourth.
Continuous-market open: On markets that trade around the clock, each bar opens where the last one closed, so the gaps many classic candle definitions require rarely appear except across the weekend.

Module

Two-candle reversals

How far the second body reaches back into the first The module

Bullish engulfing: A falling bar followed by a rising bar whose body covers the first body entirely. One period took back all of the previous one's progress and more.
Bearish engulfing: A rising bar followed by a falling bar whose body covers the first body entirely. The mirror of the bullish one, read at the top of a rise.
Bodies, not wicks: Two-candle patterns compare bodies — where each period opened and closed. The wicks of the first bar do not have to be covered for a pair to count as engulfing.
How far the second body reaches: The question behind most two-candle names: inside the first body (harami), past its midpoint (piercing line, dark cloud cover) or beyond its open (engulfing).
Harami: A large body followed by a small one that fits inside it. It records contraction — the move stopped extending for a period — not a reversal.
Body midpoint: Halfway between a bar's open and close. The line a piercing line or dark cloud cover has to close beyond.
Piercing line: After a fall, a rising bar that closes above the midpoint of the falling body but not above its open. The middle rung between harami and engulfing.
Dark cloud cover: After a rise, a falling bar that closes below the midpoint of the rising body but not below its open. The mirror of the piercing line.
The pair's far extreme: Where a two-candle reading stops being true: a close beyond the lower low of both bars for a bullish pair, or beyond the higher high for a bearish one.
Tweezers: Two neighbouring bars with the same low (tweezer bottom) or the same high (tweezer top). The smallest level there is: two tests in a row, matching within a tick or two.
Matching low: Two falling bars after a decline that close at the same price. A close-based version of the tweezer bottom. Often taught as a reversal, measured more often as a continuation; a close beneath the shared close retires any reading of it as a floor.
Kicker: A bar followed by one that opens beyond the first bar's open, in the opposite direction, and never trades back into the gap. It needs a real gap, so it barely forms intraday on continuously traded markets.
Counterattack line: Two opposite bars closing at the same price, the second having opened far from it. Like the kicker, it depends on a gap between one close and the next open.

Module

Three-candle patterns

The third bar is the verdict on the first two The module

Three-candle pattern: A named sequence of three bars. Most are a two-candle idea plus a third bar that either confirms it or refuses it — the name is only earned once that third bar has closed.
Confirmation bar: The bar whose close completes a pattern's definition. Until it closes, the pattern does not exist; after it closes, price has usually moved away from where the idea formed.
Morning star: A long falling bar, a small-bodied star below it, then a rising bar closing well into the first body — past its midpoint. Records a decline that paused and was largely taken back.
Evening star: The mirror of the morning star: a long rising bar, a small star above it, then a falling bar closing past the first body's midpoint.
Star: A small-bodied bar that sits beyond the body of a long bar before it. It records a period that made little net progress — a pause, not a direction.
Body gap: One bar's body sitting entirely beyond the previous body while the wicks overlap. The usual stand-in for a true gap on markets that trade almost around the clock.
Three white soldiers: Three rising bars with large bodies, each opening inside the previous body and closing near its high. "White" is the old print colour for a rising bar — orange in this product.
Three black crows: Three falling bars with large bodies, each opening inside the previous body and closing near its low. Records three periods in a row that finished near their worst price.
Identical three crows: Three black crows where each bar opens at, or almost at, the previous close. On an hourly chart of a near-continuous market, that is the normal case rather than a rare one.
Overextension: A move that has already travelled several times its usual distance. The same strong bars read as a start after a decline and as a crowded late stage after a long run.
Three inside up: A harami followed by a bar that closes above the first bar — above its open in some definitions, above its high in others. The mirror after an advance is three inside down.
Three outside up: A bullish engulfing pair followed by a third bar that closes higher than the second. The mirror after an advance is three outside down.
Stick sandwich: Two falling bars with a rising bar between them, the two falling bars closing at the same price. Rare; told as one close being defended twice, though tests find the fall more often continues.

Module

Continuation patterns and gaps

A pause inside a move, a hole in the chart, and a break that did not last The module

Continuation pattern: A shape read as a move pausing and resuming: a counter-move that stayed within limits. It describes containment, and a close beyond the limit ends the description.
Rising three methods: A long rising bar, a few small bars inside its range, then a rising bar that closes above the first bar's high. Falling three methods is the mirror.
Mat hold: The three-methods skeleton with a gap after the first bar and a pullback that holds higher in its range. Records a counter-move that gave back less.
Gap: Empty space between two bars: the second bar's range sits entirely beyond the first, so nothing traded in between. On gold and FX, found mostly at the weekly open.
Window: The Japanese name for a gap. A rising window opens upward, a falling window downward; traders watch whether the empty space behaves as a level afterwards.
Weekly open gap: The gap between the last price before the weekend and the first price after it. On a market that trades almost around the clock, it is where most true gaps come from.
Gap fill: Later bars trading back into a gap's empty space. Fully filled when price reaches its far edge; partly filled when it enters and stops short.
Tasuki gap: Two bars gapping in one direction, then an opposite bar that closes inside the gap without filling it. Upside and downside versions mirror each other.
Two black gapping: A gap down followed by two falling bars, the second closing lower and neither reaching back into the gap. Records a gap met with more selling instead of a fill.
Inside bar: A bar whose whole range, wicks included, sits within the previous bar's range. A period that went nowhere the one before it had not already been.
Hikkake: An inside bar, a close beyond one side of it, then within a few bars a close beyond the other side. Records a break that did not last.
Three line strike: Three bars in one direction, then one long bar the other way that closes beyond the start of the first. Sources disagree which version is called bullish.
Breakaway: Five bars: a long bar, a gap, smaller bars extending the move, then a long opposite bar closing back inside the gap. Rare, and rarer still on markets that seldom gap.

Module

Which patterns hold up

How to check a pattern instead of trusting its name The module

Pattern context: Where a pattern appeared: at a level or in open space, inside a sequence or a range, in a quiet or an active session. The definition ignores it; the reading depends on it.
Location: Whether a pattern formed at a level where finished bars have reacted before, or in open space. The same shape records different things in the two places.
Something to reverse: A shape read as a move being refused. It needs a real move to refuse — a sequence on a stated timeframe — or it is answering a question the chart never asked.
Pattern in a range: A reversal shape formed in the middle of a trading range. It meets the definition and records almost nothing, because there was no move for it to reverse.
Anticipation: Counting a pattern while its last bar is still forming. Nearer in price, and sometimes a pattern that never existed, because the bar closed differently.
Confirmation: Counting a pattern only once its defining bar has closed. Certain that the shape happened, and paid for in the distance price has usually moved by then.
Never-completed pattern: A pattern that was forming and then did not close as one. It rarely gets remembered, and a count that leaves it out makes the completed ones look better than they are.
Definition drift: Two sources using one pattern name for different rules — gap or body gap, open or high. Their counts are of different things, so their numbers cannot be compared.
Base rate: What an ordinary bar in the same place is followed by, with no pattern at all. A pattern has to be measured against it, not against zero.
Data mining: Testing many patterns or rules on the same data and keeping the best. Some will look impressive by chance alone, and will not repeat on new data.
Outcome rule: The single fixed rule, written before the next bar, that scores every tally row the same way. Chosen after the result, it is not a rule but a verdict.
Pattern tally: A journal record of every instance of one pattern marked in advance, with its definition, context, anticipation or confirmation, and the result by a fixed rule.

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