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REVERSAL PATTERNS – Part I Bullish Engulfing Pattern



Bearish Engulfing Pattern



Dark‐cloud Cover



Piercing Line



Morning Star



Resistance Resistance Support



Support



Support



vol



vol



— Bullish signal  Strong signal reversal — Bottom in downtrend



— Bearish signal  Strong signal reversal — Top in uptrend



Shooting Star Candle



Inverted Hammer Candle



Green or red



Bullish confirmation



Bearish confirmation — Bearish signal  Potential signal reversal — Top in uptrend — Potential weakness — Low volume  pause — Avg and high volume  potential reversal — After the candle must be a  bearish confirmation candle



vol



— Bearish signal  Strong signal reversal — Top in uptrend



Evening Doji Star



vol



red or green



— Bullish signal  Strong signal reversal — Bottom in downtrend — Green candle must penetrate at least 50% in red one



— Bullish signal  Strong signal reversal — Bottom in downtrend — An ideal pattern has a gap  between their candles



Morning doji star



Evening Star Red or green



Resistance



Resistance



Support



Green or red



As a traffic light — Bullish signal  Potential signal reversal — Bottom in downtrend — Potential weakness — Low volume  pause — Avg and high volume  potential reversal — After the candle must be a bullish confirmation candle



— Bearish signal  Strong signal reversal — Top in uptrend — An ideal pattern has a gap  between their candles



— Bullish signal  Strong signal reversal — Bottom in downtrend — An ideal pattern has a gap  between their candles



— Bearish signal  Strong signal reversal — Top in uptrend — An ideal pattern has a gap  between their candles



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REVERSAL PATTERNS – Part II Hammer Candle



Hanging Man Candle



Northern Doji Candle



Long‐Legged Doji Candle



Gravestone Doji Candle



More significant in uptrend



Resistance green or red



red or green



red or green long upper and  lower wicks



green or red



long upper wick



Support RSI



— 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  than twice the spread



Bullish Harami Cross



overbought



open/close low



— Bearish signal  Potential signal reversal — Top in uptrend — Potential weakness — Low and avg volume  pause — High volume  potential reversal — The lower wick should be more  than twice the spread — Need a bearish confirmation



— Bearish signal  Warnings of potential signal reversal — Top in uptrend (more  important) — Indecision in the market — More important:  overbought or after a tall green candle



— Bearish signal  Warnings of  potential signal reversal — Top in uptrend — Confused/indecision market — Low volume (anomaly) insiders move the market — High volume  insiders enter in the market (up or downtrend)



— Bearish signal  Warnings of potential signal reversal — Top in uptrend — This candle doesn’t implies a  large move lower — This candle helps to change the trend from bullish to  neutral



Bearish Harami Pattern



Bullish Harami Pattern



Doji in a box range



Dragonfly Doji Candle



green or red green or red



red or green green or red



open/close high long low wick



— 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  additional bullish signal,  reinforcing the possible reversal



— Bearish signal  Less powerfull reversal signals — Top in uptrend — The market is “losing its breath” — It’s important to observe  additional bullish signal,  reinforcing the possible reversal



— Bullish signal  Less powerfull reversal signals — Bottom in downtrend — The market is “losing its breath” — It’s important to observe  additional bearish signal,  reinforcing the possible reversal



— No bullish or bearish signal — In a trading range — The market in a box is undecided, so doji have little forecasting implications if they are in a trading range environment since there is no trend to reverse



— Bullish signal  Warnings of  potential signal reversal — Bottom in downtrend — We should look at what  happened before the signal  (additional confirmation)



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REVERSAL PATTERNS – Part III Bearish Harami Cross



Tweezers Top Harami Cross Highs match or near to match



Hanging Man



Shooting Star



Highs match or near to match



Highs match or near to match



Dark‐cloud Cover 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 regular harami pattern — It’s important to observe  additional bearish signal,  reinforcing the possible reversal



Upside‐gap Two Crows It opens over the previous open  and closes under the previous close



Gap between opens



— Bearish signal  Less powerfull reversal signals — Top in uptrend — It’s important to observe  additional bearish signal,  reinforcing the possible reversal



— — — — —



The second candle is not a small real  body, but it formed a dark‐cloud



Bearish signal  Potential signal reversal, but less powerfull cover, adding a more negative impact Top in uptrend Need a bearish confirmation 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 



Bearish Belt‐hold



Tweezers Bottom



Bullish Belt‐hold Hammer



Opens at or near, the high



Closes at, or near, the low



— Bearish signal  Less powerfull reversal signals — Top in uptrend — If the next candle closes above a bearish belt‐hold line, this should mean a  resumption of the uptrend



Opens at, or near, the low



It open under the prior day’s low, but it could open under the prior day’s close



Closes at, or near, the high



— Bullish signal  Less powerfull reversal signals — Bottom in downtrend — If the next candle closes under the bullish belt‐hold line, this implies a renewal of  selling pressure



Belt‐hold lines are more important if: — they confirm resistance or other belt‐hold lines, or — they have not appeared for a while



Piercing Line



Lows match or near to match



Lows match or near to match



Bullish signal  Potential signal reversal, but less powerfull Bottom in downtrend Need a bullish confirmation 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  — — — —



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REVERSAL PATTERNS – Part IV Three Black Crows



Three Advancing White Soldiers



Advance Block Pattern



Stalled Pattern



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



Ideally, each of the openings should also be within or near the prior session’s green real body



— Bullish signal  Less powerfull reversal signals — Bottom in downtrend — If it appears at a low price area or after a  period of stable prices  sign of strength



Small real bodies or long upper shadows



— Bearish signal  Warnings of  potential signal pause  — Top in uptrend (mature trend) — The rally could be losing force — It should be used to liquidate or protect longs, but usually not to short



— Bearish signal  Warnings of  potential signal pause — Top in uptrend or bottom in  downtrend — Trend temporarily exhausted after this formation — It should be used to liquidate or protect longs, but usually not to  short



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CONTINUATION PATTERNS – Part I Rising Window



Falling Window Top of  window



Window



Sell on bounces



Support Resistance



Buy on dips



Window



Bottom of  window



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



— Bearish signal — In a downtrend — A falling window should be a zone of resistance on pullbacks. If pullback closes over  the top of the window, the prior downtrend is voided — If you are aggressively bearish, you can consider selling near to the bottom of the 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 In an uptrend The two candles of the tasuki should be about the same size A close under the support would turn the trend down



— — — —



Bearish signal In a downtrend The two candles of the tasuki should be about the same size 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 White Lines



Downgap Side‐by‐side White Lines



This congestion band  stabilized a steep decline Rising window Falling window Falling window



Rising window



Consolidation with a  series of small real bodies



Short covering — Bullish signal — In an uptrend, after a consolidation area (CA) — The CA is a group of small real bodies after a strong green session  relieving overbought condition



Rising Three Methods



— Bearish signal — In a downtrend, after a consolidation area (CA) — The CA is a group of small real bodies after a strong red session  relieving oversold condition



Falling Three Methods



Close above the first session of the pattern



— 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



Bullish Separating Lines



Bearish Separating Lines



Open below the previous close session



Open above the previous close session



vol



— Bullish signal — In an uptrend — After a rising gap, both green candles have similar‐sized



— Bearish signal — In a downtrend — After a falling gap, both red candles have similar‐sized — If the second red candle closes over the resistance, it negates the bearish outlook of the pattern



Close below the first session of the pattern



A bullish belt‐hold ↓ same open as the previous open session



— Bearish signal — In a downtrend or finishing an uptrend — 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 red candle’s high‐low range



— Bullish signal — In an uptrend or finishing a downtrend



vol



A bearish belt‐hold ↓ same open as the previous open session



— Bearish signal — In a downtrend or finishing an uptrend



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