Master bullish and bearish candlestick patterns: hammer, engulfing, doji, morning star, shooting star, and more. Learn how to read candle anatomy and spot every pattern instantly using Diplyzer.
Candlestick charts date back to 18th-century Japanese rice traders and remain the default way to visualize price today. Each candle packs four data points — open, high, low, close — into a single shape, and the shapes that repeat across market history carry real information about who's in control: buyers or sellers.
A candlestick pattern is a specific arrangement of one or more candles that has historically preceded a shift in price direction or a continuation of the existing trend. Unlike chart patterns, which take weeks to form, candlestick patterns can complete in a single session — making them the fastest read on shifting momentum available on a chart.
Every candle is built from the same four prices:
Body: the thick rectangle between the open and close. A bullish (green/white) candle closes above where it opened. A bearish (red/black) candle closes below where it opened.
Wicks (or shadows): the thin lines above and below the body, marking the high and low of the period. Long wicks show rejection — price traveled there and was pushed back.
Key principle: a candle's body tells you who won the session. Its wicks tell you how hard the fight was.
Bullish candlestick patterns signal that buyers are stepping in and a move higher may follow. They matter most when they appear after a decline, at support, or at the bottom of an oversold move.
A hammer has a small body near the top of the candle's range and a long lower wick — at least twice the length of the body — with little to no upper wick.
What it means: sellers pushed price sharply lower during the session, but buyers reclaimed almost all of the loss by the close. That rejection of lower prices is the signal.
Confirmation: a hammer is only meaningful after a downtrend, ideally at a known support level. Wait for the next candle to close above the hammer's high before acting.
Ask Diplyzer:
"Scan for stocks that formed a hammer candlestick at support in the last 3 sessions. Filter for confirmation on the following candle and rank by volume."
A two-candle pattern: a small bearish candle is followed by a larger bullish candle whose body completely "engulfs" the prior candle's body.
What it means: sellers were in control, then buyers overwhelmed them entirely within a single session — a sharp transfer of control.
Quality markers:
A three-candle bottoming pattern: a long bearish candle, followed by a small-bodied candle that gaps or drifts lower (indecision), followed by a strong bullish candle that closes well into the first candle's body.
What it means: the downtrend loses momentum (candle two), then buyers take firm control (candle three). It's one of the most statistically reliable bottoming patterns because it requires three separate confirmations, not one.
Ask Diplyzer:
"Find any stocks in the S&P 500 that completed a morning star pattern on the daily chart this week. Show me the close of the third candle relative to the first candle's midpoint."
A two-candle pattern similar to bullish engulfing, but the second candle only closes above the midpoint of the first candle's body rather than fully engulfing it. A slightly weaker signal than bullish engulfing, but still meaningful at support.
Three consecutive long-bodied bullish candles, each opening within the prior candle's body and closing near its own high. A strong continuation or bottoming signal — but be cautious of chasing it after an extended run, since three strong closes in a row can also mark short-term exhaustion.
Bearish candlestick patterns are the mirror image — they flag that sellers are taking control, typically after an advance, at resistance, or following an overbought move.
The bearish counterpart to the hammer: a small body near the bottom of the range with a long upper wick and little to no lower wick.
What it means: buyers pushed price sharply higher during the session, but sellers took it back by the close. Most significant after an uptrend, at resistance, or after a gap up.
Ask Diplyzer:
"Scan Nasdaq 100 Tech stocks ($10B+ market cap) for shooting star candlesticks forming at resistance today. Filter for stocks up more than 10% over the prior 5 sessions."
Structurally identical to a hammer — small body, long lower wick — but it appears after an uptrend rather than a downtrend, which flips its meaning to bearish. Context is everything: the same candle shape is bullish at a bottom and bearish at a top.
The inverse of bullish engulfing: a small bullish candle followed by a larger bearish candle that fully engulfs it. Signals that sellers have overwhelmed buyers after an advance.
Quality markers:
The bearish mirror of the morning star: a long bullish candle, a small indecision candle that gaps or drifts higher, then a strong bearish candle closing well into the first candle's body. A classic three-candle topping signal.
Ask Diplyzer:
"Did [stock] form an evening star pattern at its recent high? Confirm the third candle's close relative to the first candle and check volume on the reversal day."
The bearish counterpart to the piercing line: a bearish candle opens above the prior bullish candle's close, then closes below the midpoint of its body. A softer version of bearish engulfing.
Three consecutive long-bodied bearish candles, each opening within the prior candle's body and closing near its own low — the mirror of three white soldiers, and a strong distribution signal after an extended advance.
A doji forms when the open and close are virtually identical, leaving almost no body — just wicks on either side. It represents a stalemate between buyers and sellers.
A doji is not inherently bullish or bearish — its meaning depends entirely on context:
Variants:
A hammer, engulfing pattern, or doji in isolation is not a trade signal — it's a clue. The pattern's reliability depends on three things layered on top of it:
| Validation Criterion | What to Check |
|---|---|
| Location | Is it forming at a real support/resistance level, not in the middle of a range? |
| Prior trend | Reversal patterns need an actual trend to reverse — no trend, no signal |
| Volume | Does volume confirm the candle, or is it a low-conviction print? |
| Confirmation | Did the next candle close in the expected direction? |
| Multi-timeframe | Does the pattern align on both the daily and weekly chart? |
The same hammer shape that marks a bottom in one context is meaningless noise in another. Pattern recognition without context is the single biggest reason candlestick trading fails for beginners.
Trading the pattern, not the context: a textbook hammer in the middle of a range, with no trend behind it, is not a signal.
Skipping confirmation: acting on a pattern before the next candle confirms it is the most common way to get caught in a false signal.
Ignoring volume: a bullish engulfing candle on below-average volume carries far less weight than one on a volume surge.
Overweighting single candles: three-candle patterns (morning star, evening star, three soldiers/crows) are statistically more reliable than single-candle patterns (hammer, shooting star, doji) precisely because they require more confirmation.
Diplyzer's pattern engine scans candlestick formations across every stock, timeframe, and asset class in seconds — something that would take hours to do manually across a watchlist of any real size.
"Scan S&P 500 stocks with positive free cash flow ($10B+ market cap) for bullish engulfing or hammer candlesticks confirmed in the last 2 sessions, forming at a support level. Rank by volume expansion."
"What candlestick pattern is [stock] forming right now on the daily chart? Tell me whether it needs confirmation and what the next candle would need to do to validate it."
"Find every stock in the Nasdaq 100 showing a bearish reversal candlestick pattern at a 20-day high today."
| Pattern | Bias | Candles | Best Context |
|---|---|---|---|
| Hammer | Bullish | 1 | After a downtrend, at support |
| Bullish Engulfing | Bullish | 2 | After a decline, on rising volume |
| Morning Star | Bullish | 3 | At a multi-week or multi-month low |
| Piercing Line | Bullish | 2 | At support, softer than engulfing |
| Three White Soldiers | Bullish | 3 | Early trend continuation or bottom |
| Shooting Star | Bearish | 1 | After an uptrend, at resistance |
| Hanging Man | Bearish | 1 | After an uptrend (same shape as hammer) |
| Bearish Engulfing | Bearish | 2 | At resistance, on rising volume |
| Evening Star | Bearish | 3 | At a multi-week or multi-month high |
| Dark Cloud Cover | Bearish | 2 | At resistance, softer than engulfing |
| Three Black Crows | Bearish | 3 | Early trend continuation or top |
| Doji | Neutral | 1 | Meaning depends entirely on trend context |
Diplyzer identifies and validates candlestick patterns in real time, across any stock, timeframe, or asset class — with the trend, volume, and support/resistance context needed to tell a real signal from noise.
"Give me a complete candlestick analysis of [stock]. Identify any pattern forming on the daily and weekly charts, tell me if it needs confirmation, and give me the key level that would validate or invalidate it."