Candlestick patterns Cheat Sheet

• Marubozu is a candle­stick with no upper and lower shadow
• A Bullish Marubozu indicates that there is huge buying interest and the stock is now Bullish
• Can appear anywhere in the chart irresp­ective of the prior trend; the trading implic­ation remains the same
• Buying Price: Close Price of Marubozu
• Stop Loss: Start Price of Marubozu

• A spinning top has a small real body; Upper and lower shadows are almost equal in length
• The colour of the spinning top does not matter
• Spinning tops convey indecision in the market with both bulls and bears being in equal control

• A paper umbrella is charac­terized by a long lower shadow with a small upper body
• If the paper umbrella appears at the bottom end of a downward rally, it is called the ‘Hammer’
• The prior trend for the hammer should be a downtrend
• The colour of the hammer does not matter
• Strong Bullish signal
• Buying Price: Close Price
• Stop Loss: Low Price

• A paper umbrella is charac­terized by a long lower shadow with a small upper body
• If the paper umbrella appears at the top end of an uptrend rally, it is called the ‘Hanging Man’
• The prior trend of the hanging man should be an uptrend
• The colour of the hanging man does not matter
• Strong Bearish signal
• Buying Price: Close Price
• Stop Loss: High Price

• The shooting star looks just like an inverted paper umbrella
• It has a long upper shadow where the shadow’s length is at least twice the length of the real body
• The body’s colour does not matter, but the pattern is slightly more reliable if the real body is red
• The prior trend should be bullish
• Bearish pattern

• The bullish engulfing pattern is a two candle­stick pattern which appears at the bottom of the downtrend
• The prior trend should be a downtrend
• The first candle should be a red candle reconf­irming the bearis­hness in the market
• The second candle should be green, long enough to engulf the red candle

• Opposite of Bullish Engulfing

• The bullish harami is a bullish pattern appearing at the bottom end of the chart
• The market is in a downtrend pushing the prices lower, giving the bears absolute control over the markets
• First candle: a red candle with a new low is formed, reinfo­rcing the bear’s position in the market
• Second candle: the market opens at a price higher than the previous day’s close. On seeing a high opening price, the bears panic, as they would have otherwise expected a lower opening price.

• Opposite of Bullish Harami

• A bullish candle­stick pattern
• The market is in a downtrend placing the bears in absolute control
• First candle: the market makes a new low and forms a long red candle
• Second candle: The occurrence of a doji/s­pinning sets in a bit of restle­ssness within the bears, as they would have otherwise expected another down day
• Third candle: the market­/stock opens with a gap, followed by a blue candle that manages to close above first red candle­'s opening

• Opposite of Morning Star