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Pattern Recognition
Trend Recognition
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Pattern Recognition

Now comes the harder part, identifying patterns in the charts. These simple patterns provide crucial glimpses into potential moves, trends, reversals, support and resistance levels that can make or break the trade.

To start with, we'll provide smaller samples, and later some larger scale, more in-depth patterns.


Positive-Negative Pattern

A negative stick closing lower than the previous day's close, yet has a close higher than the open. Shows pending strength in a downtrend. Potential reversal pattern.

Negative-Positive Pattern

A positive stick, as the close is higher than the previous day's close, but the closing price is still lower than that day's open. Shows weakness in an uptrend, similar to a doji; a potential reversal pattern.

Bearish Engulfing Pattern

The 2nd day opens above the close of the 1st day, but quickly sells off to finally close below the open of the 1st day. This dampens the spirits of the longs and brings into question the bull trend which prompts selling in the coming days. A bearish trend reversal.

Bullish Engulfing Pattern

A long white body that engulfs a small black real body in a down trend. The white body's opening price is below the closing price of the previous black body. A bullish trend reversal which Prompts more buying in the coming days.

Dark Cloud Cover

In an uptrend a long white body is followed by a black body that opens higher than the previous days upper shadow, but then closes more than half way down the white body. A bearish trend reversal, making longs quickly question their strategy.

Piercing Pattern

This is considered to be the opposite of the Dark Cloud Cover. In a down trend a long black body is followed by a white body that opens lower than the past days lower shadow, it then closes more than half way up the black body. A bullish trend reversal.

Top Star

A Spinning Top of any colour that gaps away from a long real body in an uptrend. Gaps on candles are different to bar charts. Candle gaps work on the opening and closing price. Stars indicate a slowing of the current trend.

Bottom Star

A Hammer of either colour that gaps away from a long real body in a down trend. Gaps on candles are different than bar charts, as candle gaps work on the opening and closing price. Stars indicate a slowing of the current trend.

Doji Star Top (bearish)

	In an up trend a Doji gaps away from a long real white body. An important reversal signal that is usually confirmed by a black downwards body in the next session. The uptrend is in full force with a strong 1st day. All confidence built up
by the bulls from the 1st day is crushed when the 2nd day's gap up closes near its open.

Doji Star Bottom (bullish)

	A Doji gaps away from a long real black body in a down trend. Generally regarded as an important reversal signal that is usually confirmed by a white upward body in the next session. The down- trend is in full force with a strong 1st day.
Confidence built up by the bears from the 1st day is crushed when the 2nd day's gap down closes near its open. Short covering will quickly appear if the next day opens higher.

Evening Star (Bearish pattern)

A major top reversal formed by three candles. A Star top is followed by a black body that closes well below the first white bars closing price. The 2nd day gaps higher, but trades in a small range. The bearishness of this indecision is confirmed by the lower close of the 3rd day. Look for lower prices.

Morning Star

A major bottom reversal formed by three candles. A Star bottom is followed by a white body that closes well above the first black bars closing price. The 2nd day gaps lower, but trades in a small range. The bullishness of this indecision is confirmed by the higher close of the 3rd day. Look for higher prices.

Evening Doji Star (bearish)

	The same pattern as the Evening Star but the middle candle is a Doji. This pattern is considered to be even more bearish than the Evening Star. The bearishness of the doji star created on the 1st two days is confirmed with the 3rd day. If the penetration of
the 3rd day is more than 50 % then this formation has a much better chance to work well for the trader.

Morning Doji Star (bullish)

	A similar pattern as the Morning Star, but the middle candle is a Doji. This pattern is considered to be even more bullish than the Morning Star. The bullishness of the doji star created on the 1st two days is confirmed with the 3rd day. If the penetration of
the 3rd day is more than 50%  this formation has a much better chance to work well for the trader.

Bullish Belt-Hold

	A bullish Belt-Hold is a tall white candlestick which opens at the lowest price of the session. It is also called a Shaven Bottom. A significant gap down occurs. The remaining price action for the day occurs to the upside. This triggers a buying
spree. Shorts cover their positions due to concern over this price action.

Bearish Belt-Hold

A bearish Belt- Hold is a long red candlestick which opens on its high. Also called a "Shaven Head." A significant gap up occurs. The remaining price action for the day occurs to the downside. This triggers shorts to cover and positions to be sold. Concern over this price action reinforces the selling.

Bearish Harami

	Harami, meaning "pregnant." A long 1st candle with high volume in the existing uptrend brings complacency to the bulls. The next day trades in a small range within the previous day's real body. Light volume on the 2nd day should give rise to concern by the bulls of an
impending change of trend. Look for lower prices over the coming days, especially if the next day provides confirmation of a trend change by closing lower.

Bearish Harami Cross

The 2nd day's price range does not pierce the previous day's range and closes about where it opened. Volume on the 2nd day is low which indicates that traders are lacking enough information to decide whether to go long or short.

Bullish Harami

	A long 1st day with high volume in the existing downtrend brings complacency to the bears. The next day trades in a small range within the previous day's real body. Light volume on the 2nd day should give rise to concern by the bears of an impending change of trend. Look for
higher prices over the coming days, especially if the next day provides confirmation of a trend change by closing higher.

Bullish Harami Cross

The 2nd day's price range does not pierce the previous day's range and closes about where it opened. Volume on the 2nd day is low which indicates that traders are lacking enough information to decide whether to go long or short.

Bearish 3 Black Crows

Pervasive profit taking takes its toll on those who remain long. This enduces a snowball selling effect in the coming days.

Bullish 3 white soldiers

Three consecutive long white days with higher closes each day. Each day opens within the previous body. This formation represent powerful unabated buying. Longs should be prepared for a rest before proceeding on to higher prices.

Bearish Tri-star

All three days are doji days. 2nd day gaps above the 1st and 3rd days. This formation is very rare. The huge amount of indecision created by these three dojis must not be ignored. This level of indecision strongly suggests that the trend is about to change.

Bullish Tri-star

All three days are doji days. 2nd day gaps below the 1st and 3rd days. Again, this is rare. Massive indecision created by these three dojis must not be ignored. This level of indecision strongly suggests that the trend is about to change.

Bullish Tasuki Gap

1st two days are white days with an up gap between the 1st and 2nd day. 3rd day is a black day which opens within the body of the 2nd day and closes within the gap between the 1st and 2nd days. The gap up on the 2nd day does not get filled by the 3rd day. This suggests that the uptrend will continue.

Bearish Abandoned Baby

The gap up on the second day encourages the bulls,but the close on the second day is nearly the same as the open on the second day showing indecision.  Watch for additional downside price action in the next few days.

Bullish Abandoned Baby

The gap down on the second day encourages the bears, however the close on the second day is nearly the same as the open on the second day. Watch for upside price action in the next few days.

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