CandleStick Charts
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Candlestick Shapes
Pattern Recognition
Trend Recognition
Support & Resistance

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CandleStick Shapes

In and of themselves, candlestick shapes can tell you a great deal about the stock or market in general, although it is these shapes that combine to make patterns -- and THAT is the real art.

Note that these are just the basic shapes, and just like bar charts, may represent varying time periods. One stick could equate to the movement in a week, a day, or within minutes.

Starting simple (remembering the upper shadow, real body and lower shadows) we present a doji.

Doji

A doji is a shape wherein the opening and closing prices are the same and the shape has no noticable "real body." It signals market indecision except when it appears as a Gravestone Doji, below.

Gravestone Doji

This particular type of doji, in which the opening and closing prices are at the low of the price range, signals a top in a bull run and a bottom in a bear phase.

Hammer

The same format as the Hanging Man. It warns of a potential bottom reversal in a falling market. As with any single candlestick, confirmation is required. The Bullish Hammer formation shows the price goes much lower than the open then closes near the opening price. This fact reduces the confidence of the bears. Ideally, a white real body Hammer with a higher open the following day could be a bullish signal for the days ahead.

Inverted Hammer

A small real body at the lower end of a long upper shadow. It warns of a potential bottom reversal in a falling market.

Hanging Man

A small real body at the top of a long lower shadow. It warns of a potential top reversal in a rising market. The Hanging Man formation indicates that the price goes much lower than the open then closes near the opening price. This might mean that many longs have positions that they are attempting to sell. Ideally, a red real body Hanging Man with a lower open the following day could be a bearish signal for the days ahead.

Marubozus

Marubozus do not have upper or lower shadows and the high and low are equal to the open or close. A White Marubozu indicates that buyers controlled the price action from the first trade to the last trade. A red Marubozu indicates that sellers controlled the price action from the first trade to the last trade.

Shaven Head

A real body, white or red, and no upper shadow.

Shaven Bottoms

A real body, white or red, and no lower shadow

Shooting Stars

A small real body at the lower end of a long upper shadow. It warns of a potential top reversal in a rising market.

Spinning Tops

A small real body and long shadows. They imply equilibrium between buyers and sellers. They can be red or white.

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