Home / Price Action / Ch 4: 10 Candlestick Patterns for Price Action
Ch 4 · Price Action
10 Candlestick Patterns for Price Action
Doji, Marubozu, Harami, Engulfing, Piercing/Dark Cloud, Hammer/Hanging Man, Inverted Hammer/Shooting Star, Morning/Evening Star, Three Soldiers/Crows, Hikkake. Cross-linked with the TA candlestick chapter for the pure-pattern view.
📖 20 min
This chapter overlaps with the Technical Analysis Ch 5 candlestick chapter. The TA chapter covers the pure pattern vocabulary. This chapter covers the same patterns as a price action reader — where the emphasis is not on pattern names but on the buyer/seller intent behind them.
4.1 Doji — the pause bar
Open and close are essentially the same price. The battle ended in a draw. As a price action reader, the doji itself is neutral — the meaning comes from where it appears.
Doji at a trend extreme — indecision after a run of directional bars. Warning of trend pause or reversal
Doji in a range — meaningless. Ranges are made of indecision
Dragonfly doji (long lower wick only) at support — buyer rejection confirmed. Strong bullish setup with next-bar confirmation
Full body, no wicks. From the first tick to the last, one side dominated. Bull marubozu = every price during the bar was above the open. Bear marubozu = the opposite.
Bull marubozu after consolidation → breakout initiation, continuation likely
Bear marubozu at resistance → sharp rejection, downside continuation likely
A marubozu followed by a same-direction marubozu is one of the strongest continuation signals in the vocabulary
4.3 Harami — the inside-body pattern
Two-bar pattern: a large bar followed by a small bar whose entire body is contained inside the first bar's body (wicks can extend beyond). Signals a sudden slowdown after a directional push. Harami means "pregnant" in Japanese — the small bar is the "child" inside the "mother" bar.
Bullish harami — big red bar followed by a small green bar inside. At support after a downtrend → possible reversal
Bearish harami — mirror at resistance
Confirmation required — never trade a harami without the next bar confirming (close in the reversal direction)
Weaker than a full engulfing, but often signals the same turning point one bar earlier
4.4 Engulfing — the reversal-of-conviction
Two-bar pattern: a small bar followed by a large opposite-colour bar whose body completely engulfs the first bar's body. The market flipped from one side's control to the other's within a single bar.
Bullish engulfing at support after downtrend — decisive shift to buyer control
Bearish engulfing at resistance after uptrend — decisive shift to seller control
Engulf ratio matters — the engulfing bar should be at least 1.5× the size of the engulfed bar for a strong signal
Stop = low of the engulfing bar (bullish) or high of the engulfing bar (bearish)
💡 Engulfing is the most tradeable candlestick pattern for beginners
Two clear bars, unambiguous shape, well-defined stop, works across timeframes. If you had to pick one candlestick pattern to specialise in for the first year of price action trading, this is the one.
4.5 Piercing Line / Dark Cloud Cover
Similar to engulfing but less complete. Two-bar reversal pattern where the second bar opens with a gap in the trend direction, but then reverses to close beyond the midpoint of the first bar's body — without fully engulfing.
Piercing line (bullish) — red bar → red bar opens with gap-down but closes above the red bar's midpoint
Dark cloud cover (bearish) — green bar → green bar opens with gap-up but closes below the green bar's midpoint
Halfway between harami (weak) and engulfing (strong) in reliability
4.6 Hammer / Hanging Man
Same shape: small body near the top, long lower wick (2× body or more), minimal upper wick. Different name based on context.
Hammer — this shape at the bottom of a downtrend. Buyer rejection of lower prices. Bullish
Hanging man — same shape at the top of an uptrend. Warning of hidden selling pressure. Bearish (weaker signal than hammer; always requires next-bar confirmation)
Colour of the body matters less than the shape. Green body is marginally more bullish for the hammer
4.7 Inverted Hammer / Shooting Star
Mirror of hammer/hanging man. Small body near the bottom, long upper wick, minimal lower wick.
Inverted hammer — this shape at the bottom of a downtrend. Buyers pushed up and got faded, but the fact that they tried is bullish. Weaker than a regular hammer; requires strong confirmation
Shooting star — same shape at the top of an uptrend. Buyer failure at resistance. Bearish, well-tested pattern
4.8 Morning Star / Evening Star
Three-bar reversal patterns. The middle bar is the "star" — a small-bodied bar with a gap on both sides (in the pure form) that isolates it from the surrounding bars.
Morning star (bullish) — long red bar → small bar with gap down → long green bar closing inside the first red bar's body
Evening star (bearish) — long green bar → small bar with gap up → long red bar closing inside the first green bar's body
Strongest form — with true gaps on both sides of the middle bar. In Indian markets, intraday charts rarely gap, so the "star" is often just a small-body inside the trend bar's range
Highest-reliability three-bar reversal when at a level with volume support
4.9 Three White Soldiers / Three Black Crows
Not a reversal pattern in the classical sense — a trend initiation pattern.
Three white soldiers — three consecutive strong green bars, each opening within (or above) the previous bar's body, each closing near its high. After a base or downtrend, this signals a new bullish trend is starting
Three black crows — mirror at a top or after a base. Three consecutive strong red bars marking a new bearish trend
Trade — this pattern is typically the confirmation to hold or enter, not the entry itself. If you already own the position from an earlier setup, this pattern is a hold signal
4.10 Hikkake — the failed pattern trap
A false-breakout pattern that traps traders who anticipated a move. The classic setup: an inside bar forms; the next bar breaks the inside bar's high (triggering "buy" orders); then a subsequent bar closes below the inside bar's low. The false breakout traps buyers, then reverses.
Bullish hikkake — inside bar → break below inside bar's low (trap) → reversal above the inside bar's high
Bearish hikkake — mirror
Entry — on break of the inside bar's opposite extreme (i.e., the direction opposite to the trap)
Reliability — genuinely high on Indian intraday when the inside bar sits at a level
✅ From failed moves come fast moves
Every hikkake is a small tribute to a larger truth: the market's failed attempts telegraph its real intent. When a breakout fails immediately and reverses, the follow-through in the opposite direction is often stronger than a "clean" pattern would produce. Learn to recognise the failure, and half of the pattern-recognition game is won.
4.11 On the chart
AdvancedOverlap with the TA path — when to use which
The same patterns appear in the TA candlestick chapter. The difference in framing:
**TA chapter:** patterns as objective signals — measurable, statistical, part of a systematic toolkit
**PA chapter (this one):** patterns as narrative — the intent behind the bars, the buyer/seller struggle they encode
Practical rule: if you're building a mechanical strategy, the TA framing gives you rules that can be coded. If you're trading discretionary, the PA framing gives you the "why" that lets you judge when to override the rule.
Both matter. Read whichever fits your current problem.