CANDLESTICK PATTERNS – COMPLETE BREAKDOWN & EXPLANATION

📊 CANDLESTICK PATTERNS – COMPLETE BREAKDOWN & EXPLANATION

The chart you shared is a comprehensive visual guide to candlestick patterns, divided into two major categories:

Continuation Patterns

Reversal Patterns

These patterns help traders understand market psychology, momentum, and potential future price direction.

Let’s break down everything shown in the chart in detail 👇

🔵 CONTINUATION PATTERNS

Continuation patterns suggest that the current trend is likely to continue after a brief pause or consolidation.

🟢 BULLISH CONTINUATION PATTERNS

These appear during an uptrend and suggest the uptrend will resume.

1️⃣ Rising Three Methods

Structure:

1 strong bullish candle

Followed by 3 small bearish candles (consolidation)

Ends with another strong bullish candle breaking higher

Psychology:
Buyers remain in control. Sellers try to push price down but lack strength.

Signal:
Continuation of the uptrend.

2️⃣ Three White Soldiers

Structure:

Three strong bullish candles in a row

Each closes higher than the previous

Small or no lower wicks

Psychology:
Aggressive buying pressure. Strong trend confirmation.

Signal:
Strong bullish continuation.

3️⃣ Bullish Side-by-Side

Structure:

Strong bullish candle

Followed by small candles moving sideways

Breakout upward

Psychology:
Market pauses but buyers are still dominant.

Signal:
Uptrend continuation.

🔴 BEARISH CONTINUATION PATTERNS

These appear during a downtrend and suggest the downtrend will continue.

4️⃣ Falling Three Methods

Structure:

1 strong bearish candle

3 small bullish candles (weak pullback)

1 strong bearish candle breaking lower

Psychology:
Temporary relief rally, but sellers remain dominant.

Signal:
Continuation of the downtrend.

5️⃣ Three Black Crows

Structure:

Three strong bearish candles

Each closes lower than the previous

Small upper wicks

Psychology:
Strong selling pressure.

Signal:
Bearish continuation.

6️⃣ Bearish Side-by-Side

Structure:

Strong bearish candle

Small sideways candles

Breakdown downward

Psychology:
Sellers pausing before pushing price lower.

Signal:
Downtrend continuation.

🔁 REVERSAL PATTERNS

Reversal patterns suggest the trend may change direction.

🟢 BULLISH REVERSAL PATTERNS

These appear at the bottom of a downtrend and suggest price may rise.

7️⃣ Morning Star

Structure:

Large bearish candle

Small indecision candle (gap or small body)

Strong bullish candle closing deep into first candle

Psychology:
Sellers lose strength. Buyers step in aggressively.

Signal:
Downtrend reversing into uptrend.

8️⃣ Hammer

Structure:

Small body at top

Long lower wick

Appears after a decline

Psychology:
Sellers pushed price down, but buyers rejected lower prices.

Signal:
Potential bullish reversal.

9️⃣ Bullish Engulfing

Structure:

Small bearish candle

Large bullish candle fully engulfs previous candle

Psychology:
Buyers completely overpower sellers.

Signal:
Strong reversal to upside.

🔟 Bullish Harami

Structure:

Large bearish candle

Small bullish candle inside previous candle body

Psychology:
Selling pressure is weakening.

Signal:
Possible trend reversal upward.

🔴 BEARISH REVERSAL PATTERNS

These appear at the top of an uptrend and suggest price may fall.

1️⃣1️⃣ Evening Star

Structure:

Large bullish candle

Small indecision candle

Large bearish candle closing deep into first candle

Psychology:
Buyers lose momentum. Sellers take control.

Signal:
Uptrend reversing into downtrend.

1️⃣2️⃣ Shooting Star

Structure:

Small body at bottom

Long upper wick

Appears after an uptrend

Psychology:
Buyers pushed higher but were rejected.

Signal:
Potential bearish reversal.

1️⃣3️⃣ Bearish Engulfing

Structure:

Small bullish candle

Large bearish candle fully engulfs previous candle

Psychology:
Sellers overwhelm buyers.

Signal:
Strong bearish reversal.

1️⃣4️⃣ Bearish Harami

Structure:

Large bullish candle

Small bearish candle inside previous body

Psychology:
Buying pressure weakens.

Signal:
Possible reversal downward.

🧠 What This Chart Is Teaching

The chart is essentially teaching:

✔ Market Psychology

Candlesticks represent a battle between buyers and sellers.

✔ Trend Continuation vs Trend Reversal

Continuation = trend pauses, then continues

Reversal = trend direction changes

✔ Pattern Confirmation

Patterns work best:

At support/resistance

With volume confirmation

With trend context

On higher timeframes (like weekly)

⚠ Important Notes

No pattern is 100% accurate.

Always wait for confirmation.

Combine with:

Support & resistance

Trendlines

Moving averages

Volume

RSI / MACD

📈 Why This Matters (Especially for Crypto & BTC)

On volatile markets like BTC:

Continuation patterns help you ride trends.

Reversal patterns help you catch bottoms/tops early.

Weekly timeframe patterns are especially powerful.

🔥 Final Summary

This chart is a complete visual cheat sheet of:

• 6 Continuation patterns
• 8 Reversal patterns
• Bullish and Bearish versions
• Market psychology behind each formation

Mastering these patterns allows you to:

Understand price action deeply
Trade without relying only on indicators
Improve entry & exit timing

Candlestick patterns need to be one of your trading arsenal's most effective weapons. We can determine the direction of the market using several candlestick patterns. All timeframes exhibit these patterns, but the daily candlestick patterns seem to be the most reliable.

Once you recognize these patterns, you may be ready for your next move and use other tools to join the market, including the previously discussed MA approach and flag patterns (see attached charts). This chart is just for information

Never stop learning

I would also love to know your charts and views in the comment section.

Thank you