Reversal Patterns

Dark Cloud Cover. The Dark Cloud Cover is a two-day bearish pattern found at the end of an upturn or at the top of a congested trading area. The first day of the pattern is a strong white real body. The second day's price opens higher than any of the previous day's trading range.

Piercing Pattern. The Piercing Pattern is a bottom reversal. It is a two candle pattern at the end of a declining market. The first day real body is black. The second day is a long white body. The white day opens sharply lower, under the trading range of the previous day. The price comes up to where it closes above the 50% level of the black body.

Hammer and Hanging Man. Hammer and Hanging-man are candlesticks with long lower shadows, little or no upper shadow, and small real bodies. The bodies are at the top of the trading session. This pattern at the bottom of the down-trend is called a Hammer. This pattern at the top of an up trend is a hanging man.

Morning Star. The Morning Star is a bottom reversal signal. Like the morning star (Mercury) it foretells the sunrise, or the rising prices. The pattern is a three day signal.

Evening Star. The Evening Star is the exact opposite of the morning star. The evening star, the planet Venus, occurs just before the darkness sets in. The evening star is found at the end of the uptrend.

Shooting Star. The shooting star, or inverted hammer, in an up trend sends a warning that the top is near. It got its name by looking like a shooting star. At the bottom of a trend, the shooting star is considered a bullish signal.

Three White Soldiers. Three consecutive long white days with higher closes each day.

Each day opens within the previous body.

Three Black Crows.

Two Crows, Bearish. This pattern is considered a sell signal and is more significant at heavy resistance levels. The first black candle's real body gaps above the preceding white body. The second, larger black candle opens above the preceding candles open, and closes below its close.

Two Crows, Bullish. This pattern is considered a buy signal and is more significant at strong support levels. The first white candle's real body gaps below the preceding white body. The second, larger white candle opens below the preceding candles open, and closes above its close.

Tasuki Gap, Bearish. The black body of the bearish Tasuki Gap opens within the preceding white body. The two smaller bodies gap above the larger white body.

Tasuki Gap, Bullish. The white body of the bullish Tasuki Gap opens within the preceding black body. The two smaller bodies gap below the larger black body.

Tweezer Top. Tweezer tops have equal highs at a new high. This pattern can consist of any type of candlesticks.

Tweezer Bottom. Tweezer bottoms have equal lows at market bottoms. The type of candlesticks that make up a tweezer bottom does not matter.

Harami. This formation is considered Bearish following an up trend and a Bullish when following a down trend. Most often the classic Harami consists of an opposing real body color, as illustrated at left. However, the two bodies can be the same.

Counter Attack, Bearish. A counter attack line formation occurs in an up trend when two opposite color candles have the same close.

Counter Attack, Bullish.  A counter attack line formation occurs in a down trend when two opposite color candles have the same close.