The Important Candlestick Reversal Patterns To Keep An Eye On In 2023

The phrase “Candlestick Reversal Patterns” is somewhat a mistermed one. These words may lead you to think about the sudden ending of a previous trend and contrarily reversing it to a new trend. But these sorts of reversals happen rarely.

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Understanding the term “Trend Reversal”

The candlestick reversal patterns mostly give hints of a trend reversal well before it will happen. But it doesn’t mean that the trend will always reverse either way. The trend reversal doesn’t happen abruptly, it happens in stages like a motorbike shifting its gears.

For instance, you just imagine yourself riding on a motorbike. You suddenly apply the brakes on your motorbike and its brake lights get illuminated. Now at that moment, the red brake light of your motorbike will be considered the reversal signal for the bikes following you.

Now as you applied the brakes it doesn’t mean that you are going to take a u-turn or move back always. Rather it will depend on your decision whether you want to turn right, left, or further going to move forward after that slight pause.

Stopping for a while to decide or show your next move is known as a “Trend Reversal Signal“. Same in the candlestick reversal patterns, when they appear, the technical analysts should take them as cautionary signals for their next trade moves. These patterns imply the threats of the prior trend to get reversed. But always remember these patterns provide a breathing pause to the prior trend and they might let the previous trend carry on after that or the market can move sideways as well. So, be prepared for that also.

Significance of Candlestick Trend Reversal Patterns

As mentioned earlier, when we talk about trend reversal we probably don’t mean a typical reversal but the change in a trend. All the prudence is in considering the candlestick reversal patterns as trend-changing patterns.

One of the major significance of these candlestick patterns is that they provide warning signals to the traders well before the time of the transformation of the market psychology so that they could align their trades accordingly.

Kinds of Candlestick Reversal Patterns

Candlestick reversal patterns are categorized under these two heads:

  • Top Reversal Patterns
  • Bottom Reversal Patterns

As the name implies, “Top Reversal Patterns” indicate the transformation of a bullish trend to bearish one. Whereas, the “Bottom Reversal Patterns” denotes the reversal of the bearish trend to bullish.

Some of the most Important Candlestick Reversal Patterns

Enlisted below are the famous candlestick reversal patterns:

  1. Umbrella Lines
  2. Hammer
    The Hammer Candlestick
  3. Dark Cloud Cover
  4. Piercing Pattern
  5. Hanging Man
  6. The Engulfing Pattern
  7. Stars Candlestick Patterns
  8. The Abandoned Baby
  9. The Evening Star
  10. The Morning Star
  11. The Shooting Star
  12. The Inverted Hammer
  13. The Morning Doji Star
  14. The Evening Doji Star
  15. The Harami Pattern
  16. The Bullish Harami
  17. The Bearish Harami
  18. Harami Cross
  19. Belt-Hold Lines
  20. Tweezer Top and Bottom Candlestick Patterns
  21. Three Black Crows
  22. Upside-Gap Two Crows
  23. Tower Tops
  24. Tower Bottoms
  25. Dumpling Tops & Frypan Bottoms
  26. Three Advancing White Soldiers
  27. Three Mountains & Three Rivers
  28. Counter Attack Lines
  29. Doji (Including some of the Spinning Tops)
  30. The Northern Doji
  31. The Rickshaw Man / Long-Legged Doji
  32. The Gravestone Doji
  33. The Dragonfly Doji
  34. The Tri-Star
  35. Tasuki
  36. Windows
  37. High-Price and Low-Price Gapping Plays
  38. Rising and Falling Three Methods
  39. Gapping Side-By-Side White Lines
  40. Separating Lines

Note: We will thoroughly reveal the magic of all these candlestick reversal patterns in our upcoming articles.

The Bottom Line

The recognition of the candlestick reversal patterns is the core subject of learning the whole technical knowledge about trading. Thus, Awareness of these reversal patterns is necessary to be a successful trader. The whole prudence lies in it for sure.

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