Candlestick Patterns Quiz for Traders

A bull candle forms when the closing price exceeds the opening price, indicating buyers controlled the session. The body reflects net upward movement, while minimal lower shadows confirm buying pressure. In percentage terms, if price opens at 100 and closes at 110, that 10 percent increase signals positive momentum. Traders interpret consecutive bull candles as trend confirmation and potential continuation.

A bullish engulfing pattern occurs when a large green candle fully covers the previous red candle’s body. If the first candle drops 5 percent and the next rises 8 percent, overwhelming prior losses, buying strength is confirmed. The second candle must open below and close above the prior body. This structure reflects momentum shift from sellers to buyers.

A bearish engulfing pattern forms when a red candle completely covers the previous green body. If price rises 6 percent on day one but falls 9 percent the next session, sellers dominate. The second candle opens higher but closes significantly lower. This transition demonstrates supply overpowering demand, signaling potential downward reversal after bullish movement.

A piercing line appears after a downtrend when a bullish candle opens below the prior low and closes above its midpoint. If the previous candle drops 10 points, and the next recovers over 50 percent of that range, momentum shifts. Closing above midpoint mathematically signals strength recovery, suggesting buyers are regaining control after sustained selling pressure.

Dark Cloud Cover forms after an uptrend when a bearish candle opens above prior high but closes below midpoint of the previous bullish body. If prior gain was 12 points and current loss retraces over 6 points, bearish momentum builds. Closing below midpoint confirms weakening demand. This pattern indicates probability of short term downside reversal.

A bull marubozu has no upper or lower shadows, meaning price opened at session low and closed at session high. If price moves from 50 to 60 without retracement, buyers controlled entire range. Absence of wicks mathematically confirms uninterrupted demand. This strong body suggests high conviction and continuation probability in upward trend.

A bear marubozu opens at the session high and closes at the low without shadows. If price declines from 80 to 70 with no upward retracement, sellers dominate completely. The full body range represents total session loss. Lack of wicks statistically increases probability of continuation, as no counter pressure from buyers appeared during trading.

A hammer forms after decline with a small body and long lower shadow. If price drops 15 points intraday but recovers 12 before closing, rejection of lower levels is evident. The lower wick shows failed selling pressure. Closing near opening confirms buyers absorbed supply. This pattern often precedes upward reversal in oversold conditions.

Hanging man forms at uptrend peak with long lower shadow and small body. If price falls sharply intraday but recovers near open, selling pressure begins emerging. Though close remains near high, intraday weakness reveals vulnerability. When followed by bearish confirmation, probability of reversal rises due to reduced buying momentum and increased supply.

Shooting star forms at top of uptrend with long upper wick and small body near low. If price rises 12 points but closes only 2 above open, buying strength weakens significantly. The upper shadow quantifies rejection of higher levels. This imbalance often precedes downward correction when next candle confirms selling continuation.

Morning star consists of bearish candle, small indecision candle, then strong bullish candle. If first candle drops 8 percent, second stabilizes, and third recovers more than half prior loss, sentiment shifts. Gap formation strengthens signal mathematically. This three phase structure represents transition from distribution to accumulation and bullish reversal probability.

Evening star mirrors morning star but signals bearish reversal. After strong bullish candle, a small indecision candle forms, followed by large bearish candle retracing over 50 percent of first body. If prior gain was 10 points and current loss exceeds 6 points, downside momentum dominates. This confirms distribution phase and likely downward continuation.

A doji forms when open and close prices are nearly equal, reflecting equilibrium. If intraday range spans 15 points but closing difference is under 1 point, neither buyers nor sellers dominate. This statistical balance signals indecision. When appearing after strong trend, probability of reversal increases, especially if confirmed by subsequent directional candle.

A bear candle forms when the closing price is lower than the opening price, showing seller dominance. For example, if price opens at 120 and closes at 110, the 10 point decline represents downward pressure. The candle body measures net loss, while upper shadows show failed buying attempts. Consecutive bearish candles often confirm short term downward momentum and trend weakness.

An inverted hammer appears after a downtrend with long upper shadow and small body. If price rallies 10 points intraday but closes near open, buyers attempted reversal. Although sellers pushed back, upward testing signals weakening bearish control. Statistical probability of reversal increases when confirmation candle closes above inverted hammer high in following session.