Single Candlestick Patterns: Guide With Examples, And Backtest

Ready to decode the market with single candlestick patterns? These indicators can alert you to potential price movements with just a glance. In this article, we dissect each pattern’s significance and show you how to apply single candlesticks for strategic trading. Expect to learn to recognize and interpret single candlestick patterns to improve your trading effectively.

Key Takeaways

• Single candlestick patterns are individual candlesticks that provide insights into market sentiment, potential trend reversals, or continuations, with patterns such as the Doji, Hammer, and Shooting Star indicating bullish or bearish market signals.
• The significance of single candlestick patterns lies in their ability to signal potential market reversals, though they require additional confirmation from other technical indicators or candlestick patterns for reliable trading signals.
• Despite offering early warnings of trend reversals and serving as simple visual market dynamics representations, single candlestick patterns can also produce ‘noise,’ lead to cognitive biases, and may mislead traders due to gaps in charts; thus, they should be used cautiously and in combination with other analysis tools.
• We have quantified all candlestick patterns into quantified trading rules and backtested them. We also have the code for Amibroker and Tradestation. You will find it in our candlestick course.

What are Single Candlestick Patterns?

Single candlestick patterns consist of just one single candle. Many patterns have two or more candles, but a single candlestick pattern has one – hence the name.

A visual example of a single candlestick pattern is the neutral doji:

Candlestick pattern captures can impart critical knowledge about the prevailing sentiment in the market and its energy and suggest whether there might be forthcoming shifts or persistence in trends. They are small yet significantly informative indications comparable to subtle body language indicators within the marketplace. Among these notable single candlestick configurations are:

• Doji
• Hammer
• Shooting Star
• Spinning Top
• Engulfing Pattern
• Harami Pattern

Grasping these formations enables traders to refine their trading strategies.

A bullish indicator known as the Hammer materializes amidst a price decline, signaling that it may have reached its nadir with prospective upside on the horizon—a suggestion that prices could begin an ascent shortly thereafter.

Conversely, occurring during an upward trend is The Hanging Man. This bearish pattern intimates an upcoming dominance by sellers over buyers within the market’s dynamics. These singularly formed candlestick signs embody complex trading environments translated into simple visual cues for easier understanding.

What Does a Single Candlestick Pattern mean?

The meaning and significance of a single candlestick pattern depends on the prior price action and the type of pattern.

It’s a beacon illuminating the path for traders, highlighting imminent trends ahead. A bullish single candlestick pattern typically forecasts an increase in price, while its bearish counterpart suggests that prices may soon fall.

Consider the Hammer pattern. It’s indicative that the market might be establishing a reversal, evidenced by its pronounced lower shadow demonstrating how buyers overcame sellers despite their attempt to drive prices down.

On the flip side, there’s the Hanging Man pattern: this formation appears during an uptrend and warns that sell-off momentum is gaining traction — with again a long lower shadow revealing selling pressure within the session. These patterns might equip traders with foresight into impending market movements allowing them to strategize accordingly.

What are the Best Single Candlestick Patterns?

The best single candlestick pattern is the Hanging Man. The second best is the Hammer. These two are pretty similar, though.

We know this because we have backtested all candlestick patterns to gather statistics and facts, not just anecdotal evidence. We backtested using S&P 500, thus we have covered the stock market, not other assets.

Like any tool, certain single candlestick patterns are more potent than others. The best single candlestick patterns are those that provide reliable and high-probability trading signals, but they also need to be relatively frequent. Some examples of these profitable and frequent patterns include:

• The Doji candlestick pattern signals market indecision and is considered one of the most well-known single candle patterns.
• The Hammer candlestick pattern indicates a potential reversal in the market.
• The Shooting Star candlestick pattern suggests a potential reversal in an uptrend.

By learning and recognizing these patterns, you might add a tool to your trading arsenal.

The beauty of these patterns is that they can help traders cut through the noise of the market and focus on what matters most: to quantify trading rules and backtest them. It’s important to note, however, that the profitability of these patterns isn’t guaranteed and often requires confirmation from other technical analysis tools or using filters.

Are Single Candlestick Pattern Bullish or Bearish?

Single candlestick patterns can be bullish and bearish depending on the circumstances. It depends mostly on the price action before the pattern.

Let’s explain:

Traders often inquire about whether a single candlestick pattern signifies bullish or bearish trends. Indeed, such patterns can represent either trend depending on their form, position in the market’s progressions, and overall context of prevailing market movements.

Take the Hammer. It is a bullish reversal candlestick pattern that appears when prices are declining, a sign that possibly the lowest point has been reached and an upswing might follow.

Conversely, at times there’s evidence like the Hanging Man – which serves as a bearish reversal signal appearing after an uptrend concludes. This indicates potential dominance by sellers over buyers in that phase of trading activity.

Thus lies the adaptability of single candlestick patterns: they serve as reliable mirrors to shifting marketplace sentiments.

How many single candlestick patterns are there?

There are 9 single candlestick patterns.

However, there are no established and official rules, so other traders might disagree and argue there are more.

What are the Most Common Types Of Single Candlestick Patterns?

The most common single candlestick pattern is the Hammer and Hanging Man. However, single candlestick patterns are generally frequent because they only involve one candle or bar, while candlestick patterns consisting of multiple candlesticks depend on more variables to create a pattern. Thus, single candlestick patterns are inherently more frequent than others.

Let’s look at some of the single candlestick patterns:

1. Doji Candle Pattern

The Doji candlestick pattern emerges as a symbol of hesitation and uncertainty. This particular pattern manifests during sessions where there’s little difference between the opening and closing prices of a security, resulting in its depiction as either an orthodox cross or one that is inverted, also taking on the appearance of a plus sign.

Because it sits in neutral territory reflecting market indecisiveness, this candle pattern demands verification through additional technical analysis tools or supportive candlestick formations to predict Price action.

Key attributes associated with the Doji include:

• A close resemblance between its opening and closing levels
• The possibility for extended upper and lower shadows
• Occurrence at various junctures within an existing trend
• Indication towards imminent changes or continuity in market direction

Placing reliance solely on this singular indicator when making trade choices without considering supplemental factors would be imprudent.

Acting much like a ceasefire signal amid ongoing combat among traders—the buyers against sellers—a doji conveys respite from their relentless push-and-pull dynamic.

2. Shooting Star Candlestick Pattern

The Shooting Star candlestick pattern serves as an omen of possible impending declines. It can be recognized by its modest real body situated close to the day’s lowest point, accompanied by a substantial upper shadow, and typically emerges following an uptrend to indicate a potential bearish reversal.

The appearance of this shooting star candle acts akin to firing a signal flare into the heavens, alerting traders about an approaching downturn in the market.

3. Long-Legged Doji Candlestick Pattern

Reembling a tightrope walker delicately poised between the forces of bulls and bears, the Long-Legged Doji candlestick pattern is characterized by its extensive upper and lower shadows. Opening and closing prices are almost the same, indicating a state of hesitation and potential market stabilization.

This pattern suggests that the market is at an intersection, wavering uncertainly about its next move in either direction.

4. Marubozu Candle Pattern

The Marubozu candle pattern stands as an unrelenting and formidable force, marked by a sizable body lacking any shadows or wicks. When it’s bearish, it looks frightening.

It demonstrates that the session’s opening and closing prices are at the utmost limits of its price range. This pattern suggests a robust commitment to the trend’s direction, like a powerful breeze steering the market along its course.

5. Spinning Top Candlestick Pattern

The Spinning Top candlestick pattern elegantly pirouettes in the ongoing tussle between buyers and sellers, symbolizing a potential pause or indecision within an existing trend. While it doesn’t always predict a trend reversal, this top candlestick pattern commonly appears as a component of more complex formations in technical analysis. It’s a very common pattern.

6. Doji Star Candle Pattern

This particular pattern emerges when it is paired with a Doji and serves to signal a potential bullish or bearish reversal following an interval of market uncertainty.

7. Inverted Hammer Candlestick Pattern

In a bearish market, the appearance of an Inverted Hammer pattern can serve as a beacon signaling potential trend reversal from downtrend.

This pattern represents a flicker of hope for bulls amid prevailing negative sentiment and could herald the pivot point where bullish momentum regains its strength.

8. Hanging Man Candlestick Pattern

The Hanging Man candlestick pattern serves as an alert for bullish investors. Emerging at the pinnacle of a market trend might suggest an impending downward shift and necessitate the presence of a bearish candle to validate its prediction in bearish transactions.

9. Pin Bar Candlestick Pattern

The Pin Bar candlestick pattern signals the possibility of an impending trend reversal. As a reversal pattern represented by just one candle, it suggests that there might be a shift in market direction. However, verification might be necessary.

Are Single Candlestick Patterns and Candlesticks the same?

Single candlestick patterns and candlesticks are not the same. Every single candlestick pattern is a type of candlestick, yet not every candlestick signifies the formation of a pattern.

Single candlestick patterns particularly indicate potential reversals in the market. Conversely, an individual candlestick reflects any movement in price and does not inherently imply that there will be a reversal or any indications. Although intimately connected, single candlestick patterns and ordinary candles represent different concepts.

This relationship can be compared to how squares relate to rectangles — all squares qualify as rectangles, but rectangles do not necessarily have to be squares.

What is the difference between a single and a double candlestick?

The difference between a single and a double candlestick pattern is that a single candlestick pattern consists entirely of just one individual candlestick, in contrast to a double, which involves a pair forming a distinct formation.

How do you find Single Candlestick Pattern in charts?

You find a single candlestick pattern on a chart by quantifying trading rules and using software to scan. You are unlikely to distinguish patterns if you rely on your own anecdotal judgment. You must quantify it.

How do you trade single candlestick pattern?

You trade a single candlestick pattern by making decisions based on data and statistics based on backtests. If the pattern has a positive expectancy and offers good risk and reward, it might be a good trading strategy to add to your portfolio of strategies.

You don’t trade candlestick patterns based on observational skills. You can, of course, but you are unlikely to make money. There are millions of unsuccessful anecdotal candlestick traders out there. Don’t be one of them!

A single candlestick pattern might have many false signals, so you must employ them alongside additional technical analysis instruments so as to secure more reliable trading cues.

Is Single Candlestick Pattern Profitable?

Single candlestick patterns are not necessarily profitable on their own, but they are if you add valuable filters or second indicators or variables.

When combined with additional technical analysis tools and proper risk management tactics, single candlestick patterns can be effective instruments for trading.

Yet, their effectiveness hinges on your skills to find the variables and indicators that complement the patterns.

What are the advantages of a Single Candlestick Pattern?

The advantages of a single candlestick pattern is that it’s easy to spot, quantify, and trade. These patterns simplify the understanding of market behavior.

What are the disadvantages of a Single Candlestick Pattern?

The disadvantages of a single candlestick pattern are that they are too frequent as a stand-alone pattern, they are “noisy”, and they require confirmation indicators or patterns.

Traders risk succumbing to a cognitive bias known as “apophenia,” which is an inclination to perceive meaningful patterns within random data and attribute significance to inconsequential price fluctuations. Thus, you need confirmation and quantified data to gather facts and statistics.

The limitations associated with single candlestick patterns encompass:

• The introduction of “noise” into trading activities that complicates the identification of clear signals
• There is a propensity for traders to experience cognitive biases such as apophenia because you see patterns where there are none
• Occasional gaps present in candlestick charts that may lead traders astray

Traders should recognize these pitfalls and incorporate other methods and confirmations from technical analysis alongside their use of candlestick patterns.

Summary

To sum up, a single candlestick pattern is one that involves only a single formation or bar/candlestick. These frequent patterns grant an exclusive glimpse into the emotional undercurrents of the marketplace and can alert traders to impending shifts in trends while defining precise parameters for risk. However, you need to quantify.

Despite their utility, these signals are not without limitations and are best employed alongside additional technical analysis to confirm and improve the profitability of the patterns.

Frequently Asked Questions

What are single candlestick patterns?

Single candlestick patterns consist of just one candlestick, unlike others that require two or more candlesticks.

What is the most successful candlestick pattern?

The most successful candlestick pattern is Hanging Man. We found out by backtesting.

What is the single candlestick pattern reversal?

A single candlestick pattern reversal signifies a potential change in trend or price action. After a run up in the market, a pattern might signal it has come to and end and traders should embrace for falling prices (and vice versa).

For example, when a long-legged Doji emerges following a downtrend, it may indicate the potential for a bullish reversal. Conversely, its presence after an uptrend could suggest the possibility of a bearish reversal.

Can single candlestick patterns be both bullish and bearish?

Certainly, a single candlestick pattern can be both bullish or bearish, but it depends on the price action before the candlestick.

For example, a long-legged Doji emerging following a downtrend may indicate the potential for a bullish reversal. Conversely, its presence after an uptrend could suggest the possibility of a bearish reversal.

How many single candlestick patterns are there?

There are nine single candlestick patterns.

Single Candlestick Pattern Glossary

1. Doji: A candlestick pattern where the opening and closing prices are virtually equal, indicating indecision in the market.
2. Hammer: A bullish reversal pattern formed at the bottom of a downtrend, characterized by a small body and a long lower shadow.
3. Hanging Man: A bearish reversal pattern similar to a hammer but occurs at the top of an uptrend.
4. Shooting Star: A bearish reversal pattern characterized by a small body at the bottom of the candlestick with a long upper shadow.
5. Gravestone Doji: A bearish reversal pattern similar to a shooting star but occurs at the top of an uptrend.
6. Marubozu: A candlestick with no shadows, indicating strong buying or selling pressure depending on whether it’s bullish or bearish.
7. Spinning Top: A candlestick with a small body and long upper and lower shadows, indicating indecision in the market.
8. Engulfing Pattern: A reversal pattern where the body of one candle completely engulfs the body of the previous candle.
9. Piercing Pattern: A bullish reversal pattern formed after a downtrend, consisting of a long black candle followed by a white candle that opens below the low of the prior candle and closes more than halfway into the prior candle’s body.
10. Dark Cloud Cover: A bearish reversal pattern formed after an uptrend, consisting of a long white candle followed by a black candle that opens above the high of the prior candle and closes more than halfway into the prior candle’s body.
11. Morning Star: A bullish reversal pattern formed by three candles: a long black candle, a small candle with a lower closing price, and a long white candle with a closing price that closes above the midpoint of the first candle.
12. Evening Star: A bearish reversal pattern formed by three candles: a long white candle, a small candle with a higher closing price, and a long black candle with a closing price that closes below the midpoint of the first candle.
13. Inverted Hammer: A bullish reversal pattern similar to a hammer but occurs at the bottom of a downtrend.
14. Bullish Harami: A bullish reversal pattern formed by two candles: a large bearish candle followed by a small bullish candle completely engulfed within the prior candle’s body.
15. Bearish Harami: A bearish reversal pattern formed by two candles: a large bullish candle followed by a small bearish candle completely engulfed within the prior candle’s body.
16. Doji Star: A reversal pattern formed by a doji preceded by a long white or black candle, indicating potential reversal.
17. Long Legged Doji: A doji with long upper and lower shadows, signaling market indecision.
18. Dragonfly Doji: A doji with a long lower shadow and no upper shadow, indicating potential reversal after a downtrend.
19. Gravestone Doji: A doji with a long upper shadow and no lower shadow, indicating potential reversal after an uptrend.
20. Three White Soldiers: A bullish reversal pattern formed by three consecutive long white candles with higher closes.
21. Three Black Crows: A bearish reversal pattern formed by three consecutive long black candles with lower closes.
22. Upside Gap Two Crows: A bearish reversal pattern formed by three candles: a long white candle, a small black candle, and another black candle that opens above the high of the prior candle but closes below the midpoint of the first candle.
23. Deliberation: A bearish reversal pattern formed by three candles: a long white candle, a doji, and a black candle that opens above the prior candle but closes below the midpoint of the first candle.
24. Homing Pigeon: A bullish reversal pattern formed by two candles: a long black candle followed by a small white candle with a closing price that closes within the prior candle’s body.
25. Matching Low: A bullish reversal pattern formed by two candles with equal closing prices, indicating potential reversal.
26. Meeting Lines: A bullish or bearish reversal pattern formed by two candles with similar closing prices but different colors, indicating indecision.
27. Separating Lines: A continuation pattern formed by two long candles of opposite colors, indicating strong momentum in the direction of the second candle.
28. Side-by-Side White Lines: A bullish continuation pattern formed by two white candles with similar opening and closing prices, indicating strong bullish sentiment.
29. Side-by-Side Black Lines: A bearish continuation pattern formed by two black candles with similar opening and closing prices, indicating strong bearish sentiment.
30. Mat Hold Pattern: A bullish continuation pattern formed by five candles: a long white candle followed by three small candles (any color) and another long white candle with a closing price that closes above the high of the first candle.
31. Rising Three Methods: A bullish continuation pattern formed by five candles: a long white candle followed by three small declining candles and another long white candle with a closing price that closes above the high of the first candle.
32. Falling Three Methods: A bearish continuation pattern formed by five candles: a long black candle followed by three small rising candles and another long black candle with a closing price that closes below the low of the first candle.
33. Abandoned Baby: A reversal pattern formed by three candles: a long white (or black) candle, a doji or small candle with a gap above (or below) the prior candle, and another long white (or black) candle with a gap in the opposite direction, indicating potential reversal.
34. Concealing Baby Swallow: A bullish reversal pattern formed by two candles: a long black candle followed by a long white candle with a closing price that closes above the high of the first candle and completely engulfs its body.
35. Counterattack Lines: A bullish or bearish reversal pattern formed by two candles: a long white (or black) candle followed by another long black (or white) candle with a closing price that closes near the prior candle’s close, indicating a potential reversal.
36. High-Wave Candle: A candle with a long upper and lower shadow and a small body, indicating market indecision.
37. Takuri Line: A bullish reversal pattern formed by a long black candle followed by a long white candle with a small body that opens near the prior candle’s close and closes near its open.
38. Unique Three River Bottom: A bullish reversal pattern formed by three consecutive black candles with decreasing lows followed by a small white candle that opens below the low of the prior candle and closes above its high.
39. Upside Tasuki Gap: A bullish continuation pattern formed by two candles: a long white candle followed by a gap up and another white candle that opens within the prior candle’s body and closes above its high.
40. Three Inside Up: A bullish reversal pattern formed by three candles: a long black candle followed by a small white candle that is engulfed within the prior candle’s body, followed by another white candle with a closing price that closes above the high of the first candle.
41. Three Inside Down: A bearish reversal pattern formed by three candles: a long white candle followed by a small black candle that is engulfed within the prior candle’s body, followed by another black candle with a closing price that closes below the low of the first candle.
42. Three Star in the South: A bullish reversal pattern formed by three candles: a long black candle followed by a small white candle that opens below the prior candle’s low and closes above its high, followed by another white candle with a closing price that closes above the high of the first candle.
43. Three Outside Up: A bullish reversal pattern formed by three candles: a long white candle followed by a small black candle and another white candle with a closing price that closes above the high of the first candle.
44. Three Outside Down: A bearish reversal pattern formed by three candles: a long black candle followed by a small white candle and another black candle with a closing price that closes below the low of the first candle.
45. Three Inside Up and Down: A combination pattern where both the Three Inside Up and Three Inside Down patterns occur consecutively, indicating uncertainty in the market.
46. Breakaway: A bullish or bearish reversal pattern formed by a series of candles moving in one direction followed by a gap in the opposite direction, indicating potential reversal.
47. Ladder Bottom: A bullish reversal pattern formed by three descending black candles with decreasing lows followed by a small white candle that opens below the low of the prior candle and closes above its high.
48. Long Day: A candle with a long body, indicating strong buying or selling pressure depending on its color.
49. Matching High: A bearish reversal pattern formed by two candles with equal high prices, indicating potential reversal.
50. One-Candlestick Patterns: Various patterns formed by a single candlestick, providing insights into market sentiment and potential price movements.
51. Cheat Sheet: A quick reference guide containing important information or tips.
52. Forex: Short for foreign exchange, the market where currencies are traded.
53. Shooting Star: A bearish candlestick pattern indicating potential reversal, characterized by a small body and long upper shadow.
54. Chart: A graphical representation of price movements over time, used for technical analysis.
55. Hammer: A bullish candlestick pattern signaling potential reversal, characterized by a small body and long lower shadow.
56. Basic: Fundamental or essential principles or concepts.
57. Bearish: Referring to a market sentiment or expectation of price decline.
58. Doji: A candlestick pattern with open and close prices nearly equal, often signaling market indecision.
59. Main: Principal or primary.
60. Different: Distinguishing or varying from others.
61. Trading: Buying and selling financial instruments such as stocks, currencies, or commodities.
62. Crypto: Short for cryptocurrency, a digital or virtual currency secured by cryptography.
63. Top: Referring to the highest point or level.
64. Candlestick: A type of price chart used in technical analysis to represent price movements of a security, with each candle typically showing open, high, low, and close prices for a specific time period.
65. Paper Umbrella: A bearish candlestick pattern resembling an inverted hammer, indicating potential reversal.
66. Japanese: Relating to Japan or its culture, particularly in the context of candlestick charting which originated in Japan.
67. Inverted Hammer: A bullish candlestick pattern signaling potential reversal, characterized by a small body and long upper shadow.
68. Marubozu: A candlestick with no shadows, indicating strong buying or selling pressure depending on whether it’s bullish or bearish.
69. Common: Occurring frequently or widely known.
70. Important: Significant or having great value or relevance.
71. Name: A word or phrase that identifies someone or something.
72. Downtrend: A prolonged period of decreasing prices or declining market sentiment.
73. Powerful: Having great strength, influence, or effectiveness.
74. Trend: The general direction in which prices or market sentiment is moving.
75. Long: In the context of trading, holding a position with the expectation that its value will increase.
76. One: The numerical value representing a single unit.
77. Option Trading: The buying and selling of options contracts, which give the holder the right to buy or sell an underlying asset at a predetermined price within a specified time frame.
78. Hindi: A language spoken in India, where trading and financial markets are also active.
79. Crypto Trading: Buying and selling cryptocurrencies in financial markets.
80. Stock Market: A public market where stocks or shares of companies are bought and sold.