by Reversal patterns are a series of candlesticks which indicate the end of an existing trend and the starting of a new trend. Common trend reversals are from bullish to bearish and bearish to bullish. Do note that while trend reversals implies that the prior trend is likely to change, it is not necessary for it to change.
Common reversal patterns include the hammer and hanging man, engulfing patterns, stars, dark-cloud cover and many more. These will all be covered in later posts.
Types of Reversal Patterns and their strengths
In subsequent posts I will be going through the various japanese candlestick reversal patterns and below is their relative reversal pattern strengths:
Strong(er) Reversal Patterns
- Engulfing Patterns
- Morning/Evening Stars
- Dark-Cloud Cover
- Three Black Crows/Three Advancing White Soldiers
- Three Rivers
- Dumpling Tops
- Fry-pan Bottoms
- Tower Tops/Bottoms
Weak(er) Reversal Patterns
- Harami Pattern
- Tweezers Tops/Bottoms
- Belt-hold Lines
- Upside-gap Two Crows
- Counterattack Lines
| Strong(er) Reversal Patterns | Weak(er) Reversal Patterns |
| Engulfing Patterns | Harami Pattern |
| Morning/Evening Stars | Tweezers Tops/Bottoms |
| Dark-Cloud Cover | Belt-hold Lines |
| Three Black Crows/Three Advancing White Soldiers | Upside-gap Two Crows |
| Three Rivers | Counterattack Lines |
| Dumpling Tops/ Fry-pan Bottoms | |
| Tower Tops/Bottoms |
There is also the single candlestick reversal pattern, Hanging Man and Hammer. You can click on any of the hyperlinks to be redirected to the specific reversal pattern.
Lastly, I would like to give credits for the inspiration and knowledge I gained, which is from a book titled “Japanese candlestick charting techniques” by Steve Nison. In addition, Investopedia is also a good source which provides information of some of the patterns mentioned here.
Japanese Candlestick Charting Techniques
By Steve Nison
As always, such patterns are not a guarantee of a reversal. It can easily lead to confirmation bias as we tend to assimilate similar looking patterns to the patterns discussed. In addition, due to the subjectiveness of the patterns, every trader may have different observations coming from the same pattern. Hence it is crucial to use such patterns with other patterns to confirm the reversal.
Hope you find this useful! As usual feel free to send me a message if you have any questions : )
-Rice
