Candlestick charts are thought to have been developed in the 18th century by Munehisa Homma, Japanese rice trader of financial instruments. They were introduced to the Western world by Steve Nison in his book, Japanese Candlestick Charting Techniques. Candlestick chart patterns are subject to the interpretation of the user and they do not provide price targets, which could be viewed as a limitation.
Since most of the Japanese Candlestick patterns are short-term reversal patterns, trading solely based on them would be too risky. Therefore, we recommend our readers to use these patterns with other technical trading methods for confirmation.
Bullish Patterns: Piercing Line, Kicking, Morning Star, Three Inside Up, Three Outside Up, Three White Soldiers, Engulfing, Harami, Side by Side White Lines, Rising Three Methods
Bearish Patterns: Dark Cloud Cover, Evening Star, Three Inside Down, Three Outside Down, Three Black Crows, Kicking, Engulfing, Harami, Side by Side White Lines, Falling Three Methods
Indecision Patterns: Gravestone Doji, Dragonfly Doji, Long Legged Doji
We will update this post with the appropriate links as we write a short tutorial on each candlestick pattern.