The Major Candlestick Patterns
Twenty patterns worth knowing, each drawn, rated for reliability, and honest about where it stops working on gold.
A candlestick pattern is a short story about a fight. Someone tried to push price somewhere, and either succeeded or was thrown back. Learn to read the story and a wall of candles turns into a record of who was in control, and when that changed.
Below are the twenty patterns worth knowing, grouped by how many candles they need. Each carries a reliability rating and — more useful — the conditions where it is worthless.
Read this before you use any of them
No pattern is a signal by itself. The same hammer is a trade at a demand zone the market has already respected twice, and noise in the middle of a range. Three filters decide whether a pattern is worth anything:
Location — is it forming at a level that already mattered? Timeframe — on gold, patterns below the 4-hour are mostly noise; the daily is where they carry weight. Context — a reversal pattern needs something to reverse. Against a strong trend it usually fails.
One-candle patterns
Doji
Buyers and sellers fought all session and finished level. A doji is not a forecast — it is a statement that the market has no conviction right now.
What makes it count
It only matters where it appears: a doji after a long run says the pressure has gone out of the move. In the middle of a range it says nothing at all.
When it fails
On gold’s lower timeframes doji print constantly. Below the 4-hour they are noise, not signals.
Hammer
Price was pushed well below the open and buyers dragged it all the way back before the close. The long lower wick is the rejection — that low was refused.
What makes it count
Needs to form after a fall, at a level that already mattered — a demand zone, a prior low. Confirmation is the next candle closing above the hammer’s high.
When it fails
A hammer in the middle of a downtrend with no level under it is just a candle. Gold prints dozens a week; the level is what makes one worth trading.
Inverted hammer
Buyers pushed hard, sellers took it back, but the candle still closed near the open after a decline. It signals the first serious attempt to buy.
What makes it count
Weak on its own. Treat it as an alert to watch the next candle, not as an entry.
When it fails
Identical in shape to a shooting star — only the preceding trend tells them apart. Get the context wrong and you have the signal exactly backwards.
Shooting star
After a rally, price spiked and was sold all the way back. Everyone who bought that high is now under water — and they become sellers on the way back up.
What makes it count
Confirmation is the next candle closing below the star’s body. Best at a resistance level or a round number.
When it fails
In a strong trend a shooting star gets run over within two candles. It is a reversal signal only where the trend was already stretched.
Hanging man
The same long lower wick as a hammer, appearing after a rally. Sellers were able to push price a long way down intraday — a first crack in a market that had been one-way.
What makes it count
Only counts with a bearish close beneath it. On its own it is the weakest of the classic reversal candles.
When it fails
Frequently appears mid-trend and means nothing. If gold is trending hard, a hanging man is usually just profit taking inside a continuing move.
Marubozu
One side controlled the entire session: it opened at the low, closed at the high and never gave ground. This is what genuine momentum looks like as a single candle.
What makes it count
Trade it as continuation, not reversal. A bullish marubozu breaking a level is the cleanest confirmation the break is real.
When it fails
A marubozu on a news release is often the whole move — buying the close of it means buying the top of the spike.
Spinning top
Wide range, tiny result. Both sides tried and neither achieved anything — indecision with volatility, which is different from a quiet market.
What makes it count
Useful as a warning that the current move is losing agreement, especially in a cluster after a long run.
When it fails
Meaningless in a choppy market, where most candles look like this.
Two-candle patterns
Bullish engulfing
A down candle followed by an up candle whose body covers it completely. Everyone who sold the previous session is offside by the close — one of the cleanest shifts in control on any chart.
What makes it count
Strongest when the engulfing candle closes above a level the market had been failing at, and after an extended fall rather than mid-range.
When it fails
In a range this pattern prints in both directions all week. And an engulfing candle formed entirely by a news spike often gets fully retraced once the spread normalises.
Bearish engulfing
The mirror image: buyers took control, then a single session erased all of it and closed below their open. Control changed hands inside one candle.
What makes it count
Most reliable at the top of an extended run, into resistance or a round number, on the 4-hour or daily.
When it fails
Against a powerful uptrend this is often just one day of profit taking. Without a level, a big red candle is not a reversal.
Bullish harami
A large down candle followed by a small one entirely inside it. The selling did not continue — pressure paused rather than reversed.
What makes it count
Needs a break above the small candle’s high to mean anything. Think of it as the market holding its breath.
When it fails
The weakest of the two-candle patterns. Very often the pause before the next leg down.
Bearish harami
The rally stopped expanding. Buyers could not extend the previous candle’s range, which is the first sign momentum is fading.
What makes it count
Only actionable if the next candle breaks below the small body, ideally at resistance.
When it fails
Inside a strong trend this is a normal pause and nothing more.
Piercing line
Price gapped or opened lower and then recovered more than half of the previous down candle. Buyers did not just defend — they took back most of the ground.
What makes it count
The deeper the close into the previous body, the stronger the signal. Below the halfway point it does not qualify.
When it fails
Gold trades nearly 24 hours, so the clean gap this pattern was designed around rarely appears. Judge it on the recovery, not the gap.
Dark cloud cover
An up candle followed by one that opens higher and then closes deep inside it. The session that started bullish ended as a defeat.
What makes it count
Confirmation is a close below the second candle’s low. Strongest at a level or after a vertical run.
When it fails
Easily produced by one news release and then completely undone by the next. On its own it is a caution, not a trade.
Tweezer top
Two sessions reached the same price and both failed there. That repeated rejection marks a level where sellers are consistently waiting.
What makes it count
The value is the level it identifies, more than the pattern itself. Mark the high and watch what happens on the third visit.
When it fails
Equal highs are also exactly where stops sit — the third visit is as likely to sweep the level as to reject it.
Tweezer bottom
Two attempts to break lower, both refused at the same price. Buyers are defending a specific level rather than a general area.
What makes it count
Use it to mark the level and trade the reaction, not the pattern.
When it fails
Equal lows attract stop hunts. A sweep below both wicks that snaps straight back is more often the real signal.
Inside bar
The market did nothing new: the entire session fitted inside the previous one. That is compression — volatility contracting before it expands.
What makes it count
Trade the break of the larger candle’s range, in the direction of the higher timeframe trend. The tighter the inside bar, the sharper the expansion tends to be.
When it fails
Inside bars break both ways first in a choppy market. And a run of them before a big release is just the market waiting — the break comes from the news, not the pattern.
Three-candle patterns
Morning star
A heavy down candle, then a small indecisive one, then a strong up candle that closes back inside the first. The story is complete: selling, exhaustion, reversal.
What makes it count
The third candle should close above the midpoint of the first. Best at a demand zone or after an extended decline.
When it fails
Three candles take time to complete — by the time it confirms, a chunk of the move is gone. Late entries here have poor risk-to-reward.
Evening star
The mirror of the morning star and one of the more dependable topping patterns: the rally stalls, hesitates, then gets sold hard.
What makes it count
The third candle should close well into the first. Most meaningful on the daily, at a level, after a stretched move.
When it fails
In a strong bull phase evening stars fail repeatedly — gold can print one and make new highs the same week.
Three white soldiers
Three consecutive up candles, each closing near its high and above the last. This is sustained, broad buying rather than one spike.
What makes it count
Read it as trend confirmation. The useful entry is the first pullback afterwards, not the close of the third candle.
When it fails
By the third soldier the move is already extended, which is exactly when profit taking arrives. Chasing it is how people buy the local top.
Three black crows
Three down candles in a row, each closing near its low. Persistent selling across sessions, not a single bad print.
What makes it count
Confirms a downtrend rather than starting one. Sell rallies into it; do not sell the third close.
When it fails
After three heavy candles a bounce is overdue. Entering short at the bottom of the third crow is the classic late trade.
The gold-specific warning
Gold trades almost around the clock and moves in violent steps around scheduled releases. Two consequences: the classic gap-based patterns rarely form cleanly, and any pattern printed by an FOMC or CPI candle is describing a liquidity event, not a battle between buyers and sellers. Patterns formed during a news spike deserve far less trust than the same shape in a normal session.
Patterns need levels to mean anything
The supply and demand lesson covers where to mark the areas that turn a candle into a setup.