Ten Essential Candlestick Patterns
A tour of commonly watched candlestick formations that traders use to spot potential reversals or continuations.
18 April 2026 · 10 min read
Reversal patterns at a glance
Patterns like hammers, shooting stars, engulfing candles, and morning or evening stars are often watched near key support and resistance zones.
They do not guarantee a reversal, but they can add extra confirmation when combined with broader context like trend and volume.
Continuation and indecision patterns
Doji candles, spinning tops, and small‑range inside bars can indicate indecision or a pause within an existing trend.
In rule‑based strategies, these patterns are rarely used alone; instead they become part of a larger filter that also considers trend direction and volatility.
Multi‑candle storylines
Many patterns are really short stories told across two or three candles. For example, a bullish engulfing pattern shows sellers in control first, then buyers completely taking over the next bar.
Understanding this story helps you avoid treating patterns as magic symbols and instead see them as snapshots of shifting order‑flow.
Testing patterns realistically
Because patterns are easy to spot in hindsight, it is important to backtest them objectively before relying on them in live trading.
Algocrab can help you define these patterns in code and evaluate how they behaved across different instruments and time periods, instead of relying only on textbook examples.
