Candle Patterns

A candle pattern is a shape you would otherwise have to describe with several rules. Choose Candle pattern on the left of a row and the whole row becomes one choice.

Every pattern also has is / is not, its own look-back (this candle, previous candle, up to 5 back) and its own timeframe.

There are 15, and they fall into four groups.

Useful as a filter rather than a signal: RSI crosses below 30 AND the candle is green waits for buyers to show up before you act.

• Bullish (green) candle — closed higher than it opened.
• Bearish (red) candle — closed lower than it opened.

These are the building blocks of trend. Two higher highs with two higher lows is the textbook definition of an uptrend, and you can write exactly that with four rules joined by AND.

• Higher high — this candle’s high is above the previous candle’s high.
• Lower high — this candle’s high is below the previous candle’s high.
• Higher low — this candle’s low is above the previous candle’s low.
• Lower low — this candle’s low is below the previous candle’s low.

Gaps are most useful on the first candle of the day, where they say the market opened away from where it closed.

• Inside bar — this candle sits entirely inside the previous one. The market went quiet.
• Outside bar — this candle covers the whole previous one. The market got busy.
• Bullish engulfing — a green candle whose body covers the previous red candle’s body.
• Bearish engulfing — a red candle whose body covers the previous green candle’s body.
• Gap up — this candle opened above the previous candle’s high.
• Gap down — this candle opened below the previous candle’s low.

"In a row" patterns are a quick way to say "this has been going on for a while" without stacking up separate rules.

• Doji — open and close are almost the same, so the candle has almost no body. Buyers and sellers finished level.
• Green candles in a row — the last few candles all closed higher than they opened. You choose how many.
• Red candles in a row — the same, the other way.

Patterns work best as a filter, not as the whole strategy. A green candle on its own tells you almost nothing; a green candle at the moment RSI leaves oversold tells you rather more.

They describe the candle that just closed, so they are checked once per candle like everything else.

A strategy built only from patterns is allowed, and its chart still opens normally.