Profiting from online trading is easier said than done. As the financial markets move in a complex and dynamic manner, traders struggle to identify the potential movement of an asset. 

But all is not lost for them. Candlestick patterns provide traders with visual clarity and insightful indicators about the prevailing price action and market sentiment. These charting solutions enable new traders to analyze the market and make informed trading decisions. 

In this guide, you’ll walk through a step-by-step guide to the major candlestick patterns in PDF. Read on and explore how to access a credible candlestick ebook for an informed trading experience. 

How to Find all Candlestick Patterns in a PDF?

There are numerous candlestick patterns PDFs online. Google it, and you’ll be bombarded with an overwhelming ebook selection. 

However, the problem with the majority of PDFs online is the reliability of the information and the credibility of the sources. Acting upon or making trading decisions based on the insights of these unvetted PDFs risks your capital.

To ensure that you’re making informed trading decisions, ensure you know the entities behind the creation of the PDF. One way to do so is by joining a verified online trading community. 

A community that follows a systematic verification process enables its members to assess the credibility of the information provider proactively. 

The experts and mentors in verified trading communities share their resources with other members. Such resources include the candlestick patterns eBook, trading signals, indicators, and API-based strategies, among others.

5 Types of Candlestick Patterns

There are tons, if not hundreds, of candlestick patterns that online traders use. While all of them can be profitable, experienced traders consider these five candlestick patterns the most appealing due to their popularity. 

Popularity is a big thing when analyzing the market. As the majority of traders act upon these chart indicators, they carry the power to be self-fulfilling. 

Keep in mind that prices fluctuate based on market sentiment. If 75% of traders follow the signal of a pattern, it’s most likely to move in such a way.

Here are the five most commonly used candlestick patterns among traders.

Shooting Star Candlestick Pattern

The shooting star candlestick is arguably the most popular pattern out there. Despite being a three-candlestick pattern, the shooting star is easy to spot and provides reliable signals. 

As the name suggests, shooting star patterns involve a price movement that drops. This pattern follows this price action:

  • The price has an extended bullish trend.
  • A bearish candle forms at the peak of the uptrend. This indicates intervention of the sellers (bears) in the bullish market.
  • The trend reverses from bullish to bearish--forming a bearish (red) candle that’s comparable in size to the last bullish candle.

The second candle (shooting star candle) forms a very distinct look.

It has (1) a small real body that indicates that the price closes near or at the opening price, (2) an extended upper shadow or wick that represents the effort of the buyers to rally the price further, and (3) little to no lower shadow or wick that indicates the trying efforts of the bears to inject selling pressure. 

Once this is formed, and is subsequently followed by a long bearish candle, it indicates a strong short signal. 

Traders holding a buy or long position should exit their trade, while traders looking for short opportunities should make the most of this candlestick pattern formation. 

Morning Star Candlestick Patterns

The morning star candlestick pattern is the counterpart of the shooting star pattern. It follows the idea that the sun (star) rises from the horizon in the morning. 

Thus, the formation of a morning candlestick pattern indicates that the bearish price (the sun) will appreciate from the trough (horizon). 

Similar to its counterpart, the morning star pattern follows a three-candle formation:

  • The first candlestick forms a long bearish candle at the bottom of a downtrend.
  • The second candle forms a candle with a small real body, little to no upper shadow, and an extended lower shadow. 
  • The third candlestick is a bullish candle that’s comparable in size to the first candlestick. 

Hammer Candlestick Pattern

Hammer candlestick is a single-candle pattern that signals a potential bullish reversal. Considering that it only requires one candle to form, the hammer candlestick patterns are one of the easiest to spot. 

A hammer candle appears at the bottom of an extended downtrend. It then forms a bullish candle with a small real body, extended lower shadow, and little to no upper shadow. Its look is comparable to an actual hammer; thus, its name.

The extended lower shadow signifies the exhausting momentum of sellers. The small real body, indicating that the price closes near its open, signals the bulls' injection of buying pressure in the extended downtrend. 

Three Black Crows Candlestick Patterns 

The Three Black Crows follows the old Japanese proverb, “Bad news has wings.”

As this was primarily used in the stock market, the bad news technically signifies the potential price drop. This candlestick pattern forms at the peak of an extended uptrend, 

To identify this pattern, you should locate three consecutive bearish candles that open on the same closing price level of the previous candle.

Note: The lower the opening price of the succeeding candle, the stronger the signal is. 

Moreover, when the price opens at a higher point relative to its previous price, you can confirm the signal if the price is pushed to a new low by the third candle. 

Engulfing Candlestick Patterns

Engulfing candlestick patterns follow dual-candlestick formation. 

As its name suggests, the engulfing candlestick forms a pattern where the second candle appears to be engulfing or "eating" the first candle. In other words, the second candle is relatively longer than the first candle. 

Engulfing candles are categorized into two types, bullish and bearish engulfing candlestick patterns. These two patterns are among the most frequently appearing on the trading chart. 

Here are the two types of engulfing candlestick patterns:

Bullish Engulfing Candlestick Patterns

The bullish engulfing candle forms at the bottom of a downtrend. This formation suggests that the price will appreciate as the bulls (buyers) are starting to inject buying pressure, which could rally the price. 

Bearish Engulfing Candlestick Patterns

This is the counterpart of the previously discussed pattern. It carries a bearish reversal signal, appearing at the peak of an uptrend and suggesting a potential price drop once the pattern formation is complete.

This pattern forms a small bullish candle with an extended upper shadow. This formation of the first candle represents the exhausting buying pressure from the bulls. 

Following the small bullish candle is a significantly longer bearish (red) candle. This candle confirms the exhausted pressure from the bulls and the injected selling pressure from the bears.