Bearish Candlestick Patterns
The most popular bearish candlestick patterns are:
a. Bearish Engulfing:
The Bearish Engulfing Pattern is a reversal pattern with two candles. The first candle is a bullish bar & the second candle completely engulfs the first candle's real body, regardless of the length of the tail shadows.
How to trade Bearish Engulfing Pattern?
1. Identify the more significant trend whether it is bearish
2. Wait for the formation of a Bearish Engulfing pattern on a pullback or in consolidation
3. Enter below the low of the Engulfing bar after the formation of the Bearish Engulfing Pattern
4. Stoploss above the high of Engulfing bar
b. Bearish Harami:
It is a candlestick chart pattern to spot fading momentum on the upside. When a long bullish candle is followed by a small bearish candle that lies within the first candle body, the formation occurs. Which is known as harami in Japanese, which means "pregnant."
How to trade Bearish Harami Pattern?
1. Identify the more significant trend whether it is bearish
2. Wait for the formation of a Bearish Harami pattern on a pullback or in consolidation
3. Enter below the low of the bearish candle after the formation of the Bearish Harami Pattern
4. Stoploss above the high of the bullish bar
c. Dark Cloud Cover:
A Dark Cloud Cover pattern indicates a possible short-term trend reversal from an uptrend to a downtrend. The second bar's close should cover at least half of the previous candle's body.
How to trade the Dark Cloud Cover?
1. Identify the more significant trend whether it is bearish
2. Wait for the formation of a Dark Cloud Cover pattern on a pullback or in consolidation
3. Enter below the low of the bullish candle after the formation of the Dark Cloud Cover pattern
4. Stoploss above the high of the Bearish bar
d. Three Black Crow:
The pattern consists of three consecutive long-bodied candlesticks that open within the real body of the previous candle and close below the low of the previous candle. The shadows cast by these candlesticks should be short.
How to trade three white soldiers?
1. This pattern works in an uptrend as a reversal setup & in a downtrend as a continuation setup
2. Wait for the price consolidation with a minor pullback
3. Enter below the low of a third bearish bar after the formation of the pattern
4. Stoploss above the high of the first bearish bar
e. Hanging Man:
The hanging man is a bearish candlestick pattern that appears in an uptrend signaling the possible reversal in price. With a long lower shadow or wick, a small or non-existent upper wick, and a small body, this candlestick resembles a hanging man.
How to trade the hanging man pattern?
1. This pattern works in an uptrend as a reversal setup
2. Enter below the low of a Hanging man bar after the formation of the pattern
3. Stoploss above the high of the Hanging man bar
f. Evening Star:
The evening star is a three-candle reversal pattern. The first candlestick indicates a bullish trend. The body of the second candlestick is small. The third body is bearish if it closes within the first candlestick, preferably beyond the halfway point. This indicates that the bears are taking control.
How to trade the Evening Star pattern?
1. This pattern works in an uptrend as a reversal setup
2. Enter below the low of the first bullish bar after the formation of the Evening Star pattern
3. Stoploss above the high of the second bar
g. Gravestone Doji:
The Gravestone Doji is a bearish reversal candlestick pattern that appears at the top of an uptrend. This is a three-candle reversal pattern similar to the evening star pattern. The difference between the two is the strong rejection second candle (Doji) in the case of the Gravestone pattern.
How to trade the Gravestone Doji pattern?
1. This pattern works in an uptrend as a reversal setup
2. Enter below the low of the Doji bar after the formation of the Gravestone Doji pattern
3. Stoploss above the high of the Doji bar
h. Tweezer Top:
It is a two-bar reversal pattern. Two candles with matching highs. The first bar is a bullish bar & the second is a bearish bar. It is a low-probability setup in a shorter time frame.
