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INDICATOR#1
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Abandoned Baby

   Pattern: Reversal
    Trend: Bearish
    Reliability: High




How to Identify it

    * First day is usually a long white day
    * Second day is a doji that gaps in the direction of the previous trend
    * The third day is a black day, gapping in the opposite direction, with no overlapping shadows

What it Means

In an uptrend, the market builds strength on a long white day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario definitely shows an erosion of confidence in the current trend. Confirmation of the trend reversal is the black third day, which is given extra validation by the downward gap.

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INDICATOR#2
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Advance Block

    Pattern: Reversal
    Trend: Bearish
    Reliability: Moderate  



How to Identify it

    * Three long white days occur, each with a higher close than the previous day
    * Each day opens within the body of the previous day and closes near the high of the day
    * Each days body is significantly smaller than the previous days body
    * The second and third days should exhibit long upper shadows

What it Means

In an uptrend three long days occur with consecutively higher closes. This pattern is similar to the Three White Soldiers pattern, however, in this case, each successive day is weaker than the one preceding it. This suggests that the previous rally is losing strength, and preparing for a reversal.

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INDICATOR#3
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Belt Hold

    Pattern: Reversal
    Trend: Bearish
    Reliability: Low



How to Identify it

    * A black body occurs in an uptrend with no upper shadow

What it Means

In an uptrend, a black body occurs with an open that is also the high for the day. This may cause many positions to be sold, perpetuating a bearish reversal.

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INDICATOR#4
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Breakaway

    Pattern: Reversal
    Trend: Bearish
    Reliability: Moderate




How to Identify it

    * The first day is a long white day
    * The second day is a white day that gaps above the first day
    * The third and fourth days continue to in the direction of the second with higher consecutive closes
    * The fifth day is a long black day that closes into the gap between the first and second days

What it Means

An uptrend sees a bullish surge that eventually weakens. The result is a long black day that does not close the gap into the body of the first day. This suggests a short-term reversal.

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INDICATOR#5
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Dark Cloud Cover

    Pattern: Reversal
    Trend: Bearish
    Reliability: High



   How to Identify it

        * First day is a long white day
        * Second day is black with an open above the high of the previous day
        * Second day closes within but below the midpoint of the first day’s body

   What it Means

    In an uptrend the market gaps open, but loses ground to fall below the midpoint of the previous day. The Dark Cloud Cover pattern suggests an opportunity for the shorts to capitalize on the next day’s open: a warning sign to bullish investors. The Dark Cloud Cover pattern is the opposite of the Piercing line pattern.

     

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INDICATOR#6
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Deliberation

    Pattern: Reversal
    Trend: Bearish
    Reliability: Moderate



How to Identify it

    * Two long white days occur, the second with a higher close than the first
    * A third white day is a spinning top or doji that gaps above the second day

What it Means

In an uptrend three white days occur with consecutively higher closes. This pattern is a derivative of the Three White Soldiers pattern and is very similar to the Advance Block pattern. Even though an uptrend continues, the small third body suggests that the previous rally is losing strength and preparing for a reversal.

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INDICATOR#7
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Downside Gap Three Methods

    Pattern: Continuation
    Trend: Bearish
    Reliability: Moderate




How to Identify it

    * Two long black days occur with a gap between them
    * The third day is a white day that fills the gap between the first two days

What it Means

A downtrend is followed by two long black days with a gap downward between them. The third day is a white day, but one that closes the gap between the first two. This should be seen as support for the downward trend.

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INDICATOR#8
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Downside Tasuki Gap

    Pattern: Continuation
    Trend: Bearish
    Reliability: Moderate




How to Identify it

    * The first two days are black days with an opening gap
    * The third day is a white day that opens within the body of the second day and closes within the gap of the first two days

What it Means

In a downtrend a black day occurs, followed by another black day that gaps down. A white day ensues, and is likely the result of investors temporarily taking advantage of the low buying price. The trend should continue to follow the direction of the downward gap.

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INDICATOR #9
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Doji Star

    Pattern: Reversal
    Trend: Bearish
    Reliability: Moderate



  
How to Identify it

        * First day is a long white day
        * Second day is a doji that gaps in the direction of the previous trend
        * The shadows of the doji should not be long

    What it Means

    In an uptrend, the market builds strength on a long white day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario generally shows erosion of confidence in the current trend. Confirmation of a trend reversal would be a lower open on the next trading day.

     

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INDICATOR #10
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Hanging Man / Dragonfly Doji

    Pattern: Reversal
    Trend: Bearish
    Reliability: Low/Moderate




How to Identify it

    * Small real body at the upper end of the trading range
    * Lower shadow at least twice as long as the real body
    * No (or almost no) upper shadow

What it Means

There is a sharp sell off after the market opens during an uptrend. However, by the end of the trading day, the market closes at or near its high for the day. This signifies the potential for further sell-offs. Since the certainty for a Hanging Man indicator is low, the trend reversal can be confirmed by a black candlestick or a large down gap on the next trading day accompanied by a lower close. If the open and the close are identical, the indicator is considered a Dragonfly Doji. The Dragonfly Doji has a higher reliability associated with it than a Hanging Man.

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INDICATOR#11
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Engulfing

    Pattern: Reversal
    Trend: Bearish
    Reliability: Moderate



   How to Identify it

        * A long white day occurs
        * The second day is a black day that completely engulfs the real body of the first day

   What it Means

    Occurring in an uptrend, the Engulfing depicts an opening at a new high, followed by a high volume sell-off that closes at or below the previous day’s open. This signifies that the uptrend has been hurt and the bears may be gaining strength. The Engulfing indicator is also the first two days of the Three Outside patterns.

     

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INDICATOR#12
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Evening Doji Star

    Pattern: Reversal
    Trend: Bearish
    Reliability: High



How to Identify it

    * First day is a long white day
    * Second day is a doji that gaps in the direction of the previous trend
    * The third day is a black day

What it Means

In an uptrend, the market builds strength on a long white day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario generally shows an erosion of confidence in the current trend. Confirmation of the trend reversal is the black third day. The Evening Doji Star indicator is the fully realized bearish Doji Star pattern.

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INDICATOR#13
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Evening Star

    Pattern: Reversal
    Trend: Bearish
    Reliability: High




How to Identify it

    * First day is a long white day
    * Second day is a small day that gaps in the direction of the previous trend
    * The third day is a black day

What it Means

In an uptrend, the market builds strength on a long white day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario generally shows an erosion of confidence in the current trend. Confirmation of the trend reversal is the black third day.

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INDICATOR#14
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   Falling Three Methods


        Pattern: Continuation
        Trend: Bearish
        Reliability: High

         

    How to Identify it

        * The first day is a long black day
        * The second, third, and fourth days have small real bodies and follow a brief uptrend pattern, but stay within the range of the first day
        * The fifth day is a long black day that closes below the close of the first day

    What it Means

    In a downtrend, a long black day occurs, following by three days of small real bodies that fall into a short uptrend. On the fifth day, the bears come in strong to close at a new low. This small uptrend, in between two long black days, is consistent with investors taking a break. The downward should continue.

     

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INDICATOR#15
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    Shooting Star / Gravestone Doji


        Pattern: Reversal
        Trend: Bearish
        Reliability: Low/Moderate

         

    How to Identify it

        * Small real body at the lower end of the trading range
        * Prices gap open
        * Upper shadow usually at least three times as long as the real body
        * No (or almost no) lower shadow

   What it Means

    The market gaps open above the previous day’s close in an uptrend. It rallies to a new high then loses strength and closes near its low: a bearish change of momentum. Confirmation of the trend reversal would by an opening below the body of the Shooting Star on the next trading day. If the open and the close are identical, the indicator is considered a Gravestone Doji. The Gravestone Doji has a higher reliability associated with it than a Shooting Star.