The hammer and hanging man are single-candle patterns with small real bodies and long lower shadows (at least 2× the body). A hammer appears at the bottom of a downtrend (bullish), while a hanging man appears at the top of an uptrend (bearish). The long wick indicates that sellers pushed price down but buyers recaptured ground.
2:1 lower shadow to body ratio, Small real body near the high, Colour of body is secondary to location, Inverted hammer / shooting star variations
Hammer at key support with volume spike, Hanging man at resistance after extended uptrend, Next candle confirmation (close above hammer high / below hanging man low)
For hammer: trail stop below the hammer's low. For hanging man: stop above the hanging man's high. Target the prior swing high/low.
4H, Daily, Weekly for highest reliability
A hammer with a bullish (green/white) body is slightly more reliable than a bearish one. Volume confirmation is critical.
While not strictly a candlestick pattern, continuation triangles (ascending, descending, symmetrical) are multi-candle patterns where price contracts between converging trendlines. Breakouts from triangles tend to continue the prior trend. Triangles are measured-move patterns — the target equals the height of the triangle projected from the breakout point.
A bullish engulfing pattern occurs when a large green candle completely engulfs the prior red candle near the bottom of a trend. A bearish engulfing is the opposite — a large red candle swallows the prior green candle at the top. Engulfing patterns are among the most reliable two-candle reversal signals.
Tweezers are two-candle patterns where both candles test the same high (tweezer top) or low (tweezer bottom). The first candle extends the trend and the second candle reverses. The matching highs/lows create a visual 'tweezers' shape indicating a rejection level.
The piercing line is a two-candle bullish reversal pattern where a down candle is followed by an up candle that opens below the prior low and closes above the midpoint of the prior body. The dark cloud cover is its bearish counterpart — an up candle followed by a down candle that opens above the prior high and closes below the midpoint. Both patterns signal a potential shift in sentiment when they appear at key support or resistance levels.