Candlestick Chart Patterns PDF | Free Download 2026

Understanding of Candlestick Chart Patterns: A Complete Guide for Beginners became the first step for anyone serious about trading.

Some of these patterns started in Japan 300 years ago. Today every successful trader uses them.

This Blog explains how to deeply understand how to read candlestick patterns easily. You'll gain every pattern and how to use them and how get the free resources. If you're just starting out, check out our stock market trading tips for beginners to build a solid foundation.

What Are Candlestick Chart Patterns?

Candlestick chart patterns are unique forms that can be seen on trading charts.

So, what is the reason behind using candlesticks rather than line charts? The answer is that they give you the current situation of the market in terms of buyers and sellers.

Put it this way: Line charts give you a picture of the past. Candlestick patterns enable you to make predictions.

Candlestick Explained: Parts & meaning

Every candlestick has four important parts:

• Open: Where the price started
• High: Highest price
• Low: Lowest price
• Close: Where price ended

When the candle is green or white, it indicates that the buyers were stronger (the price went up). On the opposite, the red or black candles indicate the sellers were stronger (the price went down).

Types of Candlestick Patterns

There are three types of patterns:

Single patterns: consist of just one candle (e.g., Hammer or Doji). They indicate rapid shifts in the market sentiment.

Double patterns: involve two candles together (e.g., Engulfing). They are more reliable.

Triple patterns: take three candles (e.g., Morning Star).

Some patterns proclaim "price will turn." Others proclaim "trend will persist." You need to understand which is which. Understanding the difference between bullish and bearish market conditions helps you apply these patterns correctly.

Top 5 Bullish Candlestick Patterns

1. Hammer It looks like a hammer with a body that is small on top and a long line below. It is a strong buyer's signal at the bottom.

2. Bullish Engulfing An enormous green candle completely envelops the preceding red candle. This is a very strong signal. The price is most likely to rise thereafter.

3. Morning Star A three-candle pattern is formed; first red, then a small one in the middle, and finally a big green one. It indicates the sellers are exhausted, and the buyers have taken over.

4. Piercing Line A downward (red) candle is followed by an upward (green) candle that goes above the midpoint of the red candle. Buy calls can be made near support and resistance in trading levels.

5. Three White Soldiers It is a sequence of three green candles with only small wicks. The buyers are really strong. The trend is up.

Important: Before making any purchase, ensure the pattern is completely formed.

Top 5 Bearish Candlestick Patterns

1. Shooting Star A small body with a long upper wick. The formation appears at the top. It indicates that the sellers are in control and pushing the price down.

2. Bearish Engulfing A large red candle completely covers a preceding green candle. It is an indication of selling pressure, and the price usually drops afterwards.

3. Evening Star The opposite of the Morning Star. It consists of three candles, the first is green, the second one is small, and the last one is a big red. It indicates that the buyers are now weak.

4. Dark Cloud Cover A green candle followed by a red candle that opens high but closes below the middle of the green candle. A signal to sell is given.

5. Three Black Crows Three consecutive red candles. Extremely bearish. If you see this, make sure to check your stop loss immediately.

Note: Always confirm that the volume is high when these patterns occur.

How to Read Candlestick Patterns

First rule: Observe the trend direction. Positive patterns are more effective when the trend is already rising. Negative patterns are more effective when the trend is falling.

The volume is a key factor. A strong pattern is signaled with a high volume. On the other hand, a low volume might lead to the failure of the pattern.

Analyze the support and resistance lines. Patterns at these key levels are more reliable than random ones.

Don't forget to look at the larger time frames as well. If the 1-hour chart indicates a buy but the daily chart indicates a sell, then proceed with caution. This is especially important during stock market timings in India when volatility can be higher.

Never make any decision until the candle has closed.

Combining Technical Analysis with Candlestick Patterns

Candlestick patterns and other chart patterns to obtain even better results. A case in point is the situation where a triangle pattern is breaking with a bullish engulfing candle; this would indeed be a very strong signal.

The pdf guides on breakout patterns are teaching the same things about chart patterns. However, if you add candlestick confirmation, your success rate increases greatly.

The reason for mixing to work is that you are viewing it from two different perspectives. If you are willing to learn the basics of stock analysis together with patterns, then beginner-friendly websites like Dhanarthi.com offer you simple tools. Learn more about technical analysis principles charts indicators uses to strengthen your trading approach.

How to Use Indicators with Candlestick Patterns

Employ merely 2-3 indicators and do not complicate matters:

Moving Averages (20, 50 lines): They signal the direction of the trend. Buy signals made above these lines are higher quality ones.

RSI: It indicates whether the stock is oversold (below 30) or overbought (above 70). Bullish pattern + RSI below 30 = good buy signal.

MACD: Two lines that represent momentum. It is very influential when they cross along with a good pattern.

Volume: More volume is equal to a stronger pattern. It's that simple.

Maintain simplicity You will get confused if you use a lot of indicators. Many traders also combine this with fundamental analysis vs technical analysis to make better decisions.

Intraday Trading Strategy with Candlesticks

During day trading, employ swift formations such as Engulfing, Hammer, and Shooting Star. They are quick to develop.

The most suitable time frames for intraday strategy pdf trading are:

• 5-minute chart for fast trades (scalping)
• 15-minute chart for standard day trades

Straightforward rules:

• Purchase after the pattern has ended
• Place a stop loss under the lowest point of the pattern (for buy) or over the highest point of the pattern (for sell)
• Take profit at 1.5 to 2 times your risk.

Morning strategy: Wait for the first quarter of an hour. Afterward, search for a breakout with powerful candles. If you want to learn more about what is intraday trading, we have a detailed guide.

Utilize the leading stock screener at Dhanarthi stock screener to discover excellent stocks for day trading.

Risk Management

The use of your funds in one single trade should not exceed 2%. The principle is this way.

Stop loss is indeed necessary. Place it slightly under the pattern. In case the pattern fails, you will leave with a slight loss.

Let's say you have the amount of ₹10,000. The acceptable risk is 2%, which equals ₹200. If your stop loss is ₹2 per share, then just buy 100 shares.

Always look for a 2x profit at least compared to your risk. Even if you are mistaken every other time, you will still end up with a profit. Before starting, make sure you understand what is stockbroker and their role in your trading journey.

Safeguarding your money is the priority over making money.

Common Mistakes to Avoid

Going against the trend: Do not purchase when the trend is descending. The pattern will no longer be valid.

Ignoring volume: Patterns formed on low volume usually do not succeed.

Excessive trading: Only the most favorable patterns should be traded. A pattern does not develop with every single candle.

No stop loss: You are gambling, not trading. Always apply a stop loss.

Emotive trading: Follow your strategy. Don't allow fear or greed to overpower you.

Impatience: Wait for the candle to finish. Don't speculate.

Conclusion

Learning candlestick chart patterns with a PDF is going to be very simple if you do it every day. So first, identify the different basic patterns, check them with the volume, and no matter what, always protect your money with a stop loss.

Key things to keep in mind are: Take it slow, validate every signal, have a stop loss always, and practice with paper before going live with money.

You can get the free candlestick chart pattern book pdf from various websites and do daily practice. Consider backtesting trading strategy to validate your approach before risking real money.

For financial statement analysis and other trading tools, visit how Dhanarthi helps you analyze financial reports. They have resources that are easy for beginners to understand.

Initially, practice demo trading. After gaining confidence, gradually invest your own money.

Disclaimer: This article is for educational purposes only and should not be considered as financial or tax advice. Tax laws are subject to change, and individual circumstances vary. Please consult with a qualified chartered accountant or tax advisor for personalized guidance based on your specific situation.

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