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Candle Patterns

Comprehensive candlestick pattern recognition system that automatically identifies classic reversal and continuation patterns for informed trading decisions

Overview

The Candle Patterns feature is an advanced pattern recognition system that automatically identifies classic candlestick formations on your charts. This powerful tool scans for both bullish and bearish patterns, providing visual signals and alerts when significant candlestick formations appear, helping traders spot potential reversal and continuation opportunities.

Key Features

Pattern Detection

  • 10 Pattern Types: Comprehensive coverage of major candlestick patterns
  • Multi-Candle Analysis: Detects single, double, and triple candle formations
  • Real-time Recognition: Patterns identified as they complete
  • Visual Markers: Clear arrows and text labels on charts
  • Customizable Display: Toggle individual patterns on/off

Visual System

  • Bull Patterns: Orange arrows below candles with pattern abbreviations
  • Bear Patterns: Orange arrows above candles with pattern codes
  • Text Labels: Shows pattern name abbreviation (BE, MS, etc.)
  • Tooltips: Hover for full pattern name and details
  • Alert System: Optional notifications when patterns form

Supported Patterns

Bullish Patterns

1. Bullish Engulfing (BE)

  • Strong reversal pattern
  • Large bullish candle engulfs previous bearish candle
  • Indicates potential trend reversal from down to up
  • Most reliable at support levels

2. Morning Star (MS)

  • Three-candle reversal pattern
  • Bearish candle, small candle/doji, bullish candle
  • Strong bottom reversal signal
  • Look for volume confirmation

3. Morning Doji Star (MDS)

  • Variation of Morning Star with doji
  • Even stronger reversal signal
  • Doji shows market indecision
  • Bullish candle confirms reversal

4. Bullish Harami

  • Two-candle reversal pattern
  • Small bullish candle within previous bearish candle
  • Shows selling pressure weakening
  • Often precedes trend change

5. Three White Soldiers (TWS)

  • Three consecutive bullish candles
  • Each opens within previous body
  • Strong uptrend continuation
  • Watch for overextension

6. Three Outside Up (TOU)

  • Bullish engulfing followed by confirmation
  • Three-candle pattern
  • Strong reversal signal
  • Higher reliability than single patterns

7. Three Inside Up (TIU)

  • Bullish harami followed by breakout
  • Confirms reversal with third candle
  • Conservative entry signal
  • Good risk/reward setup

8. Piercing Line (PL)

  • Two-candle reversal pattern
  • Bullish candle pierces 50% of bearish candle
  • Strong at support levels
  • Volume adds confirmation

9. Bullish Pattern

  • Basic bullish reversal setup
  • Specific RelicusRoad criteria
  • Filtered by Stochastic levels
  • Entry timing signal

Bearish Patterns

1. Bearish Engulfing (BE)

  • Strong reversal pattern
  • Large bearish candle engulfs bullish candle
  • Indicates potential top
  • Most reliable at resistance

2. Evening Star (ES)

  • Three-candle reversal pattern
  • Bullish candle, small candle/doji, bearish candle
  • Strong top reversal signal
  • Look for volume spike

3. Evening Doji Star (EDS)

  • Variation with doji middle candle
  • Even stronger reversal signal
  • Shows buyer exhaustion
  • Bearish confirmation critical

4. Bearish Harami

  • Two-candle reversal pattern
  • Small bearish within large bullish
  • Shows buying pressure weakening
  • Early warning signal

5. Three Black Crows (TBC)

  • Three consecutive bearish candles
  • Each opens within previous body
  • Strong downtrend signal
  • Avoid catching falling knife

6. Three Outside Down (TOD)

  • Bearish engulfing plus confirmation
  • Three-candle pattern
  • Reliable reversal signal
  • Good for timing shorts

7. Three Inside Down (TID)

  • Bearish harami plus breakdown
  • Conservative short signal
  • Lower risk entry
  • Confirm with volume

8. Dark Cloud Cover (DCC)

  • Two-candle reversal pattern
  • Bearish pierces 50% of bullish
  • Strong at resistance
  • Classic topping pattern

9. Bearish Pattern

  • Basic bearish setup
  • RelicusRoad specific criteria
  • Stochastic filtered
  • Timing for shorts

Trading Applications

Pattern Trading Strategy

  1. Pattern Recognition: Wait for complete pattern formation
  2. Context Analysis: Check location (support/resistance)
  3. Confirmation: Look for volume or indicator confirmation
  4. Entry: Enter on pattern completion or breakout
  5. Stop Loss: Place beyond pattern extremes
  6. Target: Use measured moves or key levels

Reversal Trading

  • Focus on star patterns and engulfing
  • Best at key support/resistance levels
  • Combine with oversold/overbought indicators
  • Use tight stops for risk management

Continuation Trading

  • Three White Soldiers/Black Crows
  • Trade in direction of prevailing trend
  • Use patterns as entry timing
  • Trail stops with trend

Confirmation Tool

  • Validate other indicator signals
  • Confirm support/resistance tests
  • Time entries with patterns
  • Reduce false signals

Integration Strategies

With Support & Resistance

  • Patterns at key levels more reliable
  • Reversal patterns at S/R extremes
  • Continuation patterns at S/R breaks
  • Multiple confluence increases odds

With Trend Indicators

  • Trade patterns with trend
  • Reversal patterns need trend weakness
  • Continuation patterns in strong trends
  • Filter counter-trend patterns

With Oscillators

  • Stochastic filters improve accuracy
  • RSI divergence with reversal patterns
  • Momentum confirmation for entries
  • Avoid patterns in neutral zones

With Volume

  • Volume surge validates patterns
  • Climax volume at reversals
  • Building volume in continuations
  • Low volume patterns less reliable

Best Practices

Pattern Selection

  1. Quality over Quantity: Focus on clear, well-formed patterns
  2. Context Matters: Location more important than pattern
  3. Multiple Timeframes: Confirm on higher timeframes
  4. Confluence: Combine with other indicators

Risk Management

  1. Stop Placement: Beyond pattern high/low
  2. Position Sizing: Smaller for reversal trades
  3. Partial Profits: Scale out at targets
  4. Failed Patterns: Exit quickly if invalidated

Market Conditions

  • Trending Markets: Continuation patterns work best
  • Ranging Markets: Reversal patterns at boundaries
  • Volatile Markets: Wider stops needed
  • Quiet Markets: Patterns less reliable

Advanced Techniques

Pattern Combinations

  1. Double Patterns: Two patterns confirming direction
  2. Pattern Clusters: Multiple signals in same area
  3. Failed Pattern Reversals: Trade the failure
  4. Pattern Sequences: Series building trend

Timeframe Analysis

  • Daily Patterns: Most reliable for swings
  • 4H Patterns: Good for day trading
  • 1H Patterns: Intraday opportunities
  • 15M Patterns: Scalping setups

Volume Patterns

  • Engulfing + Volume: Strongest reversals
  • Doji + Low Volume: Indecision confirmed
  • Soldiers/Crows + Building Volume: Trend strength
  • Pattern + Volume Divergence: Warning signal

Pattern Reliability

High Reliability

  1. Engulfing at extremes: 70%+ success rate
  2. Morning/Evening Stars: With doji even better
  3. Three-candle patterns: More confirmation
  4. Patterns at major levels: Location advantage

Medium Reliability

  1. Harami patterns: Early but less certain
  2. Single patterns: Need confirmation
  3. Mid-range patterns: Context dependent
  4. Counter-trend patterns: Higher risk

Low Reliability

  1. Patterns in choppy markets: Too much noise
  2. Against strong trend: Fighting momentum
  3. No volume confirmation: Lack of participation
  4. Too many nearby patterns: Indecision

Troubleshooting

Too Many Patterns

  • Increase Stochastic filtering
  • Focus on major patterns only
  • Use higher timeframes
  • Add confluence requirements

Missing Patterns

  • Check all patterns are enabled
  • Verify chart has enough history
  • Some patterns are rare
  • Market may lack clear patterns

False Signals

  • Add confirmation requirements
  • Check overall market context
  • Use proper risk management
  • Consider market conditions

Tips for Success

Pattern Mastery

  1. Start Simple: Master 2-3 patterns first
  2. Practice Recognition: Study historical charts
  3. Keep Journal: Track pattern performance
  4. Understand Psychology: Why patterns work

Trading Discipline

  1. Wait for Completion: Don’t anticipate
  2. Respect Stops: Failed patterns fail fast
  3. Trade Management: Have exit plan
  4. Position Sizing: Risk appropriately

Summary

The Candle Patterns feature provides traders with automated recognition of classic candlestick formations that have stood the test of time. By combining pattern recognition with proper context analysis and risk management, traders can use these visual cues to time entries and exits more effectively.

Success with candlestick patterns requires understanding not just the formations themselves, but the market psychology they represent. When used in conjunction with other RelicusRoad features and proper market analysis, these patterns become powerful tools for identifying potential trading opportunities across all timeframes and market conditions.

Tags: patterns candlestick reversal continuation Medium