17 Bearish Candlestick Patterns Every Trader Should Know in 2024

A bearish candlestick pattern is a formation on a candlestick chart that signals a potential reversal from an uptrend to a downtrend.

In this article, we'll explore 17 key bearish candlestick patterns every trader should know!

Key Takeaways

• Bearish candlestick patterns signal potential market reversals from an uptrend to a downtrend, making them essential for traders aiming to predict market shifts and manage risk.

• Key patterns like Bearish Engulfing, Evening Star, and Dark Cloud Cover provide strong indications of bearish sentiment, offering traders early warning signs of market downturns.

• Successful integration of bearish candlestick patterns into trading requires combining them with other technical indicators, practicing risk management, and understanding overall market conditions to avoid false signals.

17 Bearish Candlestick Patterns

Here are the top 17 bearish candlestick patterns:

1. Bearish Engulfing

2. Evening Star

3. Dark Cloud Cover

4. Shooting Star

5. Hanging Man

6. Three Black Crows

7. Bearish Harami

8. Bearish Doji Star

9. Gravestone Doji

10. Bearish Abandoned Baby

11. Tweezer Tops

12. Bearish Belt Hold

13. Bearish Kicker

14. Three Inside Down

15. Three Outside Down

16. Bearish Mat Hold

17. Upside Gap Two Crows

1. Bearish Engulfing

The bearish engulfing pattern is a strong reversal signal that appears at the end of an uptrend. It consists of two candles: a small bullish candle followed by a larger bearish candle that completely engulfs the previous candle's body.

Key Characteristic:

• The first candle is small and bullish, reflecting a continuation of the existing uptrend.

• The second candle is large and bearish, engulfing the entire body of the first candle, indicating a shift in market sentiment from bullish to bearish.

• This pattern signals that sellers have overwhelmed buyers, leading to a potential downward move.

Typical Market Conditions:

• Appears at the top of an uptrend.

• Suggests a potential reversal to the downside as selling pressure increases.

• Often seen after a period of sustained upward movement, indicating exhaustion of the buying trend.

2. Evening Star

The evening star pattern is a three-candle formation that signals a bearish reversal. It begins with a large bullish candle, followed by a small-bodied candle (either bullish or bearish) that gaps higher, and concludes with a large bearish candle that closes well into the body of the first candle.

Key Characteristics:

• The first candle is large and bullish, representing the continuation of the uptrend.

• The second candle has a small body and gaps higher, showing indecision in the market.

• The third candle is large and bearish, closing well into the first candle's body, confirming the reversal.

Typical Market Conditions:

• Found at the top of an uptrend.

• Indicates a transition from bullish to bearish sentiment.

• The gap between the first and second candles adds to the strength of the reversal signal.

3. Dark Cloud Cover

The dark cloud cover pattern is another bearish reversal signal. It starts with a bullish candle, followed by a bearish candle that opens above the previous candle's high but closes below its midpoint.

Key Characteristics:

• The first candle is bullish, reflecting ongoing upward momentum.

• The second candle opens above the high of the first candle but closes below its midpoint, showing a shift in control from buyers to sellers.

• This pattern suggests that the buying pressure is weakening, and the selling pressure is increasing.

Typical Market Conditions:

• Occurs at the end of an uptrend.

• Suggests that the uptrend is losing strength and a downtrend may be imminent.

• The higher the bearish candle closes below the midpoint of the bullish candle, the stronger the reversal signal.

4. Shooting Star

The shooting star candlestick is a single candle pattern that appears at the top of an uptrend. It has a small real body near the low of the session and a long upper shadow.

Key Characteristics:

• Small real body at the lower end of the price range, indicating a brief period of buying followed by selling pressure.

• Long upper shadow at least twice the length of the real body, showing that buyers tried to push prices higher but were overpowered by sellers.

• Little to no lower shadow.

Typical Market Conditions:

• Found at the top of an uptrend.

• Indicates that buyers tried to push prices higher, but sellers took over, driving the price back down.

• Suggests a potential bearish reversal as the market sentiment shifts.

5. Hanging Man

The hanging man is similar to the hammer pattern but occurs at the top of an uptrend, indicating a potential bearish reversal. It features a small real body, little to no upper shadow, and a long lower shadow.

Key Characteristics:

• Small real body at the upper end of the trading range, showing that the open and close prices were close to each other.

• Long lower shadow at least twice the length of the real body, indicating that sellers pushed prices down significantly during the session but buyers managed to bring the price back up.

• Little to no upper shadow.

Typical Market Conditions:

• Appears at the top of an uptrend.

• Suggests that selling pressure is starting to increase, and the uptrend might be coming to an end.

• Often followed by a bearish confirmation candle to validate the reversal.

6. Three Black Crows

The three black crows pattern consists of three consecutive bearish candles with long bodies and little to no shadows. Each candle opens within the previous candle's body and closes near its low, indicating strong selling pressure.

Key Characteristics:

• Three consecutive long bearish candles, each opening within the previous candle's body and closing near its low.

• Little to no lower shadows, indicating consistent selling pressure throughout each session.

• This pattern reflects a strong shift from bullish to bearish sentiment.

Typical Market Conditions:

• Occurs at the top of an uptrend or during a consolidation phase.

• Signals a strong shift from bullish to bearish sentiment.

• Indicates that sellers are firmly in control and a downtrend may be underway.

7. Bearish Harami

The bearish harami is a two-candle pattern that signals indecision and a potential reversal. It begins with a large bullish candle, followed by a smaller bearish candle that fits within the body of the first candle.

Key Characteristics:

• The first candle is large and bullish, continuing the existing uptrend.

• The second candle is small and bearish, fitting within the body of the first candle, indicating indecision and a potential reversal.

• This pattern suggests that the buying pressure is weakening.

Typical Market Conditions:

• Appears during an uptrend.

• Suggests a possible reversal of the uptrend due to weakening buying pressure.

• Confirmation from the next trading session is often needed to validate the reversal.

8. Bearish Doji Star

The bearish doji star is a three-candle pattern that includes a bullish candle, followed by a doji, and then a bearish candle. The doji represents indecision, while the bearish candle confirms the reversal.

Key Characteristics:

• The first candle is bullish, showing a continuation of the uptrend.

• The second candle is a doji, indicating indecision as the open and close prices are the same or very close.

• The third candle is bearish, confirming the reversal as sellers take control.

Typical Market Conditions:

• Found at the top of an uptrend.

• Indicates that the bullish momentum is weakening, and a reversal may occur.

• The doji’s presence adds weight to the reversal signal, emphasizing market indecision.

9. Gravestone Doji

The gravestone doji is a single candle pattern that has a small opening and closing price at the low of the period with a long upper shadow. This formation suggests that buyers pushed prices higher during the session, but sellers regained control, bringing the price back down.

Key Characteristics:

• Small real body at the lower end of the trading range, showing that the open and close prices were close to each other.

• Long upper shadow, indicating that buyers initially drove the price higher but sellers ultimately pushed it back down.

• Little to no lower shadow.

Typical Market Conditions:

• Appears at the top of an uptrend.

• Indicates a potential bearish reversal due to the failure of buyers to sustain higher prices.

• Often signals that the market is ready to change direction as the buying pressure fades.

10. Bearish Abandoned Baby

The bearish abandoned baby is a three-candle pattern that resembles the evening star but with a gap between the candles. It consists of a bullish candle, a doji with gaps on both sides, and a bearish candle.

Key Characteristics:

• The first candle is bullish, continuing the uptrend.

• The second candle is a doji with gaps on both sides, indicating extreme indecision and a potential reversal.

• The third candle is bearish, confirming the reversal as it closes well below the first candle's body.

Typical Market Conditions:

• Found at the top of an uptrend.

• Signals a strong bearish reversal due to significant price gaps and the doji's indecision.

• The gaps emphasize the market’s shift from bullish to bearish sentiment.

11. Tweezer Tops

The tweezer tops pattern consists of two or more candles with matching highs, indicating resistance. This pattern typically appears at the end of an uptrend and suggests that the buying momentum is fading and a bearish reversal is likely.

Key Characteristics:

• Two or more consecutive candles with identical highs show that the price cannot surpass a certain level.

• Can consist of bullish or bearish candles, but the highs are the same.

• Reflects a strong resistance level that the market struggles to break.

Typical Market Conditions:

• Appears at the top of an uptrend.

• Suggests that the uptrend is losing momentum and a reversal may be imminent.

• The identical highs signal that buyers are unable to push prices higher, leading to increased selling pressure.

12. Bearish Belt Hold

The Bearish Belt Hold is a single candlestick pattern that indicates a potential bearish reversal at the end of an uptrend. It is characterized by a long black (or red) candlestick with little to no upper shadow, opening at or near the high of the day and then closing significantly lower.

Key Characteristics:

• A single long bearish candlestick.

• Opens at or near the day's high and closes much lower, with little to no upper shadow.

• The absence of an upper shadow indicates that sellers were in control throughout the trading session.

Typical Market Conditions:

• Appears at the top of an uptrend.

• Suggests that the uptrend is losing momentum and that a bearish reversal may be imminent.

• Reflects strong selling pressure from the start of the trading session.

13. Bearish Kicker

The Bearish Kicker is a two-candlestick pattern that signals a sharp reversal in market sentiment. It occurs when a strong bullish candle is immediately followed by a bearish candle that opens at or below the previous candle's open, creating a gap down.

Key Characteristics:

• The first candlestick is bullish, typically with a long body.

• The second candlestick is bearish, opening below the previous candle's open, creating a gap.

• The gap between the two candles indicates a strong shift in market sentiment.

Typical Market Conditions:

• Appears at the top of an uptrend or after a period of bullish momentum.

• Signals a strong and sudden change in sentiment, with selling pressure overwhelming buyers.

• Indicates a potential bearish reversal, often leading to a significant downtrend.

14. Three Inside Down

The Three Inside Down is a three-candlestick pattern that signals a bearish reversal at the end of an uptrend. It consists of a bullish candle, followed by a smaller bearish candle that forms within the first candle's body, and finally a third bearish candle that closes below the first candle's open.

Key Characteristics:

• The first candle is a bullish candle, continuing the uptrend.

• The second candle is a bearish candle, with a body that is contained within the first candle's body.

• The third candle is a bearish candle that closes below the first candle's open.

Typical Market Conditions:

• Appears at the top of an uptrend.

• Indicates that the bullish momentum is weakening and that sellers are starting to take control.

• Suggests a bearish reversal, with the third candle confirming the shift in trend.

15. Three Outside Down

The Three Outside Down is another three-candlestick pattern that signals a bearish reversal. It starts with a small bullish candle, followed by a large bearish candle that engulfs the first candle, and a third bearish candle that confirms the reversal by closing lower.

Key Characteristics:

• The first candle is a small bullish candle.
• The second candle is a large bearish candle that completely engulfs the first candle.

• The third candle is a bearish candle that closes lower, confirming the reversal.

Typical Market Conditions:

• Appears at the top of an uptrend.

• Reflects a strong shift from buying to selling pressure.

• Suggests that the previous uptrend is likely to reverse into a downtrend.

16. Bearish Mat Hold

The Bearish Mat Hold is a continuation pattern that suggests the market will continue its downward trend after a brief pause. It begins with a long bearish candle, followed by several small bullish or neutral candles, and ends with another long bearish candle.

Key Characteristics:

• The first candle is a long bearish candle, setting the tone for the pattern.

• The middle candles are small, typically bullish or neutral, indicating a brief consolidation.

• The final candle is a long bearish candle that confirms the continuation of the downtrend.

Typical Market Conditions:

• Appears in a downtrend.

• Suggests that the selling pressure will resume after a brief pause or consolidation.

• Indicates that the market is likely to continue its downward movement.

17. Upside Gap Two Crows

The Upside Gap Two Crows is a three-candlestick pattern that signals a potential bearish reversal. It begins with a strong bullish candle, followed by two bearish candles that gap up but then close lower each time, filling the previous gap.

Key Characteristics:

• The first candle is a strong bullish candle.

• The second candle is a small bearish candle that gaps up but closes lower.

• The third candle is another bearish candle that also gaps up but closes lower, typically filling the previous gap.

Typical Market Conditions:

• Appears at the top of an uptrend.

• Suggests that the bullish momentum is weakening as sellers step in.

• The filling of the gap indicates increased selling pressure, signaling a potential reversal.

How to Use Bearish Candlestick Patterns in Trading

Integrating bearish candlestick patterns into your trading strategy can significantly enhance your ability to predict market reversals and increase your profit. Here are some tips on how to use these patterns effectively:

• Combine with Other Indicators: Use moving averages, RSI, and MACD to confirm the signals provided by bearish candlestick patterns. This helps ensure that the patterns are not false signals.

• Set Stop-Loss Orders: To manage risk, always set stop-loss orders when trading based on bearish patterns. This protects you from significant losses if the market moves against your position.

• Monitor Market Conditions: Bearish patterns are more reliable in certain market conditions. Pay attention to the overall trend and volume to gauge the strength of the pattern.

• Practice on Demo Accounts: Before applying these patterns in live trading, practice identifying and trading them on demo accounts to build confidence and refine your strategy.

Conclusion

Understanding and utilizing bearish candlestick patterns can be a game-changer for your trading strategy.

To enhance your trading success, remember to combine these patterns with other technical indicators, practice risk management, and stay updated on market conditions. Join XS today and start your trading journey!

FAQs

1. What is a Bearish Candlestick Pattern?

A bearish candlestick pattern signals a potential downward reversal in the market. It shows that sellers are taking control, pushing prices down.

2. Is a Doji Bullish or Bearish?

A doji can be either bullish or bearish, depending on its context in the trend. It mainly indicates indecision and potential reversal when appearing at market tops or bottoms.

3. What is the Bear Market Candle Pattern?

A bear market candle pattern is any candlestick formation that signals a downward trend or market reversal, like the bearish engulfing or dark cloud cover.

4. Which Candle is Best for Trading?

The best candle for trading depends on the context, but the doji, hammer, and engulfing patterns are popular for their reliability in signaling potential market reversals.

5. Can Bearish Candlestick Patterns be Used in all Markets?

Yes, bearish candlestick patterns can be applied across various financial markets, including stocks, forex, commodities, and cryptocurrencies. However, their effectiveness may vary depending on market conditions.

6. What is the Difference Between a Single Candle Pattern and a Multiple Candle Pattern?

Single candlestick patterns, like the Shooting Star, involve just one candle, while multiple candlestick patterns, such as the Bearish Engulfing or Evening Star, involve two or more candles to form a recognizable pattern.

7. Can Bearish Candlestick Patterns Fail?

Yes, bearish candlestick patterns are not foolproof and can fail, especially in highly volatile markets or when other market forces are at play. It’s important to use them as part of a broader trading strategy.