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Bearish Candlestick Patterns

2023.08.14 MEXC

In the article "Bullish Candlestick Patterns," we introduced common bullish candlestick patterns. Bearish candlestick patterns, on the other hand, are the opposite and form after an uptrend. The appearance of bearish candlestick patterns suggests a potential reversal from an uptrend to a downtrend. When bearish candlestick patterns appear, we need to analyze and judge them in conjunction with the specific market position. Common bearish candlestick patterns include the following: ①Hanging Man Pattern ②Shooting Star Pattern ③Bearish Engulfing Pattern ④Evening Star Pattern ⑤Three Black Crows Pattern.

It is important to note that, unlike traditional financial markets, cryptocurrency candlestick charts show green for price increases and red for price decreases.

① Hanging Man Pattern
The Hanging Man is one of the bearish candlestick patterns. It refers to a situation where, after a round of price increases, a candlestick with a long lower shadow and a small body is left at the high point. This candlestick can be either bearish or bullish. The Hanging Man is a strong bearish signal. The second candlestick following the Hanging Man pattern is typically bearish, and the longer the bearish candlestick, the higher the likelihood of a downtrend beginning.

② Shooting Star Pattern
The Shooting Star pattern is aptly named as it resembles a gun sight and has a shape similar to the inverse hammer. The Shooting Star pattern typically appears at the top of an uptrend and serves as a more obvious signal of a potential trend reversal. The body of the Shooting Star is relatively short, and the upper shadow is long. It can be either a small bullish or bearish candlestick.

③ Bearish Engulfing Pattern
The Bearish Engulfing pattern usually occurs at the end of an uptrend and consists of two candlesticks. The first candlestick is a small bullish candlestick, followed by a second candlestick which is a large bearish candlestick, which engulfs the small bullish candlestick. The Bearish Engulfing pattern typically indicates significant price volatility, and the market's subsequent trend is not likely to be optimistic. The larger the body of the second bearish candle, the more significant the potential downtrend.

④ Evening Star Pattern
The Evening Star pattern appears during an uptrend and serves as a signal that the market's price trend may be topping out, with a relatively high level of reliability. If the market shows an Evening Star pattern, it needs to be treated with caution.
The Evening Star pattern consists of three candlesticks and has the opposite trend compared to the Morning Star pattern. The first candlestick of the Evening Star is a bullish candlestick, followed by a second candlestick that could be a small bearish, small bullish, or doji candlestick. The third candlestick is a bearish candle, and its low price falls below the low price of the first candlestick.

⑤ Three Black Crows Pattern
The Three Black Crows pattern consists of three consecutive bearish candlesticks without or with very short shadows. The opening price of each trading day is similar to the previous day's closing price, but as the selling pressure increases, the closing price continues to decline. The Three Black Crows pattern is usually the beginning of a downtrend.

Disclaimer: Cryptocurrency trading involves risk. This information does not provide advice on investment, taxation, legal, financial, accounting, or any other related services, nor does it constitute advice to purchase, sell, or hold any assets. MEXC Learn provides information for reference purposes only and does not constitute investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. The platform is not responsible for users' investment decisions.

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