Bearish reversal candlestick patterns

• Dark cloud cover

This trading pattern is a 2-candlestick pattern indicating a top reversal at the end of an uptrend, or sometimes, at the top of a congestion band. We’ve got a strong bullish real body in the first trading session. The second session opens well above the previous trading session’s high, but the market closes near the low of the day and deep within the previous session’s bullish body at the end of the day.

Dark cloud cover pattern

If the bearish real body’s close is situated well into the previous bullish real body, the likelihood for a top increases. A penetration greater than 50% of the previous is considered the norm. If the bearish stick does not close below the mid-point of the bullish candlestick then you’d be better off waiting for confirmation. This confirmation could appear as a bearish candlestick, a lower close on the third day or a large gap lower.

• Kicking

A bullish marubozu is followed by a gap down. The second session’s opening is even further below the prior session’s opening, and forms a bearish marubozu.

Kicking bearish reversal pattern

Neither of the Japanese candlesticks has wicks (or they are tiny, at best). To be sure, wait for a confirmation of the new trend.

• Abandoned baby

This candlestick pattern is quite a rare top reversal indicator. We’ve got a doji star, which is gapped away from the previous and the following trading session’s candlesticks.

Abandoned baby bearish reversal pattern

To be sure, wait for a confirmation of the new trend.

• Evening star

The first candlestick is a long bullish body. The second candlestick has a small real body that could (but is not necessarily) bullish. Then there’s a gap up which forms a star formation. At the end we’ve got a bearish candlestick with a closing price deep within the first trading session’s bullish real body. This trading pattern indicates in no unclear terms that the market is turning bearish.

Evening star

The stars may be more than one or two. The color (direction) of the star and its gaps are of no importance.

• Evening doji star

This Japanese candlestick pattern is an important indicator of top reversals. The first candlestick is a long bullish body. The second one is a doji that comes after an upward gap. The third stick is a bearish one with a close within the range of the first trading session’s bullish real body.

Evening doji star

The doji may be more than one or two, and their gaps are of no importance.

Make sure you wait for a confirmation of the new trend.

• 3 black crows

This Japanese candlestick pattern points to the imminence of a strong reversal of an uptrend. As you know, the trend is your friend except at the end when it bends. The 3 black crows are a good indication of the falling-out-of-friendship. The pattern comprises a long bearish candlesticks coming down in a stepwise fashion.

3 black crows

If the bearish candlesticks are very extended, make sure what you’re seeing is not a temporary correction and an indication of an oversold market.

Make sure you wait for a confirmation of the new trend.

• 3 inside down

The other name for this Japanese candlestick pattern is confirmed bearish harami pattern. The third trading session confirms the bearish trend reversal.

3 inside down

• 3 outside down

The other name for this Japanese candlestick pattern is confirmed bearish engulfing pattern. The third trading session confirms the bearish trend reversal.

3 outside down

Make sure you wait for a confirmation of the new trend.

• Upside gap 2 crows

This is a 3-candlestick pattern indicating a top reversal. The first candlestick is a long bullish thing followed by a real body gapping up. Then a bearish stick appears with an open above the second session’s open and a close below the second session’s close.

Upside gap 2 crows

The two bearish Japanese candlesticks of the pattern are like crows perched on a branch.

As always, it’s not a bad idea to wait for a confirmation. If in the fourth trading session prices do not regain higher ground, expect more bearish sentiment to set in.