Multi-Candle Patterns

In one line: When 2 or 3 candles form a shape at a key level, they can hint that the crowd is about to change its mind.

🎯 What you'll learn

What a multi-candle pattern is (a shape made by 2 or 3 candles together, not one).
The main reversal shapes: engulfing, harami, morning/evening star, tweezers.
Why these shapes only matter at key levels (price zones that stop or turn price).
The difference between a reversal (trend flips) and a continuation (trend carries on).

📘 Key concepts

Engulfing — one candle swallows another

A second candle that fully covers the previous candle's body, in the opposite colour.

Bullish engulfing (buyers take over): after a fall, a small red candle (price went down) is followed by a big green candle (price went up) whose body wraps around the red one.
Bearish engulfing (sellers take over): after a rise, a small green candle is followed by a big red candle that swallows it.
Think of a cricket match: the other team was scoring, then your team hits a huge over and takes the lead. That big swing is the "engulf".

Harami — a small pause inside a big candle

A tiny candle that sits inside the body of the previous big candle. ("Harami" means pregnant — the big candle is the belly, the small one the baby.)

It shows the strong move has paused. The crowd is unsure.
It is a hint, not a promise. A reversal may follow, or price may just carry on.

Morning star and evening star — three-candle turns

A three-candle group that marks a possible turn.

Morning star (bullish): big red candle → small "indecision" candle (buyers and sellers roughly equal) → strong green candle. Like sunrise after a dark night.
Evening star (bearish): big green candle → small candle → strong red candle. Like the sky darkening at dusk.

Tweezers — a wall at the same price

Two candles whose highs (or lows) reach almost the exact same price.

Tweezer top: two matching highs = price was rejected (pushed back) at that level twice. Sellers are defending it.
Tweezer bottom: two matching lows = buyers keep defending that floor.

🔍 Example

Stock ABC falls for a week and lands on ₹100, a level where it stopped falling last month (support). You watch the daily candles:

   red    GREEN
    |      |
   [ ]   [   ]   <- green body wraps the red body
    |      |
  ₹100   ₹100

Day 1: small red candle, close ₹101.
Day 2: big green candle, opens ₹100, closes ₹108 — it engulfs yesterday's red body.
This is a bullish engulfing at support. That is a much stronger signal than the same shape floating in the middle of nowhere.
You still wait for confirmation (proof): the next candle also closes higher, and volume (number of shares traded) is bigger than usual. Only then do you act, with a stop-loss (an auto-sell order to cap your loss) just below ₹100.

⚠️ Common mistakes

Trading a pattern in "the middle of nowhere" — away from any support or resistance. There it means little.
Acting on the pattern before it completes. A morning star needs all three candles first.
Forgetting confirmation. One nice candle is a hint, not a signal.
Ignoring the trend. A bullish pattern inside a strong downtrend can fail fast.
Betting big. Patterns are odds, not certainty — position size small and always use a stop-loss.

✅ Key takeaways

Groups of candles tell a story that one candle cannot.
Engulfing = strong takeover; harami = a pause; stars = three-candle turns; tweezers = rejection at a level.
These shapes work best at key levels, not in empty space.
Always wait for confirmation (next candle + volume) before acting.
A reversal flips the trend; a continuation keeps it going — know which you expect.

📝 Quick check

Q: In a bullish engulfing, what does the second candle do? A: Its green body fully wraps around (swallows) the previous red candle's body.
Q: Why is a pattern at support or resistance stronger than the same pattern in the middle of the chart? A: At a key level the crowd is already fighting over price, so a turn there is more meaningful.
Q: What is "confirmation" and why wait for it? A: Extra proof — like the next candle agreeing plus higher volume. It lowers the chance of acting on a false signal.

📖 New words

Multi-candle pattern — a shape formed by 2 or 3 candles read together.
Engulfing — a candle whose body fully covers the previous candle's body in the opposite colour.
Harami — a small candle sitting inside the previous big candle's body; a pause.
Morning / evening star — three-candle reversal groups (bullish / bearish).
Tweezers — two candles with matching highs or lows, showing rejection at a level.
Reversal — when the trend changes direction.
Continuation — when the trend keeps going the same way.
Confirmation — extra evidence (next candle, volume) before you trust a signal.
Support — a price floor where falling price tends to stop.
Resistance — a price ceiling where rising price tends to stop.
Volume — how many shares were traded in that period.
Stop-loss — an order that auto-sells to limit your loss.

Educational content only — not financial advice. Trading involves the risk of losing money.