Technical side: Candlestick Bearish Patterns

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Been reading Steve Nison’s book “JAPANESE CANDLESTICK CHARTING TECHNIQUES” and I would to share with you some of the most popular bearish candlestick patterns. These patterns usually act as a reversal indicator which could be use to your advantage in your buy or even sell strategy.

Hanging Man

It is a single candle with a small body(either white/green or black/red) and a long lower tail just like the image below.

source: http://www.candlestickanalysis.com

It is usually found at the top of a uptrend and it signals the reversal of the uptrend. In effect it has a opposite effect of a hammer. Hanging man usually signals the point where the uptrend starts to go down. The continuous uptrend prompts buyers to buy while price is low while sellers keeps on demanding higher price. 

When the hanging man candle appears it means that those who bought are now left out hanging because the trend now is reverse. The stock is now overbought and everyone wants to get rid of their holdings thus they are force to sell lower.






Bearish Engulfing 


A chart pattern made of two candles of which a white/green candle with a small body is followed by a taller black/red candle making it look like the black/red candle will engulf the small candle.

source: www.investopedia.org

Such pattern indicates the change in trend after uptrend. 

Dark Cloud Cover

A Dark Cloud Cover is a pattern where a tall white/green candle is followed by a  black/red candle which has a higher open and a closing price not below the previous closing price.

source: http://www.econtrader.com





Bearish Piercing Pattern



A Bearish Piercing Pattern is made when a black/red tall candle is followed by a small white/green candle that is below midway the black candle’s body. If the white/green candle’s body is above midway of the black/red’s body the pattern indicates a Bullish Piercing Pattern.



Such pattern is a continuation of a downtrend. When the white/green candlestick’s body is above midway of the black/red candle, it could indicate of a reversal of the downtrend.


Financial Freedom Advocate About the blogger

Louis Delos Angeles is a Certified Public Accountant, blogger behind Investing in Philippines, and author of Investing in Stocks: Preparing for the future small amount at a time. Check him out in Google+ Learn more about Louis and his financial freedom advocacy here.

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8 comments for “Technical side: Candlestick Bearish Patterns

  1. Anonymous
    May 13, 2012 at 5:09 am

    Sir, I am a newbie, your blog is very informative. Thank you. I know nothing about technical analysis and would like to learn how to do this. San ako pwedeng mag-aral? Thank you

  2. May 13, 2012 at 6:10 am

    Thank you fro asking. If you are a client of any of the online stockbrokers you can sit in one of their free for clients technical analysis sessions. COL has one check their website. If you want to have self study you can look for Steve Nison’s book in the net(its up to you if you want to purchased it or you know what I meant already 🙂 ). Also If you watch Pesos and Sense from time to time they have technical analysis topics in between. From time to time some groups have some kind of an informal session which include technical analysis of some stocks. You can check their forums and search for one if that group has… but you can always check my site for any update on some technical analysis…

    I hope I am able to help.Thank you very much for your patronage.

  3. Anonymous
    May 20, 2012 at 4:22 pm

    I am just wondering where you can find candlestick charts of stocks in the PSE in the internet. thanks 😀

  4. May 22, 2012 at 9:30 am

    Hi there!

    You can go to the stock you are analyzing and then on the graph you can change the type of the graph to candlestick. Click on the Chart tab and in the new page the chart is presented. You can change the time frame to clearly see the chart.

  5. TAforLIFE
    February 11, 2014 at 9:22 pm

    Hi, im only using an android smartphone and sad to say i cant read candlestick charts of COL because it requires Java. Only iphone ipad has. I dont have pc here. Do you know how can i get/view candle charts of a specific stock from pse? Like a website or an app. I have bloomberg app but only shows graph. Kailangan ko kandilas hehe. Thanks

  6. January 5, 2017 at 5:48 am

    https://www.stocksph.com this one will help candle stick charting

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