Why most candlestick cheat sheets are useless
Most candlestick cheat sheets are wallpaper: a grid of pretty shapes with a one-word signal next to each, and almost nothing to help you decide which one is actually worth your money. They list thirty-odd patterns as if a hammer and a three-line strike carry the same weight, when the tested evidence says they do not.
I built this cheat sheet the other way around. The patterns below are sorted by how well they actually perform, using the largest public dataset on candlestick reliability, so you can tell the signals that work from the ones that only look good in a diagram.
If you are new to reading candles at all, start with how to read a candlestick chart, because every pattern here is just a specific arrangement of the same four data points.
How 103 patterns actually got ranked
The reference for the numbers in this cheat sheet is Thomas Bulkowski's Encyclopedia of Candlestick Charts, built on millions of candles and summarised free on ThePatternSite. He scored each of 103 patterns on overall performance, with rank 1 the best and 103 the worst (ThePatternSite).
Performance combines how often the pattern hits its price target and how far price moves after it, across bull and bear markets. A rank of 5 is not slightly better than 55; on a 103-pattern scale that is a chasm.
I lean on this dataset because it is one of the few places a retail trader can see candlestick reliability measured rather than asserted. The numbers are not a guarantee for your next trade, but they are a far better filter than memorising shape names.
The cheat sheet: patterns ranked by tested performance
The table below lists the patterns you will see most often, grouped by what they signal and ordered by how well Bulkowski's testing says they perform. Read the rank column as the headline: lower is better, out of 103.
| Pattern | Signals | Bulkowski rank (/103) | What the data shows |
|---|---|---|---|
| Three-line strike (bearish) | Bullish reversal | 1 (best overall) | Reverses bullish 84% of the time |
| Bearish engulfing | Bearish reversal | 5 | Reverses bearish 79% of the time |
| Three black crows | Bearish reversal | Top tier | Among the best upward breakouts |
| Three white soldiers | Bullish reversal | Top tier | Among the best downward breakouts |
| Morning star | Bullish reversal | Reliable (freq. rank 66) | Frequently acts as a bullish reversal |
| Shooting star | Bearish reversal | 55 (mid-list) | Average at best; overrated by beginners |
| Southern doji | Bullish reversal | Weak | Reverses bullish only 52% of the time |
| Inverted hammer | Bullish reversal (in theory) | Misreads often | Acts as bearish continuation 65% of the time |
I keep this matrix to hand because it kills the idea that all reversal candles are equal. The three-line strike and the engulfing patterns sit near the top; the doji and the inverted hammer sit near the bottom, and most beginners trade them as if they were the strongest of the lot.
The best-performing candlestick patterns
The bearish three-line strike is the highest-rated pattern in Bulkowski's entire set, reversing bullish 84% of the time after what looks like a bearish move (ThePatternSite). It is rare, which is part of why it ranks so well: patterns that appear less often tend to be taken more seriously by the data.
The bearish engulfing is the workhorse of the top tier, performing as a bearish reversal 79% of the time and ranking 5 out of 103 (ThePatternSite). It is common enough to trade regularly and strong enough to be worth the attention.
The three-candle clusters, three black crows and three white soldiers, also sit in the top tier. Bulkowski's testing puts three black crows among the best performers for upward breakouts and three white soldiers among the best for downward breakouts, which makes them more useful than most single-candle reversals (sacredtraders; ThePatternSite).
The morning star is the bullish reversal I trust most after engulfing, because it shows up often enough to find and acts as a reversal frequently, with a frequency rank in the middle of the pack (ThePatternSite).
The overrated patterns everyone trusts too much
The patterns beginners love are often the ones the data likes least, and the gap is uncomfortable. The inverted hammer is taught as a bullish reversal, but Bulkowski found it acts as a bearish continuation 65% of the time, which means it usually does the opposite of what the textbook claims (ThePatternSite).
The shooting star ranks a mid-list 55 out of 103, which is as average as average gets. It looks dramatic, with its long upper wick, but the data says the drama rarely pays off (ThePatternSite).
The doji family is the classic indecision candle, and the numbers back the hesitation: the southern doji reverses bullish only 52% of the time, which is barely better than a coin flip (ThePatternSite). I treat a doji as a pause that needs the next candle to decide direction, never as a signal on its own.
This is the part of the cheat sheet that matters most. Trading the famous patterns blindly is how accounts bleed, because you are trading the logo of a pattern rather than its tested edge.
How to actually read a candle
Every candlestick is built from four numbers: the open, the high, the low, and the close. The body runs from open to close, and the wicks, or shadows, stretch out to the high and the low.
A bullish candle closes above where it opened, and a bearish candle closes below. The body shows who won the session, and the wicks show how far each side pushed before losing ground.
I read three things off any candle before I care about its name: the size of the body, the length of the wicks, and where it sits relative to the candles around it. A long body means conviction, long wicks mean rejection, and a doji-sized body means neither side won.
If you want the mechanics of single candles in more depth, the pin bar vs hammer breakdown shows how one shape flips meaning with its location.
Why context beats shape
A candlestick pattern is only as good as the trend around it, because a reversal signal needs something to reverse. A hammer in the middle of a range is noise, and the same hammer at the end of a clean downtrend is a genuine signal.
I ask one question before I take any pattern: is there an extended move for it to reverse? If price has been grinding in one direction and a top-tier reversal candle appears at an obvious level, the setup has context. If the chart is chopping sideways, almost no candle is worth trading.
Confluence is the multiplier that turns a decent pattern into a good one. A bullish engulfing that lands on daily support, with an oversold reading and a higher-timeframe uptrend behind it, is a far stronger trade than the same engulfing printed in a vacuum.
The honest rule is that the candle is the trigger and the context is the trade. Trade the combination, not the shape, and you remove most of the false signals that cheat sheets never warn you about.
Reading candlesticks in forex specifically
Forex adds two wrinkles that stock charts do not have, and both change how you read candles. The market runs around the clock, which means the daily close is an arbitrary time rather than a real settlement, and liquidity shifts sharply between the Asian, London, and New York sessions.
Candles printed during the thin Asian session often have long wicks that mean less, because small orders move price further when liquidity is low. I weight a reversal candle far more when it forms during the London or New York overlap, when volume is real.
The pairs matter too. The majors, like EURUSD and USDJPY, are clean enough that candlestick patterns read the way the textbooks suggest.
Exotic pairs gap and w erratically, which makes candle shapes unreliable no matter how good the pattern's rank.
If you want the backdrop for how these candles fit into a full method, the candlestick patterns hub pulls every deep-dive guide into one place.
Confirmation and risk for every pattern
No pattern on this cheat sheet is a standalone buy or sell signal, and the ones with the best ranks still fail a meaningful share of the time. Confirmation is the next candle moving in the pattern's direction before you commit.
For a bullish reversal, that means waiting for price to break above the pattern's high. For a bearish reversal, you wait for the break below the low.
The unconfirmed entry is how a textbook hammer keeps falling straight through your stop.
I place the stop just beyond the pattern's extreme, the tip of the wick where the idea is proven wrong, and I size the position so that stop costs a fixed fraction of the account. The wick length sets the risk, which sets the size, which is why volatility-based position sizing pairs naturally with candlestick trading.
The target needs to offer at least twice the risk, or the math does not work even with a top-tier pattern. A three-line strike that reverses 84% of the time is still worthless if your winners are half the size of your losers.