Bearish Candlestick Pattern

Bearish Reversal candlestick patterns indicate that the ongoing uptrend is going to reverse to a downtrend.

Thus, the traders should be cautious about their long positions when the bearish reversal candlestick patterns are formed.

Below are the different types of bearish reversal candlestick chart patterns:

Hanging man:

Hanging Man is a single candlestick pattern which is formed at the end of an uptrend and signals bearish reversal.

The real body of this candle is small and is located at the top with a lower shadow which should be more than the twice of the real body. This candlestick pattern has no or little upper shadow.

The psychology behind this candle formation is that the prices opened and seller pushed down the prices.

Suddenly the buyers came into the market and pushed the prices up but were unsuccessful in doing so as the prices closed below the opening price.

This resulted in the formation of bearish pattern and signifies that seller are back in the market and uptrend may end.

Traders can enter a short position if next day a bearish candle is formed and can place a stop-loss at the high of Hanging Man.

Below is an example of Hanging Man Candlestick Pattern:

Dark cloud cover:

Dark Cloud Cover is multiple candlestick pattern which is formed after the uptrend indicating bearish reversal.

It is formed by two candles, the first candle being a bullish candle which indicates the continuation of the uptrend.

The second candle is a bearish candle which opens gap up but closes more than 50% of the real body of the previous candle which shows that the bears are back in the market and bearish reversal is going to take place.

Traders can enter a short position if the next day a bearish candle is formed and can place a stop-loss at the high of the second candle. Below is an example of a Dark Cloud candlestick pattern:;