Some of the most commonly found bullish candlestick patterns are displayed below:
A candlestick pattern should always be evaluated against the chart as a whole. For instance, the bullish hammer and dragonfly doji patterns are more reliable when they are found at the end of a downward trend.
It is also important to note that there are variants of candlestick patterns, as the textbook examples are not often found in practice. For instance, a textbook hammer candlestick has no upper wick while the image above shows that the hammer has a small upper wick.
Common bearish candlestick patterns are displayed below:
As with the bullish candlestick patterns, evaluating a given pattern using its relative position in the chart is recommended. For example, a hanging man is a more reliable signal if found after an uptrend.
When combined with volume indicators, candlestick analysis can become much more powerful. There are various candlestick patterns, with only the most commonly identified in the cryptocurrency market outlined above.