🎯 In 30 seconds: Multi-candle patterns show a change in control over two or three sessions. An engulfing candle overwhelms the one before it, a harami stalls inside it, a star pauses between two strong candles, and soldiers or crows show steady pressure. Each has exact body rules, needs a clear trend before it, and still needs confirmation. The pattern’s own high or low gives you a natural stop.
Why two or three candles can say more than one
A single candle shows one session. Two or three candles show a sequence: one side in charge, then a session that changes the picture. That sequence is easier to define, and it often ends with a candle that already confirms the idea.
The cost is a later entry. This chapter builds on Single-candle patterns.
Engulfing patterns
A bullish engulfing pattern has two candles:
- A down candle that extends a decline.
- An up candle whose body starts at or below the first candle’s close and ends at or above the first candle’s open. Its body wraps around the first body.
A bearish engulfing pattern is the mirror image after a rise. Wicks are usually ignored in the definition; the bodies do the work.
The bigger the second body compared with the first and with recent candles, the stronger the message. Most coded definitions let the bodies touch at the edge, since stocks often open right at the prior close.
Harami and harami cross
Harami is a Japanese word for pregnant, which describes the shape: a long first candle with a small second body tucked inside it.
- Bullish harami. A long down candle in a decline, then a small body (of either color) that sits completely within the first body.
- Bearish harami. The mirror image after a rise.
- Harami cross. The second candle is a doji, a slightly stronger stall.
A harami says the strong side has stalled, not that the other side has taken over. It needs confirmation more than most, often a close beyond the first candle’s open.
Piercing line and dark cloud cover
The piercing line sits between a harami and an engulfing pattern in strength. After a decline:
- A long down candle.
- An up candle that opens below the first candle’s low (or at least below its close) and closes above the midpoint of the first body, but not above its open.
The dark cloud cover is the mirror after a rise: a long up candle, then a down candle that opens above the first high and closes below the middle of the first body. If the second candle closes beyond the far end of the first body, it becomes an engulfing pattern instead.
Morning star and evening star
A morning star takes three candles after a decline:
- A long down candle, the last push of the sellers.
- A small-bodied candle, the star, whose body sits below the first body. It can be a doji or a spinning top.
- A long up candle that closes above the midpoint of the first candle’s body.
The evening star is the mirror at the top of a rise. When the star is a doji, people call them a morning doji star or evening doji star.
Three white soldiers and three black crows
- Three white soldiers. Three long up candles in a row after a decline or a flat base. Each opens within the prior body and closes near its high, at a new high for the sequence.
- Three black crows. Three long down candles in a row after a rise or a stall at the top. Each opens within the prior body and closes near its low.
Two warnings come with soldiers. Shrinking bodies with growing upper wicks mean the push is tiring. And soldiers after a long rally, instead of out of a base, may be a final burst that has already run far past any sensible stop.
Entry, stop and target
These patterns hand you a natural stop: just beyond the pattern’s extreme, the lowest low of a bullish pattern or the highest high of a bearish one.
Worked example (hypothetical stock ABC). After a slide, day 1 is a down candle from $30.00 to $29.00. Day 2 opens at $28.80, dips to $28.50 and closes at $30.40, engulfing day 1’s body. Day 2’s high is $30.60.
| Choice | Rule | Price | Risk per share |
|---|---|---|---|
| Aggressive entry | Buy at the engulfing close | $30.40 | $2.00 to a $28.40 stop |
| Confirmed entry | Buy only if day 3 trades above $30.60 | $30.70 | $2.30 to a $28.40 stop |
| Pullback entry | Buy near the midpoint of day 2’s body | $29.60 | $1.20 to a $28.40 stop |
The stop sits just under the pattern low of $28.50. Like single candles, these patterns do not produce a measured target. Use the next resistance zone, a recent swing high, or a multiple of risk. The pullback entry gives the best reward to risk but often never fills.
How these patterns fail
- Wrong place. Inside a tight range, an engulfing candle is normal back-and-forth.
- Run straight to resistance. If the next level overhead is a few cents away, the trade has no room.
- The extreme gives way. A close beyond the pattern low (bullish) or high (bearish) cancels the idea.
- Market-wide days. A big candle on a day the whole market jumped says little about this stock.
| Pattern | Candles | Needs before it | Key rule | Typical stop |
|---|---|---|---|---|
| Bullish engulfing | 2 | Decline | Second body covers first body | Below pattern low |
| Bearish engulfing | 2 | Rise | Second body covers first body | Above pattern high |
| Harami | 2 | Strong run | Second body inside first body | Beyond first candle extreme |
| Piercing line | 2 | Decline | Close above first body midpoint | Below second candle low |
| Dark cloud cover | 2 | Rise | Close below first body midpoint | Above second candle high |
| Morning star | 3 | Decline | Third close above first body midpoint | Below the star low |
| Evening star | 3 | Rise | Third close below first body midpoint | Above the star high |
| Three white soldiers | 3 | Decline or base | Three long up bodies, each closing near its high | Below the first soldier |
| Three black crows | 3 | Rise or stall | Three long down bodies, each closing near its low | Above the first crow |
What to check before trusting one
- Did a real trend come before it, by your written rule?
- Are the bodies larger than the recent average, or is this a pattern made of tiny candles?
- Is it at a support or resistance zone, a moving average, or a trendline?
- Is there room to the next level for at least twice your risk?
- Does the weekly chart point the same way?
- What is the difference between a harami and an engulfing pattern? Answer: In a harami the second body sits inside the first. In an engulfing pattern the second body covers the first. One shows a stall, the other shows a takeover.
- A down candle runs from $40 to $36. The next candle opens at $35.50 and closes at $37.50. Is it a piercing line? Answer: No. The midpoint of the first body is $38, and $37.50 did not close above it.
- What does the third candle of a morning star need to do? Answer: Close above the midpoint of the first, long down candle’s body.
- Name one sign that three white soldiers are losing force. Answer: Shrinking bodies with growing upper wicks, or the pattern showing up after a long rally instead of out of a base.
Sources
- Steve Nison, Japanese Candlestick Charting Techniques (1991).
- John J. Murphy, Technical Analysis of the Financial Markets (1999).
- Marshall, Young and Rose (2006), “Candlestick technical trading strategies: Can they create value for investors?” Journal of Banking and Finance.
- Moneydesks Technical Analysis tool: candle pattern markers and the Pattern record tab.