I have previously studied candlestick charting techniques, which are quite interesting. Recently, I had some free time, so I organized various chart patterns into a small visual guide. It’s purely categorization, without involving practical trading cases. Friends who are interested can refer to it. This article mainly discusses reversal patterns.

**Basic Structure of Candlestick Charts**

A single candlestick consists of three parts: the body, the upper shadow, and the lower shadow. The body shows the opening and closing prices, while the shadows reflect the extreme values during the period—the highest and lowest prices. When the body is very small, we call it a spinning top, indicating indecision between buyers and sellers. In extreme cases, it becomes a doji.

**Three Major Reversal Patterns**

**Pattern 1: Hammer and Hanging Man**

How to identify? Focus on two points: (1) The body must be short, color is not important; (2) The upper shadow is almost nonexistent or very short, and the lower shadow must be at least twice the height of the body. The strength of the signal depends on several factors—hammer indicates a bullish reversal, hanging man indicates a bearish reversal, and the longer the lower shadow, the clearer the signal.

**Pattern 2: Engulfing Pattern (also called Enveloping Line)**

Identification criteria: (1) Consists of two consecutive candles, with opposite colors; (2) The second candle’s body completely engulfs the first candle’s body, and the shadows do not necessarily need to be engulfed. When is the signal strongest? When the first candle is small and weak, the second candle has a large and strong body, and the preceding trend has been long-term. If the engulfing occurs on a day with unusually high trading volume, even swallowing several previous candles, it is especially reliable.

**Pattern 3: Dark Cloud Cover**

Two strict criteria: (1) The opening price on the second day must be above the high of the first day; (2) The closing price on the second day must fall below the midpoint of the first day’s body. When is it most meaningful? The deeper the penetration, the better. It is most significant when occurring during a long-term upward trend, and the next day’s opening must break through a key resistance level.