Hammer or Hanging Man: A candlestick with a small body and long lower
shadow. If the stock or index has been in a down-trend and we see this
formation, it's called a Hammer, which many times is an indicator that the
down-trend hit a bottom.
Doji: A candlestick with a very small body and long upper and lower shadows.
The open and close for the day, therefore, was the same or almost the same
telling us that investors have indecision of where to take the price of the
stock or index next.
Gravestone Doji: A candlestick with a very small body and a long upper
shadow. This formation is an excellent indicator in calling a market top
where buyers push the stock or index up, usually on lower volume, and then
sellers jump in and push it back down to where it initially opened.
Shooting Star: An additional formation that is a good indicator of calling
the top and where the probability of the stock or index rolling over and
beginning to head down increases substantially.
Engulfing Pattern: This is a bullish formation where day 1 closes as a
down-day, but day 2 starts with a gap-down at the open, and then buying ensues
where the buying pressure completely "engulfs" the prior day's price range.
Bearish Engulfing Pattern: This is a bearish formation where day 1 closes
as an UP-day, but day 2 starts with a gap-UP at the open, and then selling
ensues where the selling pressure completely "engulfs" the prior day's price