Bearish Candlestick Patterns: 7 Signals and Examples

Bullish patterns get most of the attention because most people are looking for something to buy. Bearish patterns are arguably more useful: they are how a chart tells you that a rally is running out of buyers, which matters whether you want to sell short, take profit, or simply avoid buying the top. Here are the seven worth knowing, followed by three real examples from the same week of March 2024.

Seven signals at a glance

Shooting star candlestick: small body at the bottom with a long upper wick showing failed buyers.

All seven describe the same event from different angles: buyers tried and lost. The single-candle patterns show it within one session. The two- and three-candle patterns show a rally being reversed over a few days, which is slower but harder to argue with. What none of them tell you is how far the reversal will go.

Shooting star at a record high: AMD, March 8, 2024

AMD started 2024 at 138.58 and closed at 211.38 on March 7, up 17.5% in ten sessions alone as chip stocks raced higher. RSI(14) was 74.6. On March 8 the stock opened at 213.41, ran to an all-time high of 227.30, and then sold off hard to close at 207.39, below where it opened.

A textbook shooting star wants the upper wick at least twice the body, and this one clears the bar at 2.31. The volume matters too: 120.8 million shares, the heaviest session in the window, all spent pushing to a new high that did not hold. On March 11 AMD closed at 198.39, below the star's low of 205.60. That was the confirmation. By March 20 the close was 179.73, 13.3% below the star's close, and within 60 sessions the stock had traded down to 141.16. It did not close above 227.30 again until October 8, 2025.

Same day, different shape: NVIDIA's bearish engulfing

NVIDIA printed its own version on the same session. On March 7 it had closed at 92.67 with RSI at 83.9. On March 8 it opened higher at 95.14, reached 97.40, then reversed to close at 87.53. That red body, from 95.14 down to 87.53, completely covered the previous green body from 90.16 to 92.67: a bearish engulfing. Volume was 2.05 times its 20-day average.

The follow-through was messier than AMD's. NVIDIA bounced to 91.91 on March 12 before sliding to a low of 75.61 on April 19, 13.6% below the engulfing close. It did not close above the engulfing high of 97.40 until May 23. So the pattern marked a real top for two and a half months, but someone who sold on March 8 had to sit through a 5% rebound first.

The one that failed: Alphabet, March 18, 2024

Ten days later Alphabet gave a shooting star that looked just as clean. It gapped up 5.3% on March 18, from 141.18 to an open of 148.61, touched 152.15 and closed at 147.68. Upper wick 3.54, body 0.93, on almost twice the average volume. The next day it closed at 147.03, a few cents under the star's low of 147.17.

Then nothing happened. Volume dried up to roughly half its average and price drifted sideways. On April 1 GOOGL closed at 155.49, above the star's high, and kept going. The star that looked like AMD's had simply marked a pause after a gap. The difference in hindsight: AMD's star came after a long, steep run with RSI in the 70s, while Alphabet's came after a single news-driven jump from a stock that had been flat for weeks, and the confirming close was a matter of cents with no volume behind it.

If you only buy, what do you do with these?

Most people learning to read charts are not short sellers, and that is fine. For a buyer, a bearish pattern at the top of a strong run is a prompt to act on what you already own, not to bet against it:

• Raise your stop to just under the pattern's low. If the low breaks, you are out with most of the gain.
• Take partial profit rather than guessing the top.
• Hold off on adding new positions until price shows you where buyers step back in, usually at the nearest support zone.

Before calling a top

1. Was there a real advance to reverse? A shooting star after a sideways week means little.
2. Did the pattern form at a level that matters: a prior high, a round number, a new all-time high?
3. Was volume heavy on the rejection? Heavy volume that fails to hold a high is more telling than a quiet one.
4. Has the next session closed below the pattern's low? Until it does, you have a warning, not a signal.
5. Where would you be wrong? Above the pattern's high is the usual answer.

These are the same questions you ask of bullish patterns in the candlestick basics guide, turned upside down. If you want to see how a failed high turns into a larger reversal pattern, read the guide to the head and shoulders pattern.