Bearish Candlesticks

What Are Bearish Candlesticks?

5 min read

Bearish candlesticks come in many different forms on candlestick charts. There are also bullish candlesticks. Bearish candles show that the price of a stock is going down. They are typically red or black on stock charts. Bullish candles show that the price of a stock is going up. They are typically green or white on stock charts. 

Bearish candlesticks make up part of the foundation of all stock charts. A bearish candlestick forms when the bears try to push the price down. The close price is lower than the opening price. They are typically either red or black on a chart. Bearish candlesticks are one of two different candlesticks that form on stock charts: bullish and bearish candlesticks.

Bearish candlesticks tell you when selling power is coming in. The markets are a tug of war between the bulls and the bears when stock trading. As a result, one side is always going to win. Some days the Bulls win. Some days the Bears win. Each candlestick tells a unique story.

When the market or a stock is bearish, the price goes down. Short sellers and put options buyers are riding those prices down.

They come in many different forms, patterns, and sizes. Their uniqueness and combinations hint at what may happen in the future. As a result, that’s why it’s so important to decipher their meaning. 

Each candlestick shows the price movement for the day—the day’s opening, closing, high, and low. In addition, the color of the candlestick tells you if the opening or closing price is higher.

Bearish candlesticks have a lower closing price. The real body is the filled part of the candlestick. The shorter the real body is, the more indecision the stock is in.

The lines coming out of the top and bottom of the candlesticks are wicks (top) or tails (bottom). They are also referred to as shadows. The top wick is the high of the day. The bottom shadow or tail is the low of the day.

They show you the selling pressure coming in. When a bearish candle forms, the stock price goes down, causing the closing price to be lower than the opening price. 

Bearish Candlesticks

Bearish Patterns

Bearish candlesticks patterns form over some time. As a result, these patterns give you insight into the future movement of a stock or market. But, of course, there will always be a continuation or reversal of a pattern or trend.

Paying attention to the patterns keeps you informed about how to buy, whether it’s going along with a stock or buying calls. As well as shorting or buying puts.

A head and shoulders pattern, also known as an F you pattern, is a bearish reversal pattern. You get a left shoulder, head, right shoulder, and neckline. The neckline is supported. As a result, if the stock breaks that support, it’s moving into a downtrend. You always want to wait for a reversal confirmation before buying or shorting. You don’t want to get caught in a fake out. Patterns are always forming on stock charts. That’s why it’s important that you can find them.

How to Trade Bearish Candlesticks

Knowing how to trade bearish candlesticks is quite simple:

  • Traders take a short position when the price breaks below the low of the bearish candlestick
  • They use a candlestick close above the high as a stop level

Day Trading Bearish Setups

When day trade, you buy and sell a stock multiple times daily. Day trading requires you to be fast and precise. If you’re not, you could lose on a trade.

The intraday charts and technical indicators must buy and sell signals and move much faster. So whether you’re trading penny stocks or the larger cap stocks, you need to be able to spot patterns quickly.

Bearish Candlesticks AAPL

Swing trading strategies are different. When swing trading, holding the stock at least overnight. Swing trades typically last 3-6 days upward. The daily chart is the best to use when making a swing trade.

Since the trade requires a longer hold, wait to see the patterns forming on a larger scale. Again, bearish candlesticks will tell whether to go long and buy call options or short and buy put options.

Frequently Asked Questions

A bearish hammer candlestick looks like a regular hammer but instead of price going up, it goes down. It has a small candle body and long lower wick. Typically it's either red or black on stock charts. This is known commonly as an inverted hammer candlestick.
A bearish reversal means that a stock may be showing signs of going into an uptrend and reversing from a current downtrend. Signs of a bearish reversal may be a hammer or doji candlestick found at critical support levels. Many of the times it completes a morning star pattern to confirm start of uptrend.

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