Candlestick Patterns for the CMT Exam: Complete Visual Guide

Candlestick Patterns on the CMT Exam

Candlestick analysis falls under Advanced Charting on CMT Level 2 (20% weight). Originally developed in 18th-century Japan, these patterns provide powerful visual signals.

See the Level 2 deep dive in our main guide.

Single-Candle Patterns

Doji

Open ≈ Close — represents indecision. Types:

• Standard Doji: Cross shape
• Long-legged Doji: Long shadows, extreme indecision
• Gravestone Doji: Long upper shadow, bearish at tops
• Dragonfly Doji: Long lower shadow, bullish at bottoms

Hammer & Hanging Man

Same shape (small body, long lower shadow), different meaning by location:

• Hammer: At bottom of downtrend → bullish reversal
• Hanging Man: At top of uptrend → bearish warning

Shooting Star & Inverted Hammer

Small body, long upper shadow:

• Shooting Star: At top → bearish reversal
• Inverted Hammer: At bottom → bullish reversal

Multi-Candle Patterns

Engulfing Patterns

• Bullish Engulfing: Small bearish candle followed by larger bullish candle that completely "engulfs" it
• Bearish Engulfing: Small bullish candle engulfed by larger bearish candle

Morning & Evening Star

Three-candle reversal patterns:

• Morning Star: Bearish → small body (star) → bullish = bullish reversal
• Evening Star: Bullish → small body → bearish = bearish reversal

Three White Soldiers / Three Black Crows

Three consecutive strong candles:

• Three White Soldiers: Three bullish candles = strong bullish signal
• Three Black Crows: Three bearish candles = strong bearish signal

Volume and Candlestick Confirmation

Candlestick signals are more reliable when confirmed by:

• High volume on the signal candle
• RSI divergence confirming the reversal
• Pattern occurring at key support/resistance levels
• Follow-through in the next 1–3 candles

Exam Tips

Practice recognizing patterns in our chart-based questions. Full guide: CMT exam 2026.