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Multiple-candle patterns: engulfing, harami, gaps and star formations
Updated 4 August 2026 · 3 min read · 14 Contents
Plain-language meaning
Multiple-candle patterns compare ordered relationships across two or more completed bars. Engulfing focuses on real-body containment, harami on a smaller body inside the prior body, and morning/evening star families combine a strong first candle, a smaller middle candle and an opposing third candle.
Learning objectives #
You should be able to distinguish body containment from full-range containment, state how gaps are treated, define the preceding trend, and avoid recognising a pattern before its final candle closes.
Core concept #
For body containment, compare max(open,close) and min(open,close) rather than high and low. A bullish engulfing candidate typically follows a decline, begins with a downward body and ends with an upward body whose real body contains the first. Harami reverses the size relation. Star definitions need a middle-body threshold and a third-candle penetration rule.
Method and conventions #
Freeze rules for equality, gaps, trend window, body ratios and third-bar confirmation. Some markets rarely produce textbook body gaps, so do not silently relax the definition after seeing results. Evaluate pattern frequency and later outcomes separately.
Use it in XMarketRadar #
Use the chart to inspect every bar and the Screener only for patterns with a disclosed implementation. Hover exact OHLC, confirm three completed timestamps, and compare volume without turning missing volume into zero.
Worked example #
Day one opens at 104 and closes at 100. Day two opens at 99 and closes at 105. The second real body contains the first and has the opposite direction, satisfying one bullish-engulfing geometry rule. It remains only a geometry match until preceding-trend and other declared conditions are checked.
How to interpret it #
A match states that ordered OHLC relationships occurred. It does not establish which participants acted, why they acted or what the next close will be. Gaps can carry information about overnight repricing but can also reflect corporate actions or source adjustment.
Limitations and common mistakes #
Common mistakes are using high-low containment when the rule specifies real bodies, accepting an unfinished third candle, ignoring equality policy, labelling isolated shapes without a prior trend, and counting overlapping matches as independent observations.
Market-specific differences #
Continuous markets, auction-heavy venues and price-limit markets exhibit different gap behaviour. Pattern thresholds should remain disclosed rather than redesigned per venue to force similar match counts.
Key takeaway #
Key takeaway: multi-candle patterns are ordered Boolean rules. Reproducibility requires exact containment, gap, trend and completion definitions.
Practice exercise #
Practice: encode one engulfing and one harami rule in plain language, then hand-check five examples including equality and missing-session edge cases.
Educational use only #
This chapter is descriptive education. It is not investment advice, a price prediction, a recommendation, a claim of predictive accuracy, or an instruction to buy, sell, rebalance or place an order.