TA Education 11｜Multi-Candlestick Patterns: What Does SNDK’s K-Line Signal?

Welcome to our technical analysis column. Let’s start K-Line (Candlesticks) Part 2: Multi-Candlestick Patterns for Trend Reversals

1. "Morning Star" & "Evening Star": Three-Candle Reversal Signals

These are among the most reliable reversal patterns because they unfold in three distinct stages: Trend → Indecision → Reversal.

A. Morning Star (Bullish Bottom Reversal)

• The Pattern: Occurs at the bottom of a downtrend.

1. First Candle: A long bearish candle (Selling continues).

2. Second Candle: A small-bodied "Star" (or Doji) that gaps down below the first candle. Color doesn't matter; the small size indicates the selling pressure has stalled.

3. Third Candle: A long bullish candle that rallies to close deeply into the first candle's body (preferably above the midpoint).

• Interpretation: The first candle shows fear. The second shows a loss of momentum. The third confirms that buyers have seized control. It is a classic signal that "the sun is rising" on a new uptrend.

B. Evening Star (Bearish Top Reversal)

• The Pattern: Occurs at the top of an uptrend.

1. First Candle: A long bullish candle (Buying continues).

2. Second Candle: A small-bodied "Star" (or Doji) that gaps up above the first candle.() This shows the buyers are running out of steam.

3. Third Candle: A long bearish candle that drops to close deeply into the first candle's body.

• Interpretation: The exact opposite of the Morning Star. The rally hits a wall (the Star), and the third candle confirms that sellers have overpowered the exhausted bulls. It signals the "sun setting" on the uptrend.

2. "Rising Three Methods" & "Falling Three Methods": Bull/Bear Consolidation

These are powerful Continuation Patterns. They represent a "pause to refresh" within a strong trend, rather than a reversal.

A. Rising Three Methods (Bullish Continuation)

• The Pattern:

  • First Candle: A long bullish candle (strong uptrend).

  • Middle Candles: A group of small-bodied candles (usually 3) that drift downward but remain entirely contained within the high and low range of the first candle.

  • Final Candle: A long bullish candle that breaks above the close of the first candle.

• Interpretation: The market is "taking a breath" after a rally. The small pullback is just profit-taking, not a trend change. The final candle confirms that the bulls have rested and are ready to push higher.

B. Falling Three Methods (Bearish Continuation)

• The Pattern:

  • First Candle: A long bearish candle (strong downtrend).

  • Middle Candles: A group of small-bodied candles that drift upward but remain entirely contained within the range of the first candle.

  • Final Candle: A long bearish candle that breaks below the close of the first candle.

• Interpretation: The sharp sell-off pauses as some short-sellers cover their positions (causing the small rally). However, the buyers are too weak to reverse the trend. The final candle confirms the downtrend is resuming with force.

3. "Three White Soldiers" & "Three Black Crows": The Power of Consecutive Candles

Unlike the "Three Methods" (which pause), these patterns represent a relentless march in one direction. They often signal the start of a major new trend.

A. Three White Soldiers (Steady Advance)

• The Pattern: Three consecutive long bullish (green/white) candles.

  • Crucial Detail: Each candle should open within the previous candle’s body and close higher than the previous candle, preferably near its own high (little to no upper shadow).

• Interpretation: This indicates a systematic shift in sentiment. Buyers are aggressively stepping in session after session, overwhelming sellers. It typically marks the kickoff of a sustained uptrend.

The Bull Trap Warning (Advance Block):

• If the second and third candles become progressively smaller or show long upper shadows, this is not strength; it is exhaustion.

• This variation is called the "Advance Block." It lures buyers in (the Trap) just before the rally collapses.

• Rule: Real soldiers march with strength; weak soldiers (small bodies/long wicks) are retreating.

B. Three Black Crows (Ominous Descent)

• The Pattern: Three consecutive long bearish (red/black) candles.

  • Crucial Detail: Each candle opens within the previous candle’s body and closes lower than the previous candle, preferably near its own low.

• Interpretation: This signals a collapse in support. Investors are liquidating positions, and dip-buyers are getting crushed repeatedly. It is a severe warning that a bear market or deep correction has begun.

The Bear Trap Warning (Capitulation):

• If these candles appear after a long, extended decline, they may represent "panic selling" (Capitulation) rather than a new trend.

• This can be a Bear Trap: Short-sellers chase the bottom, only for the price to snap back violently once the panic subsides.

• Rule: Watch the volume. If volume is extreme on the third crow, it might be the bottom, not the start.

4. "Bullish Cannon" & "Bearish Cannon": Decoding Market Intentions

These patterns represent a "Reloading" sequence. The market makes a strong move, pauses briefly to accumulate energy (load the ammunition), and then fires again in the same direction.

A. Bullish Cannon (The Stacked Cannon)

• The Pattern:

  • First Candle: A strong, long bullish candle (The first shot).

  • Middle Zone: One or two small candles (often Dojis or Spinning Tops) that consolidate sideways or slightly lower, but hold the support of the first candle.

  • Third Candle: Another strong, long bullish candle that breaks above the resistance of the first two candles (The second shot).

• Interpretation: The pause in the middle isn't weakness; it's a transfer of chips. Short-term traders take profit, while new buyers step in. When the third candle fires, it confirms that the uptrend is accelerating.

B. Bearish Cannon (The Downward Plunge)

• The Pattern:

  • First Candle: A strong, long bearish candle (The drop).

  • Middle Zone: One or two small candles that consolidate sideways or slightly higher, but fail to recover significantly into the first candle's body.

  • Third Candle: Another strong, long bearish candle that breaks below the lows of the previous candles.

• Interpretation: The initial drop caused panic. The middle pause was a weak attempt to stabilize. The third candle crushes that hope, signaling that the selling pressure has reloaded for a second wave downward.

After a strong start to the year for memory stocks, $SanDisk Corp.(SNDK)$ fell 5.38% yesterday.

Which K-line pattern best fits SNDK’s rally so far this year?

Have you ever come across a stock chart that perfectly fits today’s K-line pattern?

And does the memory sector still have upside ahead in 2026?

Leave your comments to win at least 10 tiger coins!