Master the art of interpreting candlestick patterns for better trading decisions
Candlestick charts originated in 18th century Japan and have become the standard for visualizing price action in financial markets. Each candlestick represents price movement during a specific time period (1 minute, 5 minutes, 1 hour, 1 day, etc.) and displays four key price points: open, high, low, and close.
The visual nature of candlesticks makes it easy to identify patterns and trends at a glance. The body of the candle shows the opening and closing prices, while the wicks (or shadows) show the highest and lowest prices reached during that period.
A bullish candle forms when the closing price is higher than the opening price, indicating buying pressure and upward momentum.
Body: Distance between open (bottom) and close (top)
Upper Wick: High price minus close price
Lower Wick: Open price minus low price
A bearish candle forms when the closing price is lower than the opening price, indicating selling pressure and downward momentum.
Body: Distance between open (top) and close (bottom)
Upper Wick: High price minus open price
Lower Wick: Close price minus low price
A small bearish candle followed by a larger bullish candle that completely engulfs the previous candle's body. Indicates strong buying pressure.
Best at: Bottom of downtrends, support levels
A small bullish candle followed by a larger bearish candle that completely engulfs the previous candle's body. Indicates strong selling pressure.
Best at: Top of uptrends, resistance levels
Large bearish candle, small-bodied candle (any color), then large bullish candle. The middle candle shows indecision before buyers take control.
Reliability: High when at support levels
Large bullish candle, small-bodied candle (any color), then large bearish candle. The middle candle shows indecision before sellers take control.
Reliability: High when at resistance levels