Today's main task:
Learn (Candlestick Patterns)
Books: (Essence of Japanese Candlestick Techniques)
(New Interpretation of Japanese Candlestick Techniques) (Collector's Edition)
[Attached book download link]
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🚨 Master these candlestick patterns to become a practical expert!
(Candlestick Patterns: A Trader's Guide)
Candlestick patterns are one of the most important tools in technical analysis, helping traders predict market direction. These patterns are broadly divided into three categories: bullish (uptrend), bearish (downtrend), and neutral.
This guide will explain in detail the meanings of various candlestick patterns and how traders can utilize these patterns to make informed decisions.
🕯️ Basics of Candlestick Charts
Each candlestick consists of the following parts:
Body: The area between the opening and closing prices.
Wick or Shadow: The thin lines extending from the top or bottom of the body, indicating the highest and lowest prices.
Colors: Green (bullish) indicates the closing price is higher than the opening price; red (bearish) indicates the closing price is lower than the opening price.
📈 Bullish Candlestick Patterns (indicating price increase)
Single Candlestick Patterns
1️⃣ Hammer: Small body, long lower shadow, indicates potential bullish reversal.
2️⃣ Inverted Hammer: Similar to the hammer, but with a long upper shadow, also indicating a reversal.
3️⃣ Dragonfly Doji: Long lower shadow doji, shows strong buying pressure.
4️⃣ Bullish Spinning Top: Small body, long upper and lower shadows, indicates hesitation but with upward momentum.
Double Candlestick Patterns
5️⃣ Bullish Kicker: A large green candlestick gapping up from the previous red candlestick, indicating strong bullish sentiment.
6️⃣ Bullish Engulfing: A large green candlestick completely engulfs the previous red candlestick, indicating a reversal.
7️⃣ Piercing Line: A green candlestick appears after a red one, closing above the midpoint of the red candlestick.
8️⃣ Bullish Harami: A small green body appears inside the body of the previous red candlestick, indicating hesitation for a reversal.
9️⃣ Tweezer Bottom: Two candlesticks with nearly the same low price, indicating support.
Multiple Candlestick Patterns
🔟 Morning Doji Star: Red candlestick → doji → large green candlestick, indicating a strong reversal signal.
1️⃣1️⃣ Three White Soldiers: Three consecutive green candlesticks, indicating a strong uptrend.
1️⃣2️⃣ Bullish Engulfing Sandwich: A red candlestick sandwiched between two green candlesticks, confirming an uptrend.
1️⃣3️⃣ Morning Star: Red candlestick → small doji → large green candlestick, indicating a reversal.
1️⃣4️⃣ Rising Three Method: Green candlestick → several small red candlesticks → another green candlestick, a signal of trend continuation.
📉 Bearish Candlestick Patterns (indicating price decline)
Single Candlestick Patterns
1️⃣ Hanging Man: Appears at the end of an uptrend, small body with a long lower shadow, indicating a bearish reversal.
2️⃣ Shooting Star: Small body with a long upper shadow, a bearish reversal signal.
3️⃣ Gravestone Doji: Long upper shadow doji, indicating strong selling pressure.
4️⃣ Bearish Spinning Top: Small body, long shadows, indicating hesitation but potential decline.
Double Candlestick Patterns
5️⃣ Bearish Engulfing: A red candlestick completely engulfs the previous green candlestick, indicating a reversal.
6️⃣ Bearish Kicker: A red candlestick gapping down from the previous green candlestick, indicating strong bearish sentiment.
7️⃣ Dark Cloud Cover: The opening price of the red candlestick is higher than the previous green candlestick but closes below the midpoint of the green candlestick.
8️⃣ Bearish Harami: A small red body contained within the previous green candlestick, indicating a potential bearish reversal.
9️⃣ Tweezer Top: Two candlesticks with nearly the same high price, indicating resistance.
Multiple Candlestick Patterns
🔟 Falling Three Method: Red candlestick → several small green candlesticks → another red candlestick, a signal of trend continuation.
1️⃣1️⃣ Bearish Engulfing Sandwich: A green candlestick is sandwiched between two red candlesticks, confirming a downtrend.
1️⃣2️⃣ Three Black Crows: Three consecutive red candlesticks, indicating strong selling pressure.
1️⃣3️⃣ Evening Doji Star: Green candlestick → doji → large red candlestick, indicating a strong reversal signal.
1️⃣4️⃣ Bearish Abandoned Baby: Green candlestick → doji → large red candlestick, indicating a sharp decline.
1️⃣5️⃣ Evening Star: Green candlestick → small doji → large red candlestick, indicating a bearish reversal.
⚖️ Neutral Candlestick Patterns (indicating market hesitation)
1️⃣ Spinning Top: Small body and long shadows, indicating market indecision.
2️⃣ Doji: Opening and closing prices are nearly the same, indicating uncertainty.
3️⃣ Harami: Small candle contained within the body of the previous candle, may signal a pause in the trend.
4️⃣ Marubozu: A candle with no upper or lower shadows, indicating strong directionality (upward or downward).
🎯 In summary
Mastering candlestick patterns can help traders identify potential trend reversals, continuations, or market hesitations. However, please note that candlestick charts are best used in conjunction with other technical indicators (such as moving averages, RSI, MACD, support/resistance levels, etc.) to enhance analysis accuracy.
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