Let’s talk about one of the most important tools in trading: candlestick analysis. 🕯️
Understanding candles isn’t just about looking at green and red — it’s about reading market psychology in real time.
Each candlestick shows four things:
Opening price
Closing price
Highest price
Lowest price
But what really matters is what shape the candle takes — because that gives us clues about what might happen next.
Here are a few key candle patterns and the fluctuations that often follow:
🔹 Doji Candle – A candle where the open and close are almost equal. It shows indecision.
➡️ After a strong uptrend, a Doji might signal a reversal or pause. If the next candle is bearish, it often confirms trend exhaustion.
🔹 Hammer Candle – Small body, long lower wick. Found at the bottom of a downtrend.
➡️ This often signals bullish reversal. It means sellers tried to push down, but buyers stepped in hard.
🔹 Shooting Star – Small body, long upper wick. Appears after an uptrend.
➡️ Suggests bearish reversal. Bulls pushed up, but bears slammed the price back down.
🔹 Engulfing Patterns – When a full-body candle completely covers the previous one.
– A bullish engulfing after a downtrend signals potential upside.
– A bearish engulfing after an uptrend warns of incoming selling pressure.
🔹 Marubozu Candle – A candle with no wicks — just full body, all one direction.
➡️ Shows strong conviction. A bullish Marubozu often leads to momentum continuation. A bearish one might trigger sharp drops.
📊 Price behavior after candles isn’t guaranteed, but when combined with volume, support/resistance levels, and trendlines, they become powerful indicators.
For example:
– A Doji at a strong resistance might mean sellers are getting ready.
– A Hammer at key support often kicks off a bounce.
– A Bearish engulfing at a peak might be your early exit signal.
The key to mastering candle analysis is context. Don’t just trade the pattern — understand where it forms in the trend.
Stick to the basics, spot the patterns, and let the candles guide your entries and exits. 🔍
