☘️ What is a Japanese Candlestick Chart?
Japanese candlestick charts are one of the most popular tools in technical analysis, especially in the crypto market. Each candle represents the opening price, highest price, lowest price, and closing price over a specific timeframe – for example: 1 hour, 1 day, etc. Mastering candlestick patterns helps you identify trends, find reversal points, and make better trading decisions.
The color of the candles helps you see quickly:
• Green (or white) candle: price increases.
• Red (or black) candle: price decreases.
How to use Japanese candlestick patterns in market analysis:
Each candlestick pattern tells a unique story about supply and demand, buying – selling psychology. Some patterns indicate hesitation, while others signal reversals or continuation of trends. But importantly: candlestick patterns are not absolute buy/sell signals. Consider them as early warnings – and combine them with other tools like RSI, MA, Bollinger Bands, MACD, or Ichimoku for further confirmation.
☘️ 4 Candlestick Patterns Signaling BULLISH
1. Hammer
Appearing at the end of a bearish trend, with a long lower shadow (twice the body length). Indicates that sellers are trying to push the price down, but buyers counterattack strongly, pulling the closing price up near the opening level.
2. Inverted Hammer
Similar to a Hammer but with a long upper shadow. Although it couldn't maintain the gains during the session, the appearance of this candle indicates that buyers are starting to return.
3. Three White Soldiers
Consists of 3 consecutive bullish candles, long bodies, and short shadows. Each candle opens near the closing price of the previous one. A clear signal of strong bullish momentum.
4. Bullish Harami (Mother and Child in an Uptrend)
A long red candle followed by a small green candle entirely within the body of the previous candle. Indicates that selling pressure is weakening, and a bullish reversal signal may soon occur.
☘️ 5 Candlestick Patterns Warning BEARISH
1. Hanging Man
Similar to a Hammer but appears at the end of a bullish trend. A long lower shadow indicates that selling pressure is starting to increase, warning that the market may reverse.
2. Shooting Star
Similar to an Inverted Hammer but appears after a price increase. The upper shadow is long, and the body is small. Indicates that the price has been high but is strongly pushed down by sellers.
3. Three Black Crows
Consists of 3 consecutive bearish candles, each closing lower than the previous one. Indicates that selling pressure is clearly dominant.
4. Dark Cloud Cover
A red candle that opens higher than the previous green candle but closes below the midpoint of the green candle. Warns of a reversal from bullish to bearish.
5. Bearish Harami (Mother and Child in a Downtrend)
Opposite of Bullish Harami: a long green candle followed by a small red candle entirely within the body of the green candle. Indicates that buying pressure is weakening.
☘️ 2 Candlestick Patterns CONTINUING TRENDS
1. Rising Three Methods
1 long green candle → 3 small red candles → 1 strong green candle → uptrend continues.
2. Falling Three Methods
1 long red candle → 3 small green candles → 1 strong red candle → continues to decrease in price.
☘️ Doji Candle Pattern – Hesitation Signal
Opening price ≈ closing price → market is hesitant, trend is unclear.
Common forms:
Long-Legged Doji: Long upper and lower shadows → strong fluctuations but unclear direction.
Dragonfly Doji: Long lower shadow → potential bullish reversal.
Gravestone Doji: Long upper shadow → warns of bearish reversal.
In practice, due to the significant price volatility in crypto, the spinning top candle is often used instead of Doji as they are similar in meaning.
🍀 Conclusion
Japanese candlestick patterns are one of the 'basic weapons' but very effective in technical analysis. Whether you are a day trader or holding long positions, understanding and identifying candlestick patterns will help you read the market better.
However, do not view Japanese candlesticks as 'magic' – use them in conjunction with the overall trend, technical indicators, and careful risk management. Because the market always reflects emotions – while you need to keep a cool head and act with a plan.
#binancetrading #cryptosignals #TAO
