How to Read “One-Candle Signals”

For traders working in ultra-short timeframes, a single candle can speak volumes. Learning to recognize these “one-candle signals” is a valuable skill, especially for beginners. Below are four common examples:

Long Upper Shadow – Often a bearish sign, suggesting sellers are taking profits. The longer the upper wick, the stronger the selling pressure.

Long Lower Shadow – Typically a bullish sign, showing buyers are stepping in to push prices higher. The longer the lower wick, the stronger the signal.

Doji Candle – With no real body (open and close prices are the same), a doji signals market indecision and can hint at a possible reversal. Fun fact: “Doji” comes from Japanese rice traders in the 18th century, meaning “error,” as it’s rare for prices to open and close exactly alike.

Umbrellas – Candles with a long lower wick.

Red umbrella (Hammer): Suggests heavy buying interest and potential upward movement.

Green umbrella (Hanging Man): A warning that sellers might step in, reversing an uptrend.

While one-candle patterns can provide valuable hints, they work best when viewed in the broader market context. Spotting trends and chart patterns takes practice, and for investment decisions, consulting a qualified advisor is always wise.

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