Today we're going to talk about the method of Japanese candlesticks, which is one of the most important methods that can help you determine the market direction.
Japanese candlesticks are one of the most popular tools in technical analysis for trading cryptocurrencies (and others like stocks and forex). They help traders understand price movement visually and easily.
Let me explain it to you simply:
» What are Japanese Candlesticks?
The Japanese candlestick represents price movement over a specific time period (e.g., 1 minute, 1 hour, a day, etc.). Each candle shows:
Opening Price (Open)
Highest Price Reached (High)
Lowest Price (Low)
Closing Price (Close)
» Candle Shape:
The wide part (the body): the difference between the opening and closing price.
The thin lines above and below (the wicks): represent the highest and lowest prices reached during the period.
If the closing price is higher than the opening → the candle is bullish (usually green or white)
If the closing price is lower than the opening → the candle is bearish (usually red or black)
» How can I benefit from them?
Candlesticks give you an idea about market behavior and whether buyers (bulls) or sellers (bears) are in control. In certain patterns, you can predict the upcoming direction of the price.
Examples of famous patterns:
» 1. Hammer Candle:
Occurs at the end of a downtrend
Small body and long lower wick
Signal of a potential reversal and rise
» 2. Hanging Man Candle:
Same shape as the hammer, but appears after an uptrend
Can indicate the beginning of a decline
» 3. Engulfing Candles:
A large candle engulfs the previous one
If a green candle engulfs a red one → potential rise
If a red candle engulfs a green one → potential decline
» 4. Doji:
Opening price ≈ closing price
Indicates indecision in the market, a reversal may follow
Tips to benefit from them:
Use candles with other indicators (like RSI or MACD) to confirm signals.
Don't rely on just one candle, look at the overall context and price movement before it.
Try to learn Japanese candlestick patterns and practice them on a demo account first. $BTC $ETH $DOGE
