🕯 How to understand Japanese candlestick charts in detail
Japanese candlestick charts are a visual map of price action.
Each candle provides you with four vital pieces of information about the market over a specific period of time (e.g., one minute, one hour, one day).
This is what each candle reveals to you:
🧠 Anatomy of the Japanese Candlestick
Each candle contains:
Open Price: The price at the beginning of the time period.
High: The highest point the price reached during the period.
Low: The lowest point the price reached during the period.
Close Price: The price at the end of the time period.
Candle shape:
The body (thick part) represents the distance between the opening price and the closing price.
The shadow (thin line above and below the body) represents the highest and lowest prices during the period.
Part What does it mean? 🟥 Red candle: The closing price is lower than the opening price (bearish candle) 🟩 Green candle: The closing price is higher than the opening price (bullish candle) The upper tail shows how far buyers pushed the price up before sellers took control. The lower tail shows how far sellers pushed the price down before buyers returned.
📚 Basic concepts to understand
1. Candle size matters.
Large body and small tails = strong momentum (bullish or bearish).
Small body and long tails = market indecision (trend may reverse or continue).
2. The length of the tail tells the story.
Long upper tail = Buyers were strong but sellers outperformed → Possible bearish reversal.
Long lower tail = sellers were strong but buyers outnumbered → possible bullish reversal.
3. The sequence of candles is more important than the individual candle.
One candle = one word.
Candle chain = complete sentence.
Therefore, judge candles in context and not individually.
📈 Candlestick patterns you should know
Pattern Meaning: Doji: Indecisiveness — may precede a reversal or continuation. Hammer: Bullish reversal — buyers have regained control. Shooting Star: Bearish reversal — sellers have regained control. Bullish Engulfing: Strong signal for a bullish reversal. Bearish Engulfing: Strong signal for a bearish reversal. Morning Star / Evening Star: Strong three-candle reversal patterns.
(Would you like me to create an illustration of these patterns for you too? 🎨)
🛡 How to read Japanese candlesticks professionally
✅ Start with the external zoom:
Analyze the larger time frame (such as daily or 4-hour) to understand the overall trend before focusing on the smaller time frames (such as hourly or 15-minute).
✅ Identify support and resistance areas:
Watch how the candles behave at these levels — they are the keys to the next move.
✅ Wait for confirmation:
Don't rely on just one candle.
Look for patterns + confirmation from volume or other indicators.
✅ Combine candles with technical indicators:
Candlesticks tell the story, and indicators (such as RSI or moving averages) provide additional clues.
✅ Train constantly:
Understanding candlesticks becomes easier with daily practice — even if you don't trade.
🔥 Quick summary:
Japanese candlesticks = the language of the market.
Each candle tells a story about the struggle between buyers and sellers, strength versus weakness, and fear versus greed — you just have to learn to read this story correctly.
Your mission as a trader:
Don't just memorize the shapes—understand the meaning behind them.
Combine the candle's location (in the trend or at support/resistance) + the pattern + the trading volume together to make the right decision.