Types of Japanese candles in technical analysis
3 main types:
---
1️⃣ Bullish candles (📈 Positive)
Color: 🟩
Description: Closing above the opening.
Indication:
Buying strength → Likelihood of continuation or beginning of an upward trend.
Usage:
After a drop → Possible buy signal.
During an upward movement → Confirmation of upward continuation.
Recommended with:
✅ Breakthrough Resistance
✅ Near a strong support level
---
2️⃣ Neutral candles (⚖️ Indecision)
Color: 🟥 or 🟩 with a very small body
Description: Opening ≈ Closing
Indication:
Balance between buyers and sellers → Anticipate a coming move.
Usage:
Not reliable on its own.
It's best to wait for a confirmation candle afterward.
Recommended with:
✅ Support/Resistance zones
✅ Possible reversal expected
---
3️⃣ Bearish candles (📉 Negative)
Color: 🟥
Description: Closing below the opening.
Indication:
Selling pressure → Likelihood of a downward trend.
Usage:
After a strong rise → Possible sell signal.
During a decline → Confirmation of downward trend continuation.
Recommended with:
✅ Break Support
✅ Strong resistance
---
Golden Tip (⭐):
Do not rely on a single candle only
→ Combine with:
🔹 Candles
🔹 Trend lines
🔹 Technical indicators (RSI, MACD)
🔹 Support and Resistance zones
---
Simple trading strategy for beginners
"Reversal candle at support or resistance"
Tools:
📊 Chart (15m/1h or Daily)
📏 Support/Resistance
🔍 Candle type
---
✅ Steps:
1. Identify support or resistance:
🟦 Support = Upward Retracement
🟥 Resistance = Downward Retracement
2. Wait for a reversal candle:
🟩 At support = Bullish candle (like 'Hammer')
🟥 At resistance = Bearish candle (like 'Shooting Star')
3. Entry after closing:
🟢 Buy after a support candle
🔴 Sell after a resistance candle
4. Define the target and stop loss:
🎯 Take Profit: Resistance (for buy) / Support (for sell)
❌ Stop Loss: Below/Above the reversal candle
---
Practical Example (Visual):
Price reaches support
Shows a Hammer candle
Buy Entry
SL below the tail, TP at resistance
