Candles on the chart are a history of struggle: buyers push the price up, sellers push it down. And one simple but powerful insight for beginners is that the shadow of the candle speaks more than the body.
Here’s an example: a long upper shadow and a small body at the bottom. This means that the price tried to rise, but was quickly pushed back down. Buyers couldn't keep up—and left the battlefield. Such a candle often signals a possible reversal downward.
This is called a “pin bar” or “rejection candle.” It works especially well if it appears after a rise and at a resistance level. Conversely, a long lower shadow after a decline may indicate an imminent reversal upward.
The insight is that it’s not always important where the candle closed. What matters is where it has been and how it finished the day. Look at the shadows. They show where the emotions were—fear, greed, panic. And the chart is primarily emotions, just in numbers.
The sooner you start to notice this—the less you will catch “entry at highs.”