In the world of financial markets, stories are not told with words, but with candles. Silent candles stand on the lines of the charts, telling tales of the struggle between buyers and sellers, and whispering to the insightful analyst about what is to come, if they listen well.
The beginning of the path: Basics of charts
Charts are the visual language of the markets, and the most famous ones are: the line chart, the bar chart, and then the most widely used and influential: the Japanese candlestick chart.
Each candle represents a time period, revealing four secrets: the opening price, the closing price, the high point, and the low point. The magic lies in its shape, as its color (green/upward or red/downward) tells you about the market's state, and its upper and lower wicks reveal hidden struggles that numbers alone do not show.
Candle Patterns: The market's hidden language
Over time, traders learned recurring patterns in candle behavior; shapes that repeat themselves as if they are the market's signatures on its decisions. Among the most prominent of these patterns:
Hammer: Appears at the bottom of a downtrend, its body is small and its wick is long, heralding the birth of a new upward move.
Hanging Man: Stands at the peak of an uptrend, indicating weakness among buyers and possibly the beginning of a reversal.
Engulfing: A strong candle that swallows the previous one, announcing the superiority of one side.
Morning/Evening Star: Triple patterns that herald a change in direction, combining hesitation followed by resolution.
These are not just artistic shapes, but psychological signals; they indicate when sellers were afraid, when buyers hesitated, and when one of them decided the battle.
Chart Patterns: Maps of trends and explosions
Alongside candles, larger patterns drawn by price movement over time appear, used to determine trends or reversals or breakouts. Among the most prominent are:
Head and Shoulders: One of the strongest reversal patterns, appearing at peaks or troughs, indicating trend fatigue and readiness to depart.
Triangles: Represent a struggle between buying and selling pressure, warning of an impending explosion.
The ascending triangle often breaks upward.
The descending triangle often breaks downward.
Flags and Pennants: Appear in the middle of a trend, as if the market is catching its breath before continuing.
Price Channels: Show a regular trend within parallel lines, used for entering and exiting while the trend continues.
My vision: When the market whispers, listen to its details
My personal vision in analysis starts from a simple principle: "Every pattern carries an intention."
I first look for the location before the shape. I am not interested in a hammer candle unless it is at a clear bottom, and I do not rely on the head and shoulders pattern unless a clear trend has formed.
As I observe the size, a strong candle without strong volume may be false.
I always look for accumulation before explosion, as the market usually catches its breath before launching or dropping, leaving traces in the form of triangles or sideways ranges.
In the end, I do not rely on a single pattern, but combine several indicators: candles, patterns, indicators, and time context, to formulate a balanced decision that does not depend on momentary intuition, but on a calm reading of the complete scene.
Conclusion
Candle patterns and charts are not magical predictions, but tools that reflect human nature in the markets: their fear, greed, patience, and hesitation. Those who master their codes come closer to understanding the market, not as reckless speculators, but as artists reading the rhythm of the battle in the silence of the candles.
