Candlesticks as a trader's superpower: from theory to practice

Japanese candlesticks are not just beautiful charts. They are the language that the market speaks. Originating in Japan in the 18th century for rice analysis, they have become a universal weapon for crypto traders and remain relevant to this day.

How to read a candle: anatomy in 30 seconds

Each candle is a snapshot of the battle between bulls and bears over a selected period of time. It consists of two parts:

The body of the candle — that's where the focus is. The distance between the open and the close. A green (white ) candle = close above open = bulls won. A red (black ) = close below = bears are dominating.

Shadows (wicks) are the maximum and minimum of the period. A long lower wick may indicate that the price fell but then recovered. A long upper wick means, on the contrary, that the price went up but then retraced.

Why candles > other charts

One candle provides four parameters: open, close, high, low. So much information in one place. You need to look at many bars to get the same thing. Candles are intuitive — a beginner will understand at a glance whether the asset has fallen or risen.

Patterns that work

Hammer - a small body with a long lower wick. The shape resembles a hammer. Usually signals a bottom, a bounce upwards is possible.

Shooting star is the opposite of a hammer. Small body, long upper wick. It can be a warning before a drop.

Doji - the body is almost indistinguishable, the open is nearly equal to the close. This is market uncertainty, indecision. Often occurs before major movements.

Engulfing (Engulfing) — a new large candle completely covers the previous one in size. If the green engulfed the red = bullish signal. If the red engulfed the green = bearish.

How not to drain the depo using candles

1. Do not rely solely on patterns. Candles are one of the tools. Combine with support-resistance, volumes, moving averages. One candle does not predict 100%.

2. Context is king. A hammer on an uptrend = a different meaning than a hammer on a downtrend. Always look at the bigger picture.

3. Practice with history. Open the BTC, ETH, SOL chart on a monthly timeframe. Find the patterns that worked and the patterns that gave false signals. Intuition will come with time.

Result

Candles are a bridge between price and your understanding of the market. They do not provide guarantees ( nothing gives them), but they give you a structure and a language for analysis. Learn the basic patterns, combine them with other tools, and you will see the market differently.