Japanese candlestick patterns are one of the most widely used tools in forex trading. If you’ve made it this far, congratulations! You’re now better equipped to read and understand the candlestick charts that guide millions of forex traders around the world.
🕯 What Are Japanese Candlesticks?
Japanese candlesticks are a visual representation of price movements within a given time period. They tell traders whether buyers (bulls) or sellers (bears) are in control.
🔍 Key Components of a Candlestick:
- Body (Real Body):
- Hollow/White Candlestick: Close is above the open (bullish).
- Filled/Black Candlestick: Close is below the open (bearish).
- Shadows (Wicks):
- Upper Shadow: Shows the high of the session.
- Lower Shadow: Shows the low of the session.
📈 Candlestick Size and Meaning:
- Long Body: Strong buying or selling pressure.
- Short Body: Market indecision or consolidation.
- Long Shadows: Price was pushed higher/lower but failed to hold.
- Short Shadows: Price stayed close to the open and close range.
🧠 Japanese Candlestick Patterns Overview
Candlestick patterns are classified based on how many candlesticks form the pattern:
| Number of Bars | Candlestick Patterns |
|---|---|
| Single | Spinning Tops, Doji, Marubozu, Hammer, Hanging Man, Shooting Star |
| Dual | Bullish & Bearish Engulfing, Tweezer Tops & Bottoms |
| Triple | Morning Star, Evening Star, Three White Soldiers, Three Black Crows, Three Inside Up & Down |
🔗 Combine Candlesticks with Support & Resistance
Candlesticks become even more powerful when combined with support and resistance levels. This approach improves your chances of identifying high-probability trading setups and catching potential reversals.
⚠️ Important Trading Reminder
Japanese candlesticks are powerful tools, but they are not foolproof. They provide clues, not guarantees.
Always consider overall market conditions, use risk management, and look for confirmation signals before entering a trade.
📚 Recommended Reading
Want to dive deeper? Get your hands on:
“Japanese Candlestick Charting Techniques” by Steve Nison – the definitive guide that introduced candlestick charting to Western traders.
📌 Final Words: Understanding Japanese candlesticks is essential for every forex trader. With this knowledge, you’re no longer trading blind — you’re reading the market’s story, candle by candle.