How to Read Candlestick Like a Pro

Hello everyone, it’s great to see you again.

In the previous analysis, we explored bullish and bearish candlestick patterns. So apart from patterns that show us the next trend, is there anything else that can help us predict future movements?

The answer is yes—it’s the signals from Japanese candlesticks, the exact type of candles we use in trading. In this lesson, I’ll talk about bullish candlesticks. Let’s get started!

1. Hammer Candle:

-Characteristics: A candle with a small body, a lower shadow at least twice the length of the body, and a very short or nonexistent upper shadow.
-Meaning: Indicates weakening selling pressure and the beginning of buying dominance, signaling a potential bullish reversal.

2. Dragonfly Doji:

-Characteristics: A very small or nonexistent body, a long lower shadow, and no or very short upper shadow.
-Position: Usually appears after a strong downtrend or at a support zone.
-Meaning: Suggests selling pressure has weakened, buyers are stepping in, and a bullish reversal may be forming.

3. Bullish Engulfing:

-Characteristics: A two-candle pattern, with a small bearish candle followed by a large bullish candle that completely engulfs the previous one.
-Position: Often seen after a strong downtrend or at major support levels.
-Meaning: Shows weakening selling pressure and strong buying momentum, signaling a potential bullish reversal.

4. Piercing Pattern:

-Characteristics: A long bearish candle followed by a bullish candle that opens below the prior close but closes above 50% of the bearish candle.
-Meaning: Indicates selling pressure has eased and buying momentum is returning.

5. Bullish Harami:

-Characteristics: A large bearish candle followed by a small bullish candle completely contained within the previous candle’s body, forming a “mother and child” pattern.
-Meaning: Suggests weakening selling pressure and the gradual return of buying power.

6. Morning Star:

-Characteristics: A three-candle pattern with a large bearish candle, followed by a small indecisive candle, and then a large bullish candle closing above 50% of the first bearish candle.
-Meaning: A strong reversal signal, showing indecision on the second candle and buyer dominance on the third.

7. Three White Soldiers:

-Characteristics: Three consecutive bullish candles, each opening within the prior candle’s body and closing higher.
-Meaning: Indicates the continuation of an uptrend.

These are some of the most popular candlestick patterns trusted by many traders. Don’t forget to take notes and practice using them often—you’ll surely become an expert.

In the next part, I’ll share about reversal and bearish patterns. Please hit like on this post to let me know you’ve understood today’s lesson and are excited for the next one—it’ll be a great motivation for me.

And don’t forget to leave any questions in the comments if you’re still unsure about something.
Good luck!