Understanding candle patterns in Technical Analysis for trading

To understand reading Japanese candlesticks in charts, it is essential to recognize the basic shapes of the candles at opening and closing. There are 6 main patterns that traders need to master:

1. Long Candles

• Long green candle: indicates buyer control over the market.
• Long red candle: Indicates sellers' dominance.

2. Long Lower Shadow Candles

• A green candle with a medium body and a long lower wick: reflects the sellers' attempt to lower the price, but the buyers succeeded in closing the price higher.
• The similar red candle: indicates an attempt by buyers to push the price up, but sellers ultimately took control.

3. Resistance Candles

Similar to the first pattern, but with some resistance from the other side.

4. Neutral Candles

A medium or small body red or green candle with a long wick: indicates a long battle between buyers and sellers with no clear dominance from either side.

5. Long Upper Shadow Candles

• Green candle: Indicates the strength of buyers with resistance from sellers that resulted in a small body close.
• Red candle: Indicates the strength of sellers with buyers' resistance leading to a close with a small body.

6. Doji Candles

The opening price is equal to the closing price, and it often indicates a potential reversal in the price direction.

These six patterns are essential for understanding individual candlesticks. By combining several candlesticks together, more complex models and patterns can be formed to assist in the technical analysis of financial markets.

Traders on major trading platforms can benefit from these patterns to improve their investment decisions and better understand price movements.