I’ve noticed that many people’s understanding of candlestick patterns actually remains at a very superficial level. Reflecting back to 1990 when our stock market opened, candlesticks were directly introduced, but honestly, the research on candlestick patterns at that time was not in-depth enough, mainly just copying Japanese results—some scattered single, double, and multiple candlestick statistics, without forming a systematic and complete pattern.

To be honest, candlestick patterns and various indicators, although essential tools in technical analysis, are just references, not absolute truths. A common mistake many make is to rush into placing orders upon seeing a classic candlestick chart or a certain indicator signal. In fact, analysis should be specific to the situation; one should not apply patterns rigidly without adaptation.

Candlestick charts are also called yin-yang candles. This thing originated from rice market trading during Japan’s Tokugawa shogunate era, used to record daily rice price fluctuations. Later, it was introduced into the stock market and gradually became popular in Southeast Asia. Its popularity stems from being intuitive, highly three-dimensional, and practical experience has shown that candlestick patterns can indeed predict future market directions more accurately and help judge the balance of bullish and bearish forces.

There are 48 types of candlesticks, divided into 24 bullish (yang) and 24 bearish (yin) types. Bullish candles mainly include small bullish, medium bullish, large bullish, and doji (indecision) candles, each further divided into six scenarios. The size of the real body can indicate the strength of buying pressure—larger bodies suggest stronger buying, and the market generally rises afterward. A long lower shadow indicates strong buying, while a long upper shadow indicates strong selling; the market may decline afterward. The logic for bearish candles is similar: larger bodies mean stronger selling, and the market usually falls.

In my opinion, what truly deserves attention are some classic candlestick pattern combinations. For example, the Morning Star, which appears at the end of a downtrend, consists of a strong bearish long candle on the first day, a gap-down doji or hammer on the second day, and a long bullish candle on the third day—this signals a reversal. The Evening Star is the opposite, appearing during an uptrend and indicating a good selling opportunity.

There’s also the Red Three Soldiers, where the closing prices rise consecutively over three days, each day opening within the previous day’s real body and closing near the day’s high. When this pattern appears, the outlook is usually bullish. The Three Black Crows is its opposite: in an uptrend, three consecutive long bearish candles gradually decline, indicating the stock price may further fall.

Finally, I want to mention a trap-prone pattern—Double Black Crows. After a period of rising prices, a long bullish candle appears first, then the next day gaps up but closes lower, and on the third day, it gaps up again but closes lower. This indicates the bullish momentum is clearly weakening, and the probability of a reversal increases. When encountering this candlestick pattern combination, my advice is to stay alert, consider taking profits or reducing holdings, and wait for a clearer direction.

In short, learning to read candlestick patterns is just the first step. The key is to combine this with volume, market environment, and your own risk tolerance. Don’t be fooled by a single signal; verifying from multiple angles can improve success rates.