I’ve always felt that many people’s understanding of candlestick chart patterns still stays on the surface. Our stock market has been using candlestick charts since it opened in 1990, but honestly, most of the research over these years has mostly followed old Japanese playbooks—spotting single candlesticks or double candlesticks here and there—without forming a truly systematic, complete understanding framework.

To be frank, indicators and candlestick charts are indeed must-know tools for trading stocks, but never treat them as absolute truth. Even the most classic candlestick patterns and the most commonly used indicators don’t guarantee conclusions that are 100% accurate. In real trading, you still need to be flexible and adapt; you can’t copy-and-paste rules mechanically.

Candlestick charts originated in Japan’s Tokugawa shogunate era from rice market trading, where they were used to track the rise and fall of rice prices. Later, they were introduced into the stock market and are now very popular across Southeast Asia. They’re widely liked because they’re intuitive, strongly layered in structure, and easy to understand at a glance. Practice has shown that candlestick charts can be quite accurate in forecasting future price direction, and they can also clearly judge the balance of power between the bulls and the bears.

The 48 candlestick patterns are divided into 24 bullish and 24 bearish types. Bullish candlesticks mainly include four categories: small bullish, medium bullish, large bullish, and the bullish doji (Yang doji). Each category is further subdivided into six types. The larger the real body, the stronger the buying pressure, and the market generally tends to rise afterward; the longer the lower shadow, the stronger the buying pressure, and the longer the upper shadow, the stronger the selling pressure. The logic is the same for bearish candlesticks: the larger the real body, the stronger the selling pressure, and the market generally tends to fall afterward.

If you master these 5 common candlestick combinations, you can basically develop a good “sixth sense” for spotting opportunities.

The Morning Star usually appears at the end of a downtrend. The first day is a long bearish candlestick showing strong selling pressure, suggesting the decline may continue. The second day gaps down and forms a doji or a hammer; the highest price may even be lower than the previous day’s low, creating a gap, which indicates that the range and pace of the drop are starting to contract and brings a potential turnaround signal. The third day shows a long bullish candlestick; buying pressure is strong and the market conditions have improved. Combined with volume analysis, the value of this candlestick pattern is even greater.

The Evening Star is the exact opposite: it appears in an uptrend. The first day is a long bullish candlestick indicating the up move will continue. The second day gaps up but forms a doji or a hammer; the lowest price may be higher than the previous day’s high. The third day is a long bearish candlestick closing. This is a fairly strong reversal signal within an upward trend. When it appears, you must be especially alert—it could be a very good point to sell, or a good time to avoid taking positions in the short to medium term.

Three White Soldiers is a common bullish pattern. Over three days, the closing price rises day by day, while the opening price is within the real body of the prior day’s bullish candlestick, and the closing price is near that day’s high. Even though the outlook is often bullish, it’s actually quite difficult to define it with exact precision.

Three Black Crows is the opposite of Three White Soldiers. In an uptrend, three consecutive days show long bearish candlesticks. The closing price of each bearish candlestick is below the previous day’s low, the opening price is within the previous day’s real body, and the closing price is near that day’s low. This indicates that the stock price is either already close to the top or has been staying at a high level for some time; the outlook is generally for further declines.

A gap-up with Double Black Crows typically appears at the stage’s top in an individual stock. After the price rises, the first candlestick is a long bullish one that continues the trend. On the second day, it gaps up but closes bearish. On the third day, it gaps upward again but still closes bearish. After the bulls’ two days of pushing higher fail, momentum weakens and the probability of an island-style reversal increases. When you encounter this candlestick pattern, stay vigilant—consider taking profits or reducing positions, and wait for the market direction to become clearer.

In the end, technical analysis is only a reference tool; analyzing specific situations based on the specifics is the real way forward.