Recently, I’ve been reviewing some classic technical analysis textbooks, and I’ve found that many people’s understanding of K-line reversal signals still remains at a superficial level. Our domestic stock market has been using K-lines directly since it opened in 1990. But to be honest, over all these years, research on K-lines has still been quite scattered and hasn’t developed into a particularly systematic, complete framework.

I think it’s necessary to discuss the topic of K-line reversal signals in a proper way. The K-line chart itself originates from rice-market trading during Japan’s Tokugawa shogunate era, and it was later introduced into stock analysis. Its popularity comes from the fact that it can clearly and intuitively show the balance of power between bulls and bears. But one point needs to be emphasized here—indicators and K-line charts are only reference tools. In real trading, you still have to analyze specific situations case by case; you can’t force-fit them.

There are 48 types of K-lines in total: 24 bullish types and 24 bearish types. The larger the real body of a bullish line, the stronger the buying pressure, and the market usually rises afterward. The longer the upper shadow, the stronger the selling pressure, and the market is more likely to fall. For bearish lines, it’s the opposite: the larger the real body, the stronger the selling pressure. A long lower shadow indicates that buyers are still “bottom-fishing.” Mastering these basic characteristics is key to identifying K-line reversal signals.

When it comes to the five K-line patterns most commonly used in practice, I think they’re especially worth talking about. The Morning Star usually appears at the end of a downtrend. The three-day structure consists of a long bearish line, a doji/hanging man, and a long bullish line. Once this combination appears, it’s basically a bottom signal, and the probability of a rebound is very high. The opposite pattern—the Evening Star—is a reversal signal during an uptrend. If you see this formation during a rally, you should consider taking profits or reducing positions.

Red Three Soldiers is one of my favorite patterns. It consists of three consecutive bullish lines rising day by day, with the closing price reaching new highs every day. In this situation, the outlook is mostly bullish. But Three Black Crows is the opposite: after a run up into a high level, you see three consecutive bearish lines, and each one closes below the previous day’s low. This clearly indicates that the stock price is set to move further downward.

There’s also an easily overlooked formation called Double Crow Gap, which usually appears at a stage top. First, the stock price rises with a long bullish line. On the second day, it gaps up but closes bearish. On the third day, it gaps up again and still closes bearish. At this point, the bulls’ momentum is clearly weakening, and the probability of a reversal increases. Once I see this kind of K-line reversal signal, I generally choose to exit to take profits or reduce leverage/positions appropriately.

To be honest, simply understanding these formations isn’t enough—you also need to combine trading volume and other technical indicators to get a truly better level of accuracy. The market always requires specific analysis of the specific situation; there is never a 100% inevitability. But if you master the logic behind these K-line reversal signals, it can definitely help you be more confident in your trading.