Recently, I reviewed the development of technical analysis in our stock market and found an interesting phenomenon. Since the stock market opened in 1990 until now, candlestick charts have been used for over thirty years, but research on them has actually remained largely based on Japanese studies, mostly scattered analyses of single or double candlesticks, without forming a truly systematic and complete framework. To be honest, our current understanding of candlesticks is still far from deep enough.

Having traded for so many years myself, my biggest realization is that indicators and candlestick charts are indeed essential analysis tools, but never treat them as absolute truths. Many people like to rigidly adhere to certain classic candlestick patterns or commonly used indicators, only to be slapped in the face by the market. In actual trading, flexibility and adaptability are crucial; analyze specific situations accordingly, and avoid rigidly applying formulas.

Candlestick charts are essentially yin-yang candles, originating from rice market trading during Japan’s Tokugawa shogunate era, and later introduced into the stock market. They are so popular mainly because they are intuitive, highly three-dimensional, capable of more accurately predicting future market directions, and clearly show the strength comparison between bulls and bears.

There are 48 types of candlesticks, 24 bullish (yang) and 24 bearish (yin). The key is to understand what the size of the real body and the length of the shadows represent. A larger bullish candlestick indicates stronger buying pressure, usually leading to a rise in the future market; longer lower shadows suggest stronger buying, while longer upper shadows indicate stronger selling. The logic for bearish candlesticks is exactly opposite: larger real bodies mean stronger selling pressure, and the market generally declines afterward.

The most practical approach is to master a few common candlestick patterns. I’ve summarized five that I frequently use, which might be helpful for everyone.

The Morning Star appears at the end of a downtrend, forming a clear reversal signal with three candlesticks. The first is a long bearish candle, indicating continued decline; the second gaps down open, creating a gap; the third is a long bullish candle, showing strong buying, signaling a trend reversal. Once confirmed, this pattern usually indicates a rebound is coming.

The Evening Star is the opposite, appearing during an uptrend. The first is a long bullish candle continuing upward; the second gaps up but forms a gap; the third is a long bearish candle closing, with strong selling pressure. This is a reversal signal within an uptrend and also a good time to consider selling.

The Three White Soldiers is a common bullish signal, consisting of three consecutive bullish candles closing higher, each opening within the previous candle’s real body, with close prices near the high. When this pattern appears, the probability of a continued upward trend is high.

The Three Black Crows is the opposite of Three White Soldiers, occurring in an uptrend with three consecutive long bearish candles stepping down, each closing lower than the previous one. This pattern indicates the stock price may be near a top or has been at a high level for some time, with a high probability of subsequent decline.

The Two Crows Gap is more subtle and often appears at the top of a stage. After a rise, a long bullish candle appears, followed by two days of gap-up opens but closes lower, forming an island reversal pattern. The bulls’ two-day attack fails, and momentum clearly weakens, so caution is advised.

Honestly, mastering these candlestick patterns can improve your judgment accuracy, but don’t forget to combine them with volume and other indicators for analysis. Candlestick patterns are just references; the market will always have exceptions. Maintain respect and awe for the market, adjust flexibly based on market reactions—that’s the key to long-term survival. Recently, I’ve also been paying attention to some trading opportunities on Gate, and if you're interested, you can check out the market yourself.