Honestly, I’ve thought for a long time about how to explain why some candlestick patterns work and others don’t. The answer turned out to be simpler than it seemed — it all depends on how clearly the candles show the struggle between bulls and bears.

Japanese candles are not just beautiful charts. They are the language of the market. And if you learn to read it, you can notice reversals before they happen.

Let’s start with the simplest signals. The hammer appears at the end of a decline — a small body at the top, a long shadow at the bottom. Sellers pushed the price down, but buyers bought the dip. We enter after the next candle closes higher, preferably at support. The shooting star works in the opposite direction — at the top, with a long shadow at the top. The market tried to rise, but no one supported the high levels.

When patterns consist of two candles, a clear shift in control is already visible. Engulfing is one of the most powerful models. The second candle completely covers the body of the first. If it’s a bullish engulfing after a decline, we enter on the close of the second or on a pullback. Bearish engulfing at the top, especially near resistance, often leads to strong reversals downward.

A gap in the clouds indicates an upward reversal: the second candle opens lower but closes above the middle of the first. The dark cloud cover is a mirror signal for a decline. The harami indicates trend weakening; it’s not an immediate reversal but a preparation for a major move.

Three-candle patterns are already a serious level. The morning star consists of a long bearish candle, a small indecision candle, and a strong bullish candle. This is a strong reversal upward, especially if it forms at support. The evening star works the opposite — a reversal downward with RSI divergence.

Three white soldiers are three large green candles with minimal shadows, a powerful shift of control to the bulls. We enter on a pullback after the second or third candle, but not at the highs. Three black crows are an aggressive bearish reversal, working best after a long rise near key resistance levels.

There’s also a rare pattern — the abandoned baby. A doji candle with gaps on both sides. Deadly accurate, great for position trading.

But here’s the catch: Japanese candlestick patterns are not a button for printing money. They are a signal of a change in balance. The best trades happen when the pattern coincides with a support or resistance level, RSI shows divergence, EMA confirms the direction, and volumes are increasing. All these factors together — that’s what really works.

If it helped, save it and give a like. If you’re interested in how to apply this in practice — check out the charts on Gate, where you can test these signals in real time.