I have been trading for years, and I tell you that if you want to master technical analysis, you need to understand Japanese candlesticks well. It’s the most basic but also the most important. Without this, you’re navigating blindly on the charts.

Look, there are three ways to analyze the market: fundamental, technical, and speculative. Speculation is pure mental noise; you try to guess without any foundation. Fundamental analysis is based on events, news, financial results. But technical analysis, that’s the one that allows you to see patterns that repeat over and over again. And it all starts with candlesticks.

Japanese candlesticks originated centuries ago in rice trading in Japan, then spread to the Western world and revolutionized how we view financial markets. Basically, they are a graphical representation of prices over a specific period. Each candlestick has two parts: the body and the wicks. But the important thing is that they give you four data points simultaneously: open, close, high, and low, which we call OHLC.

Platforms generally show green for upward movements and red for downward movements, although you can change the colors. The key is that when you hover your mouse over a candlestick, you see all those OHLC values, the percentage of movement, and the timeframe. For example, a one-hour candle might show an open at 1.02704, a high at 1.02839, a low at 1.02680, and a close at 1.02801. The body specifies open and close, the wicks mark highs and lows, and the color indicates whether it was bullish or bearish.

Now, there are many candlestick patterns, but I will show you the main ones. Remember, they are not infallible; they simply suggest opportunities.

The engulfing pattern is a two-candle pattern of different colors. The first has a small body, the second engulfs it and surpasses the previous opening price. It generally anticipates trend reversals. If you see a bullish engulfing after a bearish trend, the market is likely to go up. If it’s bearish after an uptrend, get ready for a fall.

The doji candle is special. It has long wicks but a very small body, looks like a cross. The open and close are practically the same. This indicates total indecision in the market, a balance between buyers and sellers. No one controls the situation.

The spinning top is similar to the doji but with a slightly larger body. It also indicates indecision, though slightly less than the doji. The long wicks show how much volume was involved in the transactions.

The hammer is fascinating. It has a small body and a long wick either upward or downward. If you were in an uptrend and a hammer appears with an upward wick, it means buyers lost strength. They pushed the price up but then sellers took control. It’s a sign of a trend reversal. The opposite happens in downtrends.

The hanging man looks almost identical to the hammer, but the context is what changes. If previous candles were bearish and this pattern appears, now the market turns bullish. If they were bullish, it turns bearish. Context is everything.

The marubozu is pure power. Very long body, almost no wicks or none at all. It means that a trend has strong momentum. Few corrections, only direct movement. Marubozu in Japanese means bald, which is why it has no wicks.

But here’s the important part: don’t trade with just one pattern. Look for confluences, at least three signals that give you confidence. For example, if you see a daily engulfing that coincides with a identified support level and your moving averages confirm it, then you have something solid.

Japanese candlesticks help you identify support and resistance much better than line charts. Why? Because line charts only use closing prices, ignoring opens, highs, and lows. The wicks show where the price tried to go but was rejected. That’s valuable information.

A long wick generally indicates reversal; the trend is exhausted. A short wick indicates a strengthened trend. A large body shows higher trading volume, giving you more confidence that something real is happening.

The great thing is that these patterns work across all timeframes. A one-minute candle has the same elements as a monthly one. But here’s the trick: a one-hour candle is made up of four fifteen-minute candles. Each of those is made up of three five-minute candles. So when you see a long wick on a higher timeframe, you know there was significant movement on lower timeframes.

Imagine you see a one-hour candle with a long wick upward but that closes below where it opened. What happened? If you break it down into fifteen-minute segments, you’ll see it rose in the first two periods but then fell sharply in the last two. Buyers lost control.

To trade effectively, combine candlesticks with other tools. Fibonacci, moving averages, support and resistance levels. Look for confluences. I’ve seen traders enter just by observing a single candle, but that requires years of practice.

If you’re starting out, my advice is to spend a lot of time analyzing without trading. Get a demo account and spend hours watching charts. Visualize past patterns across many assets. Train your eye. When you’re well trained, you’ll need less time to read the market.

Patterns on higher timeframes are more reliable. A daily hammer is much more effective than a fifteen-minute one. This is important.

Eventually, you’ll find assets where you recognize that their behaviors fully respect the patterns you studied. Those become your favorites. That’s where you really make money—not by making many trades, but by making few well-thought-out trades.

Think of it this way: a professional football player trains almost three hours daily to play ninety minutes. You should analyze as much as possible, and when you find many confluences, open a trade and wait. You don’t need another trade until the previous one has finished.

So now you know, master Japanese candlesticks, understand what each pattern tells you, practice without real money until you feel confident, and when you trade, always look for confluences. Technical analysis based on Japanese candlesticks is your solid foundation to understand this market.