Recently, I’ve been organizing some insights on stock technical analysis and found that many beginners still stay at a superficial understanding of candlestick charts. In fact, mastering a few core candlestick pattern combinations can greatly improve the accuracy of market judgment.

Speaking of candlestick charts, their history is actually quite interesting. This tool originally originated from rice market trading during Japan’s Tokugawa shogunate era, used to track daily rice price fluctuations. Later, it was introduced into the stock market. By 1990, when our country’s stock market opened, candlestick analysis was directly adopted. However, at that time, research on candlesticks was still somewhat scattered, mainly borrowing from Japanese findings, lacking a systematic and complete model.

I personally believe that the reason candlestick charts are so popular is because they are intuitive, highly three-dimensional, capable of quite accurately predicting future market directions, and clearly showing the strength comparison between bulls and bears. But I want to emphasize one point — indicators and candlestick analysis are just reference tools; you shouldn’t rely on them blindly. In actual trading, analysis must be specific to the situation, and rigidly applying patterns is not advisable.

There are 48 types of candlesticks, divided into 24 bullish and 24 bearish. Simply put, the larger the real body of a bullish candlestick, the stronger the buying pressure, and the more likely the market will rise afterward; a longer lower shadow indicates strong buying; a longer upper shadow suggests strong selling. The logic for bearish candlesticks is exactly the opposite. After understanding these basics, you can start studying candlestick pattern combinations.

I especially want to share five common candlestick patterns, which appear most frequently in practice and are often overlooked.

First is the Morning Star. It usually appears at the end of a downtrend. The first day is a strong long bearish candlestick, indicating the decline may continue; the second day shows a gap down with a doji or hammer pattern, creating a gap from the first day; the third day appears as a long bullish candlestick, showing strong buying pressure, indicating the trend has turned positive. Once this signal is confirmed, combined with volume analysis, it’s a good reference.

Conversely, there is the Evening Star. It appears during an uptrend and is a relatively strong reversal signal. The first day is a long bullish candlestick indicating an upward trend; the second day gaps up but may close with a different shape; the third day shows a long bearish candlestick with strong selling. At this point, special attention should be paid, as the trend has issued a clear reversal or short- to medium-term correction signal, which could be a good selling opportunity.

The Red Three Soldiers is a very common candlestick pattern. It consists of three consecutive days where the closing prices are higher than the previous day, with each day’s opening within the previous day’s bullish real body, and the closing close to the day’s high. When this pattern appears, the outlook is mostly bullish.

The Three Black Crows is the opposite of the Red Three Soldiers. In an uptrend, three consecutive long bearish candlesticks appear, each closing below the previous day’s low, forming a step-like descending pattern. This usually indicates that the stock price has approached a top or is at a relatively high level, and the trend is likely to further decline.

Finally, the Bearish Gap (Double Black Crows) typically appears at a market top. It starts with a long bullish candlestick continuing the upward trend, followed by two days of gap-up but closing lower, with the third day’s bearish candlestick engulfing the previous day’s bearish candle. Bulls’ two-day upward attempts fail, and momentum clearly weakens, increasing the probability of a reversal. At this point, it’s advisable to stay alert, consider taking profits, or reducing positions.

Honestly, mastering these candlestick pattern combinations, combined with volume and other indicators, greatly helps improve judgment accuracy. But the most important thing is to continuously verify in practice, because the market is always changing. There’s no absolute formula—only a better understanding.