Many beginners in crypto ask me about bearish candles, and I decided to explore this in more detail. In fact, it is one of the most basic but very important elements of technical analysis.

Basically, a bearish candle forms when the closing price of an asset is below the opening price for a specific period — it doesn't matter if it's an hour, a day, or a minute. That's all. It sounds simple, but you need to understand how to read it.

The structure of a bearish candle consists of several parts. The main part is the body, the solid part that shows the difference between opening and closing. In a bearish candle, the top boundary of the body is the opening price, and the bottom is the closing price. These candles are usually colored red or black (depending on the platform), which immediately signals a decline. There are also wicks or shadows — thin lines at the top and bottom showing the high and low for the period. They are not always present, but when they are, they provide a complete picture.

Regarding interpretation, a bearish candle indicates that sellers took control, pushing the price down. This could be the start of a downtrend, a continuation of an existing decline, or just a correction in an upward movement. An important point is that a single bearish candle rarely decides anything. Traders look for patterns like bearish engulfing or shooting stars, which work much more effectively, especially if they appear after a rally.

Let's look at a specific example. Suppose a stock opens at $100 and closes at $95, with a high of $102 and a low of $94. The bearish candle would look like this: a red body from $100 to $95, an upper wick from $100 to $102, and a lower wick from $95 to $94. See? Everything makes sense.

Personally, I never rely solely on bearish candles. I look at them in the context of other tools — support and resistance, RSI, moving averages. The market is more complex than just one candle, even if it is bearish. You need to see the full picture and understand the overall market sentiment. Only then will your decisions be justified.