Types of Japanese Candles and Their Power Dollar Signs

Japanese candles are the foundation of all technical analysis Understanding them is understanding market psychology

Candles Tell a Story

Each candle shows the battle between buyers and sellers over a period

Bullish Green Candle Opens low and closes high Dominance of buyers

Bearish Red Candle Opens high and closes low Dominance of sellers

Key Patterns and Their Importance

Hammer or Hammer Small body at the top and a long wick downwards

Meaning Strong rejection to the downside It is a bullish signal if it appears at support

Engulfing or Engulfing A large candle that completely covers the previous candle

Meaning A strong trend change If the green candle engulfs the red one it is a bullish signal

Doji Indecision Very small body almost a line The wicks can be long

Meaning The market does not know what to do There is balance between buyers and sellers It often appears before a big movement

The key is to see the context of the chart Never trade an isolated candle

Click on $BTC and see how these candles form on the daily chart