Candlestick charts are one of the most popular ways to analyze price movements in trading. Originally developed in Japan in the 1700s, these charts are still widely used today by traders around the world. 🌏
In this guide, you’ll learn:
✅ The structure of a candlestick 🕯
✅ What wicks (ヒゲ hige) and bodies (実体 jittai) mean
✅ Key candlestick patterns (ローソク足パターン rōsoku-ashi patān)
✅ How to read bullish (陽線 yōsen) and bearish (陰線 insen) candles
🕯️ What is a Candlestick Chart?
A candlestick chart (ローソク足チャート rōsoku-ashi chāto) visually represents price movements over a specific time period. Each candle tells a story of how the price moved during that time.
📌 Candlestick Parts
Each candlestick consists of:
🔹 Body (実体 jittai): The thick part that shows the open and close prices.
🔹 Wick (Shadow) (ヒゲ hige): The thin lines above and below the body, showing the highest and lowest prices.
🔸 Top Wick (上ヒゲ ue-hige): The highest price reached.
🔸 Bottom Wick (下ヒゲ shita-hige): The lowest price reached.
🔴 Bullish vs. Bearish Candles
- Bullish Candle (陽線 yōsen): The price went up (green or white).
- Bearish Candle (陰線 insen): The price went down (red or black).
📌 Example:
If the bottom wick is long, it means the price dropped but was pushed back up by buyers. If the top wick is long, the price went up but was pushed back down by sellers.
🔥 Important Candlestick Patterns (ローソク足パターン)
1️⃣ The Doji (同時 Dōji)
🔹 Meaning: The open and close prices are almost the same.
🔹 What it shows: Indecision – neither buyers nor sellers are in control.
🔹 Example:
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Small body, long or short wicks
2️⃣ The Hammer (ハンマー Hanmaa) 🛠
🔹 Meaning: A bullish reversal pattern.
🔹 What it shows: Buyers pushed the price back up after a big drop.
🔹 Appearance:
✅ Small body at the top
✅ Long bottom wick (下ヒゲ shita-hige)
✅ Little or no top wick (上ヒゲ ue-hige)
📌 Tip: Found at the bottom of a downtrend, signaling a possible trend reversal.
3️⃣ The Shooting Star (流れ星 Nagareboshi) 🌠
🔹 Meaning: A bearish reversal pattern.
🔹 What it shows: Sellers pushed the price back down after a big rise.
🔹 Appearance:
❌ Small body at the bottom
❌ Long top wick (上ヒゲ ue-hige)
❌ Little or no bottom wick
📌 Tip: Found at the top of an uptrend, signaling a trend reversal.
4️⃣ Engulfing Pattern (包み足 Tsutsumi-ashi) 🌀
🔹 Meaning: A strong reversal pattern.
🔹 What it shows: A big candle “engulfs” the previous one, indicating a shift in momentum.
🔹 Types:
✅ Bullish Engulfing: A big green candle eats a smaller red candle.
❌ Bearish Engulfing: A big red candle eats a smaller green candle.
📌 Tip: Found after an uptrend/downtrend, confirming strong movement.
📈 Reading Market Trends (トレンドの読み方 Torendo no yomikata)
Candlesticks don’t work alone! You must analyze trends (トレンド torendo) to understand market direction.
🔼 Bullish Trend (上昇トレンド Jōshō Torendo)
- Price is going up over time.
- More green (陽線 yōsen) candles than red.
- Support levels are holding.
🔽 Bearish Trend (下降トレンド Kakō Torendo)
- Price is going down over time.
- More red (陰線 insen) candles than green.
- Resistance levels are pushing prices lower.
📌 Tip: Combine candlestick patterns with trend lines for better predictions!
💡 Final Tips for Using Candlestick Charts
✅ Check Volume (出来高 Dekidaka) – High volume confirms a strong move.
✅ Look for Patterns – One candle isn’t enough; check multiple.
✅ Combine with Indicators – Use moving averages (移動平均 idō heikin) and support/resistance levels (サポートとレジスタンス sapōto to rejisutansu).
🎯 Quick Summary:
| English | Japanese (Kanji + Pronunciation) | Meaning |
|---|---|---|
| Candlestick | ローソク足 (Rōsoku-ashi) | “Candle leg” |
| Body | 実体 (Jittai) | “Real body” |
| Wick | ヒゲ (Hige) | “Beard” (shadow) |
| Bullish Candle | 陽線 (Yōsen) | Green (price up) |
| Bearish Candle | 陰線 (Insen) | Red (price down) |
| Doji | 同時 (Dōji) | Indecision pattern |
| Hammer | ハンマー (Hanmaa) | Bullish reversal |
| Shooting Star | 流れ星 (Nagareboshi) | Bearish reversal |
| Trend | トレンド (Torendo) | Market direction |
🎓 Practice Challenge:
👉 Look at a real candlestick chart and try to describe what’s happening using the Japanese terms! 🇯🇵
📢 Want to Learn More?
If you found this guide helpful, try analyzing real charts and identifying patterns! The more you practice, the better you’ll become at reading price action and understanding market psychology. 🧠📈