Read Japanese candlesticks like a professional: What every technical trader must master

Do you really want to understand how the market works? Forget about fundamental analysis for a moment. Technical analysis is your best tool, and it all starts with complete mastery: knowing how to read Japanese candlesticks.

Why is learning to read Japanese candlesticks mandatory?

There are three types of analysis in trading: fundamental, technical, and speculative. The speculative is pure emotion, fundamental requires reading reports until exhaustion, but technical… technical is pure art and data.

Japanese candlesticks originated centuries ago in Japan’s rice trade and later conquered Western financial markets. They are simple but powerful: each candle provides 4 vital data points in one image: opening price, high, low, and close (OHLC in English). The body shows the opening and closing, the wicks show the extremes. Green = bullish, Red = bearish. That’s it.

Many novice traders use line charts and miss valuable information. Lines only show the close. With Japanese candlesticks, you see the full fight: how the price moved throughout the period, where resistance was found, where buyers and sellers clashed.

How to read Japanese candlesticks: Patterns that change the game

You don’t need to memorize 50 patterns. Focus on these:

Engulfing Candle

Two candles of different colors. The second completely engulfs the first. Indicates a trend reversal. If a downtrend is coming and you see a bullish engulfing, get ready: the market is likely to turn around.

Doji

Microscopic body, long wicks. Price goes up, down, but opens and closes at nearly the same level. Signifies total indecision. Neither buyers nor sellers have control. It’s a neutral signal that requires confirmation.

Spinning Top

Sibling of the Doji but with a slightly larger body. Same interpretation: unstable balance. The market doesn’t know where to go.

Hammer

Small body, a long wick upward. In an uptrend, it means buyers lost strength. Price rose but was rejected. A probable trend change.

Hanging Man

Visually identical to the hammer, but the context is different. Appears after a downtrend. Now the market turns upward.

Marubozu

The name means “bald” in Japanese. Giant body, almost no wicks. Pure trend strength. Sellers or buyers have total control. When you see this, the direction is clear.

How to use this in the real world

A support is where the price bounces repeatedly. Do you know what best identifies it? The wicks of the candles, not the close. In EUR/USD, we saw the price attempt to break 1.036 three times and bounce each time. With line charts, that level wouldn’t even appear.

Japanese candlesticks work everywhere: Forex, cryptocurrencies like Bitcoin, commodities, stocks. And they work across all timeframes: from 1 minute to 1 month.

Here’s the powerful part: a 1-hour candle is made up of 4 fifteen-minute candles. If you see a bearish 1-hour candle with long wicks upward, what really happened? Probably the price rose in the first 15-30 minutes, then sellers took control and pushed it down. The wicks tell the full story.

The real secret: Confluences

This is where professionals are separated from amateurs. Don’t trade based on just one candle. Look for confluences: at least three signals that align.

Real example: In EUR/USD, we saw a support, a Fibonacci retracement level at 61.8%, and a bullish Marubozu candle converging at the same price. That was a high-probability entry. A single order wouldn’t have been enough.

Tips from someone who has seen thousands of candles

First: Higher timeframes are more reliable. A hammer on a daily candle is worth more than one on a 15-minute chart. Noise decreases on larger timeframes.

Second: Practice on a demo account. Don’t risk real money while training. Spend hours studying past charts. Look for patterns in Bitcoin, EUR/USD, gold, whatever. Your eye must be trained.

Third: A long wick likely indicates a probable reversal, energy spent. A short wick means trend strengthening. A large body indicates trading volume, conviction in the direction.

Fourth: Learn to read Japanese candlesticks before risking real money. It’s the minimum. Once you know how to read candlesticks, technical analysis stops being a mystery.

Fifth: Combine your candlestick reading with Fibonacci, moving averages, and indicators. The best trade is where everything aligns.

The mindset that sets you apart

Professionals don’t trade every day. They analyze for hours. They wait for confluences. They open a trade when everything is aligned. A well-read 1-hour candle can justify a trade lasting days. That’s smart trading.

Think of it this way: a professional football player trains 3 hours daily for a 90-minute match. You should analyze as much as possible and only execute when the candles speak clearly.

Once you master how to read Japanese candlesticks, you will have crossed 50% of the way in technical analysis. Combine this with fundamental analysis, and you will have a real advantage. Candles don’t lie. You just need to train your eye to understand them.