Recently, I’ve noticed that many friends are still a bit confused about candlestick charts. In fact, mastering candlestick patterns can help you understand the market’s temperament, and it’s really worth spending time to study.

Speaking of candlesticks, the technical methods we use actually originate from rice market trading during Japan’s Tokugawa shogunate era. Later, they were introduced into the stock market, and by 1990, when our stock market opened, they were directly adopted. But honestly, after so many years, research on candlesticks still mainly relies on Japanese findings. Many people only learn some scattered knowledge about single or double candlestick patterns without forming a systematic understanding.

However, I have to say, the reason candlestick charts have remained popular for so long is indeed valid. They are intuitive, highly three-dimensional, and can more accurately predict future market directions, as well as judge the strength of bulls versus bears. But there’s a trap to avoid here: indicators and candlestick analysis are just reference tools. Don’t blindly trust any classic pattern or indicator; in actual trading, you must analyze specific situations case by case.

There are 48 types of candlesticks, divided into 24 bullish and 24 bearish. It looks complicated, but the core logic is simple. The larger the real body of a bullish candle, the stronger the buying pressure, and the market generally will go up afterward; a longer lower shadow indicates stronger buying pressure and a likely rise; a longer upper shadow suggests stronger selling pressure and a decline. The logic for bearish candles is the opposite: larger real bodies mean stronger selling pressure, and the market will likely fall.

But to truly trade using candlestick combinations, just understanding these basics isn’t enough. I pay more attention to five common candlestick pattern formations.

The Morning Star usually appears at the end of a downtrend. The first day is a long bearish candle, the second day gaps down and forms a doji or hammer, and the third day closes with a long bullish candle. Once this pattern appears, it often indicates that the downward trend may be ending. I’ve used this signal to catch some bottoms, and it works pretty well when combined with volume analysis.

The Evening Star is the opposite of the Morning Star and appears during an uptrend. The first day is a long bullish candle, the second day gaps up and forms a doji or hammer, and the third day closes with a bearish candle. This is a clear reversal signal in an uptrend, and when I see this pattern, I usually consider reducing positions or exiting.

The Three Soldiers is one of the most common candlestick patterns. It consists of three consecutive bullish candles, each closing higher than the previous day, with the opening within the previous real body and closing near the day’s high. When this pattern appears, the probability of a bullish continuation is high.

The Three Black Crows is the opposite of the Three Soldiers. During an uptrend, it shows three consecutive long bearish candles stepping down, with each closing lower than the previous day’s low. This indicates the market may already be at a high point, and the probability of further decline is high.

Another pattern is the Gap Up Double Crows, usually appearing at market tops. It starts with a long bullish candle, followed by two days of gap-up openings but closing with bearish candles. The bulls’ efforts are repeatedly thwarted, signaling a clear weakening of bullish momentum and increasing the chance of a reversal. When I see this pattern, I immediately become more alert.

Honestly, if used properly, candlestick patterns can indeed help judge market direction. But the key is to combine them with volume and other indicators. Don’t rely solely on one candlestick pattern to make decisions. The market is always more complex than you think, and staying humble and vigilant is the key to long-term survival.