Chapter 7 · Technical analysis and timing

Candlesticks in practice

Four observations let you read most patterns without memorising any of them.

40 of 50 · 7 min

What one candle records

The body spans the open and the close. The wicks show how far price travelled and was pushed back. Colour tells you which side finished ahead.

There are sixty-one named candlestick patterns in the standard reference library. You do not need them. Four observations cover most of what they encode:

A long body — one side controlled the session.
A long upper wick — buyers pushed up and were pushed back.
A long lower wick — sellers pushed down and were rejected.
Almost no body — neither side finished ahead.

A hammer is a long lower wick after a fall. An engulfing pattern is a long body that covers the previous one. A doji is no body. The names describe the observations; learn the observations.

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