Decode Japanese Candles in 5 Minutes - Guide for Crypto Traders

Are you a crypto day trader but still struggling with candlesticks? We simplify it for you.

What is a candlestick chart?

Each candlestick represents a time period (1h, 1d, etc.). It shows 4 key data points: opening price, closing price, high, and low. The body (green or red) indicates whether it went up or down. The wicks (thin lines) show the extremes reached.

How to read them:

• Green candle = closed higher than it opened (bulls win)
• Red candle = closed lower (bears win)
• Short body + long wick = intense fighting, market indecision

Patterns that do predict movements:

Bullish (buy):

• Hammer: small body, long lower wick at the bottom of a decline
• Bullish engulfing: small red candle swallowed by a giant green candle
• Morning star: 3 candles forming an inverted V

Bearish (sell):

• Hanging man: small body, long lower wick at peaks
• Bearish engulfing: small green candle swallowed by a giant red candle
• Three black crows: 3 consecutive red candles closing at lows

Pro tip: An isolated candle means nothing. Analyze the trend by comparing it with previous candles. Candlesticks are your best allies to understand whether bulls or bears control the market.

Keep practicing on historical charts. The pattern becomes clear afterward.