Japanese candlesticks are a valuable tool for trading, the method is very visual of the price behavior of an asset in the volatile market, during a time span.
This time span can be from one second, one minute, two minutes, three minutes, five minutes, one hour, one day (intraday), one week, one month, among other desired time periods. During the chosen time, the price of our asset will vary as it is dynamic, see the following chart.
But what we do need to keep in mind is the moment to start our analysis called opening price, at the end of the chosen analysis time, it is called closing price, however, the price can vary significantly (a long wick) during that time span, creating what are called wicks or shadows, values below (above) the opening price or above (below) the closing price, depending on whether it is a bullish or bearish candle.
When a large or long wick appears, it generally implies a reversal of the price and, at the same time, in the trend, as can be seen in the purple circles as turning points for the change in price value and trend.
The next candle is called DOGI, shown in the yellow circle, where the opening and closing price are the same, although there may have been changes in price, but there is a great indecision on the part of investors as it is not clearly denoted what the path or trend of the price in the market will be. There is the same force of buying and selling positions.
This candle usually appears at points called support (base) or resistance (ceiling), when the direction of the asset's price is not clearly defined, whether it will break the support and the price will fall further or the resistance if the price will rise.
The hammer light blue circle comes from a bullish candle, has a huge wick, meaning at one moment the price dropped significantly, at that point large investors or institutions appear, frequent buyers looking to benefit from the low price, and their strength causes the price to rise again and a change in trend to the upside.
The shooting star, orange circle, has a similar behavior to the hammer but in the opposite direction, as its long wick is upward, it is when sellers appear due to the high price, which causes a decrease in price and simultaneously a change in downward trend.
The Bullish Engulfing and Bearish Engulfing, the first comes from a 'small' bearish candle followed by a 'large' bullish candle that is so big it covers the bearish one, and from there tends to an upward run. The second starts with a small bullish candle and a huge bearish candle appears that engulfs the previous candle, causing a price drop and a downward trend.
The Morning Star and the Evening Star, in the first case we have a bearish candle, followed by a small bullish candle, to continue with another bullish candle but of the same size as the bearish one, thus causing the start of a bullish trend. For the second case, it starts with a bullish candle, followed by a small bearish candle, to continue with another bearish candle but of the same size as the bullish one, causing the start of a bearish trend.
I hope you enjoy this brief analysis of candles and that I have made myself understood, any questions, comments, or suggestions, I remain attentive.
But in the meantime, let's rest a bit, have an excellent night ♥️.