Financial Technical Analysis Crypto Narrative Chapter 3 Candle Stick Patterns

The candle stick chart was introduced by Steve Nison in his book, Japanese Candlestick Charting Techniques developed by Munehisa Homma, a rice merchant from Sakata, Japan who traded in the Ojima Rice market in Osaka during the Tokugawa Shogunate. It really looks like a candle where the wick is the high, the wax is the open/close, and the handle is the low. Today, candle stick chart is useful to efficiently see market behaviors and predict future movements.

A bullish finished candle is usually colored green or hollow. It is a summary of a price movement that starts/opens with a lower price and ends/closes with a higher price. Thus, a bullish candle means that the price went upward in that certain period.

On the other hand, a bearish finished candle opens with a higher price and closes with a lower price. Thus, a bearish candle means that the price went downward in that certain period. It is usually colored red or filled.

Simplest Pattern

Candle Body Length

A balanced bullish candle size is more to a bullish signal and vice versa for a balanced bearish candle is more to a bearish signal. There are even many articles for starting traders that we buy after there are series of bullish candle suggesting us to ride the wave and the same that we should sell after there are series of bearish candle. However, when the body is very big, it…