## Master the Language of Charts: A Practical Guide on How to Read Japanese Candlesticks

If you want to trade in financial markets, you need to understand a universal language: Japanese candlesticks. These charting tools reveal in seconds what happened in the market during a specific period, from sentiment shifts to potential trend reversals. But here’s the important part: **how to read Japanese candlesticks** correctly can be the difference between profitable trades and avoidable losses.

### Where do these candles come from and what information do they provide?

Japanese candlesticks originated in rice trading in Dojima, Japanese cities, centuries ago. Westerners adopted them to analyze financial markets because they offer something line charts cannot: complete information in a single representation.

Each candlestick has two visual components (body and wicks) but provides four critical data points simultaneously: opening price, closing price, high, and low, known as OHLC. Think of it this way: while a line chart only shows the close, a candlestick tells you the entire battle that took place during that period.

On platforms like MiTrade, colors communicate direction: green for bullish movements, red for bearish. Hovering over any candlestick displays the four OHLC values, the percentage change, and the timeframe.

### The four patterns you must recognize first

When learning **how to read Japanese candlesticks**, you need to memorize specific patterns that repeatedly appear in markets:

**Engulfing**: Two candles of different colors, where the second completely surpasses the range of the first. It anticipates trend changes. For example, after bearish candles, a bullish engulfing candle closing above suggests the end of the decline.

**Doji**: A peculiar candle with minimal body and long wicks on both sides (looks like a cross). It indicates total indecision: buyers and sellers are tied. Look at Bitcoin on May 11 and August 12; both showed this balance.

**Hammer**: Small body with an extraordinarily long wick. When it appears after an uptrend, it signals that buyers lost momentum. Sellers regained control. Prepare for bearish changes.

**Marubozu** (meaning "bald" in Japanese): No wicks or minimal wicks, with a large body. It communicates pure power. A bearish marubozu closing at resistance indicates absolute seller control.

### Why technical analysis needs you to understand this

When studying **how to read Japanese candlesticks**, you discover something fascinating: you find support and resistance levels that line charts would never reveal. The wicks of candles constantly touch these levels. In EUR/USD, support at 1.036 was bounced three times by the wicks, but a line chart wouldn’t have shown it.

This is why indicators work better with candlesticks: you have complete information. Moving averages contact more precise prices. Fibonacci retracements are drawn correctly. Let’s take a real example: in gold (XAU/USD), a confluence between a daily engulfing candle and a Fibonacci retracement at 1700 USD created an almost perfect buying opportunity.

### The mechanics behind each move

Imagine a 1-hour candle in EUR/USD opening at 1.02704, high at 1.02839, low at 1.02680, and close at 1.02801. Gain: 0.10%. The body (from 1.02704 to 1.02801) tells you what happened. The wicks (reaching 1.02839 and 1.02680) reveal who controlled each end.

When an hourly candle has a long wick upward but closes red (bearish), it means buyers pushed the price aggressively, but sellers took control so strongly that they reversed all gains. This is critical for interpretation.

Let’s take a specific candle: at 8:00 AM, the price rose. At 8:15, it continued. At 8:30, it started to fall. At 8:45, it closed below the open. Result: a red hourly candle with a long wick upward. Lesson: buyers were in control, sellers gained. Confirmed bearish potential during the next 5 hours.

### How to use Japanese candlesticks in real trades

The secret is not trading with a single candle, but with confluences. Identify a proven support (blue line in EUR/USD bounced 3 times at 1.036). Look for a bullish engulfing pattern (candlestick pattern). Confirm with Fibonacci (level 61.8%). Now place your order.

Always work with higher timeframes: a hammer on the daily candle surpasses one on 15 minutes in accuracy. A day of professional trading requires 3 hours of prior technical analysis for 90 minutes of execution.

### Difference between speculation and technical analysis

Understanding **how to read Japanese candlesticks** sets you apart from those who speculate emotionally. Speculators guess. Technical analysts read. A long wick indicates exhaustion, possible reversal. A short wick signals a strengthened trend. A large body communicates volume and conviction.

### Final steps: practice and patience

Start with demo accounts. Analyze charts without risking real capital. Train your eye. Over time, you will recognize patterns instantly. Professionals can make decisions by observing a single candle because they have processed thousands.

Remember: support and resistance, Fibonacci, moving averages, and indicators work together with Japanese candlesticks. Forex, cryptocurrencies, commodities, stocks: all asset classes respond to these patterns.

**Start today**: register on a platform, deposit funds, and practice. Profitable trading begins when you stop guessing and start reading what the market communicates through Japanese candlesticks.