Candles in Investing

Basic Candlestick Components and Color Interpretation
📌 Every candlestick has four key points: highest, lowest, opening, and closing prices.
🟢 Green candles indicate a bullish move where the closing price is higher than the opening price.
🔴 Red candles indicate a bearish move where the opening price is higher than the closing price.
🕯️ The main vertical section is the body, while the lines extending above/below are the wicks (indicating daily high/low extremes).

Interpreting Wicks and Candle Signals
📈 A green body signifies bullish behavior, and a red body signifies bearish behavior.
⬇️ The lower wick on any candle indicates bullish behavior (buyers pushed the price up from the low).
⬆️ The upper wick on any candle indicates bearish behavior (sellers pulled the price down from the high).
⚫ If the opening and closing prices are virtually the same, it forms a Doji candle, which is considered an indecisive signal.

Key Candlestick Patterns
🔨 The Hammer candle (small red/green body with a very long lower wick) is a very bullish signal, as the buying pressure overcame the selling pressure.
🧑‍🌾 The Hanging Man candle (similar structure to the hammer but appears at a top/uptrend) is indecisive because the bearish body conflicts with the bullish lower wick.
⚫ Gravestone Doji (long upper wick, no body) signals bearishness because the price moved high but was heavily rejected to close near the open.
⚪ Dragonfly Doji (long lower wick, no body) signals bullishness because the price moved low but buyers aggressively pushed it back up to close near the open.

Multi-Candle Patterns
🐻 Bearish Engulfing: A large red candle completely covers (engulfs) the previous day's smaller green candle, suggesting a market reversal to the downside.
🐂 Bullish Engulfing: A large green candle completely covers the previous day's smaller red candle, suggesting a market reversal to the upside.
⭐ Evening Star: A bearish pattern formed by three candles: a large green candle, followed by a small indecisive Doji pointing upward, then a large red candle, indicating potential top reversal.
🌟 Morning Star: A bullish pattern formed by three candles: a large red candle, followed by a small indecisive Doji pointing downward, then a large green candle, indicating potential bottom reversal.

Key Points & Insights
➡️ To practice identifying patterns, use a platform like tradingview.com (log in securely without personal details) and set the chart view to Day timeframe and 1 Year duration.
➡️ The more patterns (Doji, Hammer, Engulfing, Harami, etc.) you search for and mark on different charts, the more expert you will become in reading price movements.
➡️ Candle patterns represent probabilities, not guarantees; like healthy habits, they increase the chances of a desired outcome but don't prevent all negative possibilities.

📸 Video summarized with SummaryTube.com on Dec 24, 2025, 08:54 UTC