[00:02] candlesticks are and how to read them, how to understand the battle between buyers and sellers, the most important candlestick patterns every trader should know, how to identify when buyers or sellers are taking control,
[00:14] and finally, how to combine candlestick patterns with simple technical concepts opportunities. So, whether you're a complete beginner or you already know the basics, stay with me until the end because we're going to build everything
[00:28] step-by-step. Before we dive in, make sure to smash that like button, notifications so you never miss an update. Now, let's get started. Before learning candlestick patterns, you first
[00:42] actually is. A candlestick is simply a representation of price movement during a specific period of time. For example, if you are looking at a daily chart, each candlestick represents one trading day.
[00:56] If you are looking at a one-hour chart, each candlestick represents one hour. And every candlestick gives us four important pieces of information: the opening price, the closing price, the highest price, and the lowest price.
[01:10] Now, let's start with a bullish candlestick. If the opening price is below the closing price, it means the market opened here, moved higher, and eventually closed above its opening price. This tells us that buyers were in
[01:22] control during that trading session. We call this a bullish candlestick. Now, let's look at the opposite situation. If the opening price is above the opened here, moved lower, and eventually closed below its opening price. This
[01:37] during that trading session. We call this a bearish candlestick. The colors of the candles depend on the colors you use on your chart. If you're using the traditional black and white candlestick chart, a bullish
[01:50] candle is usually white, while a bearish candle is black. If you're using the more common green and red chart, a bullish candle is green, while a bearish candle is red. So, don't focus too much on the color.
[02:02] is bullish or bearish is the relationship between the opening price and the closing price. Opening below the close means a bullish candle. Opening above the close means a bearish candle. Once you understand this simple concept,
[02:16] buyers and sellers are doing in the market. Now, look at another chart example. As you can see here, we have five consecutive green candles. The first candle opens here and closes above its opening price. So, the closing
[02:30] price is above the opening price, which makes this a bullish green candle. The same thing happens with the rest of these candles. Each candle closes above buyers were in control of the market during all these trading sessions,
[02:44] looking at the opening and closing prices of the candles, you can already the market. But, this is just the basics. What you're going to learn next will completely change the way you look at candlestick charts. So, don't skip
[02:59] anything and keep watching until the end. Now, look at this chart example. As you can see here, we have four consecutive red candles. The first candle opens here and closes below. The same thing happens with the rest of the
[03:12] candles. This tells us that sellers are in control of the market. But, now look at what happens next. We get a completely different candle. It has a small body and a very long lower wick. What happened here?
[03:24] Sellers initially pushed the market lower, all the way down to the bottom of price there. Buyers stepped in aggressively and pushed the market back up, creating this long lower wick. This tells us something important. Sellers
[03:38] tried to continue pushing the market down, but they struggled and buyers fought back. This candle is called a hammer candlestick pattern. The hammer losing control and buyers are starting to take over. Now, look at what happens
[03:51] to take over. Now, look at what happens next. another bullish candle and then the market starts moving strongly higher. Buyers have taken control. The opposite version of the hammer is what we call
[04:04] The shooting star forms after a move upward when buyers have been in control pattern can indicate that buyers are losing control and sellers may be ready to reverse the trend. Look at this chart example.
[04:19] As you can see here, we have four bullish green candles. This tells us driving the market higher. Now look at what happens next. A shooting star pattern forms. This long upper wick shows the battle
[04:33] between buyers and sellers. During this trading session, buyers tried to push of this wick, but they failed to keep the price there. Sellers stepped in and pushed the market back down creating this long upper wick.
[04:46] This tells us that buyers tried to continue the move higher, but they lost the battle and sellers started taking control. This is an early indication that a move down could occur. Now look at what happens next.
[04:58] The market moves down confirming that sellers have taken control. Now that you understand bullish and bearish candles, let's take it one step further and look at one of the most important candlestick patterns, the
[05:10] engulfing pattern. There are two types, the bullish engulfing pattern and the bearish engulfing pattern. Let's start with the bullish engulfing pattern. It consists of two candles. The first candle is bearish. The opening price is
[05:23] above the closing price, which tells us that sellers were in control during that trading session. But then something interesting happens. The second candle is bullish. The market opens here, buyers step in aggressively, and price
[05:35] starts moving higher. By the end of the session, the bullish candle has engulfed the body of the previous bearish candle and this is where the psychology becomes important. The first candle tells us that sellers
[05:47] were in control, but during the second candle, buyers completely take over and overpower the sellers. That's why this pattern can signal a potential bullish reversal. Now, look at this chart example. As you can see, the market was
[06:00] trending down. We have several bearish candles pushing the market lower, which clearly tells us that sellers were in control. But then, right here, a bullish first warning that something has changed. Sellers were controlling the
[06:15] with enough strength to engulf the previous bearish candle. This tells us that sellers may be losing control, and buyers are starting to take over. And buyers are starting to take over. And look at what happens next.
[06:34] Now, let's look at the opposite pattern, the bearish engulfing pattern. The idea is exactly the same, but this time the battle is won by the sellers. So, remember this simple idea. A bullish engulfing pattern can tell us that
[06:47] control is shifting from sellers to buyers. A bearish engulfing pattern can tell us that control is shifting from buyers to sellers. Don't just memorize the shape of the pattern. Understand the battle behind it. Because once you
[07:00] understand who is winning the battle between buyers and sellers, candlestick patterns become much easier to read. Now, let's look at another important candlestick pattern, the doji. A doji forms when the opening price and the
[07:12] closing price are at the same level, or very close to each other. When a doji forms at the end of a downtrend, it can signal a potential bullish reversal. Before the doji forms, the market is trending down. Sellers are clearly in
[07:25] control and are pushing the price lower. Then suddenly, a doji appears. approximately the same price, showing that the market has entered a phase of indecision. Sellers were previously dominating the market, but now they are
[07:39] struggling to push the price lower. This tells us that sellers may be losing control and a new move upward could potentially begin. Now look at the opposite situation. When a doji forms at the end of an uptrend,
[07:51] buyers have been in control pushing the market higher, but then a doji forms. Buyers and sellers are now approximately equal. Buyers are no longer able to dominate the market as they did before. This indecision tells us that buyers may
[08:04] be losing control and sellers could potentially take over. As a result, a new move downward may begin. Look at this chart example. As you can see here, were clearly in control pushing the price lower.
[08:19] But then, right here, a doji candlestick pattern forms. The market opens here. During the session, buyers push the price up, sellers push it back down, and then buyers step in again. Eventually, the market closes at approximately the
[08:32] does this tell us? Before the doji, sellers were clearly in control, but during the formation of the doji, sellers were no longer able to dominate the market. Buyers started fighting back and neither side was able
[08:45] to take full control. This indecision after a strong move down tells us that sellers may be losing control and that the downward move could be coming to an end. As a result, a new move upward may begin. And look at what
[08:57] move upward may begin. And look at what happened next. market moved strongly higher. Again, the doji doesn't guarantee a
[09:09] reversal, but when it forms after a strong move, it can give us an important clue that the balance between buyers and sellers is starting to change. The next candlestick pattern is the inside bar. The inside bar is a two candlestick
[09:21] The first candle is called the mother bar and the second candle is called the inside bar. The second candle forms completely inside the range of the mother bar. In other words, its high is lower than the high of the mother bar
[09:34] and its low is higher than the low of the mother bar. But, what does this pattern actually mean? The inside bar generally represents market. The mother bar shows a relatively large price movement,
[09:48] but during the next trading session, the market is unable to move above the mother bar's high or below its low. Price becomes compressed inside the previous candle's range. This tells us that neither buyers nor sellers are
[10:00] strong enough to push the market outside that range. Now, depending on where the inside bar forms and what happens next, it can lead to either a bullish or bearish move. For a bullish setup, the market eventually breaks above the high
[10:12] of the mother bar. This tells us that buyers have taken control and the market may continue higher. For a bearish setup, the market breaks below the low sellers have taken control and the market may continue lower.
[10:26] Look at this chart example. As you can see, the market starts moving up. We have a bullish candle here, followed by another bullish candle, and then a third buyers are clearly in control of the market, pushing the price higher. But
[10:40] then, an inside bar pattern forms. We have the mother bar here, followed by completely inside the range of the mother bar. The formation of the inside bar tells us that the market has entered a phase of indecision.
[10:55] Buyers were previously in control, but now price has stopped moving strongly upward. Buyers and sellers are temporarily in a battle, and neither side is able to break the range of the mother bar. At this point, we don't know
[11:07] If price breaks below the mother bar, sellers may be taking control. But if price breaks above the mother bar, it tells us that buyers have regained control and may be ready to continue pushing the market higher. Now, look at
[11:20] Price breaks above the high of the This confirms that buyers have regained control, and as you can see, the market continues moving higher. The inside bar can therefore provide an interesting
[11:33] opportunity for traders who missed the initial move upward. Instead of chasing temporary pause and then look for an entry when price breaks above the high of the mother bar, confirming that buyers are taking control again. Now
[11:46] look at another chart example. As you can see, the market starts moving down. Sellers are in control and are pushing the price lower. But then, an inside bar pattern forms. This is the mother bar and this is the smaller
[11:59] candle that forms completely inside the range of the mother bar. Before the pattern forms, the market is moving down, which tells us that sellers are in control. But the formation of the inside bar indicates indecision. The
[12:12] now we're waiting to see who will win the battle between buyers and sellers. If price breaks below the low of the mother bar, it tells us that sellers have come out of this indecision phase and regained control. In that case, they
[12:26] may continue pushing the market lower. But if price breaks above the high of completely different. Sellers have lost control, buyers are taking over, and a new move upward may begin. Now look at what happens next.
[12:41] Price breaks above the high of the mother bar. This tells us that buyers have won the battle. And look at what happens after the breakout.
[12:53] move upward. So again, don't look at the inside bar alone. Watch the breakout of the mother bar because that's what can tell you which side, buyers or sellers, is taking control. Now, let's take what we've learned about
[13:06] candlestick patterns and combine it with one simple technical concept in the market. Look at this chart example. As you can see, the market was trending down. Price reached this area and then reversed strongly upward. This area is
[13:19] what we call a support level. A support level is an area where buyers previously stepped into the market and pushed the price higher. So we draw our support level here and wait to see what happens when price comes back to this
[13:31] happens when price comes back to this area. Now, look at what happens next. reaches our support level. But, instead of continuing lower, price
[13:43] gets rejected and forms this hammer candlestick pattern. Now, remember what the hammer tells us. Sellers tried to push the market lower, but they failed. Buyers stepped in, rejected the lower prices, and pushed the market back up
[13:56] before the candle closed. And what's important here is where the hammer formed. It didn't form randomly in the middle of the chart. It formed directly at our support level, an area where buyers had previously taken
[14:08] control. This gives the candlestick pattern much more context. So, this could be our entry signal. We can enter at the close of the hammer, place our stop loss below the low of the pattern, and use the next resistance level as our
[14:20] potential profit target. Now, look at what happened next. As you can see, buyers took control at the support level, and the market moved This is why we don't want to trade candlestick patterns blindly. When you
[14:35] important area such as support or resistance, the pattern can give you much more useful information about the battle between buyers and sellers. Now, look at another chart example. As you can see here, the market starts
[14:49] trending up, which tells us that buyers are in control and are pushing the price higher. Then, right here, an inside bar pattern forms. As we already learned, an inside bar represents indecision or a temporary pause in the market.
[15:03] So, buyers were in control, but now the market pauses, and neither buyers nor sellers are making a strong move. At this point, we wait to see what happens next. If price breaks below the mother bar, it could indicate that sellers are
[15:15] starting to take control. But, look at what happens here. Price breaks above the high of the mother bar. This tells us that buyers regained control, and are willing to continue pushing the market higher. So,
[15:29] this breakout could provide us with an entry signal. We can enter after the breakout candle closes, place our stop loss below the pattern, and use the next resistance level as our potential target. Now, look at what happened next.
[15:44] As you can see, the market continued moving higher as expected. So, in this example, the inside bar was simply a temporary pause in the uptrend before buyers regained control and continued the move upward. And that's it
[15:56] for today's video. You now understand how candlestick patterns can help you read the battle between buyers and sellers and identify potential trading If you found this video helpful, hit the like button, subscribe to the channel,
[16:09] and turn on notifications so you don't miss the next trading lesson. Thanks for watching, and I'll see you in the next video.