How to Read Candlestick Shapes & Charts (with ZERO experience)
Published: 2025-04-26
Status:
Available
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Analyzed
Published: 2025-04-26
Status:
Available
|
Analyzed
Predictions from this Video
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Prediction
Topic
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A big red long body candle appearing after sideways price movement typically leads to an extended sell-off across various financial instruments.
"So likewise, if you see a price going relatively sideways and then suddenly a big red candle, well that certainly indicates that sellers are coming in, people that own the stock are bailing out or whatever it is. again, futures, commodity, cryptocurrency, uh, pairs, etc. Uh, and and now we're going to get typically an extended sell-off."
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A series of successively smaller long body green candles indicates trend exhaustion, suggesting a potential shift and downward movement in the market.
"And the small body candle here in the context of it being smaller than the previous candles is telling us that the trend is starting to get exhausted. it's not moving up to the same level and we may be starting to worry about, you know, something like this happening where all of a sudden there's a shift in the trend and we begin moving back down"
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Small body candles serve as an early indicator: if they are growing larger, the trend is increasing; if they are growing smaller, the trend is decreasing or exhausting.
"our small body candles can be an early indicator that a trend is beginning to increase if they're getting slightly larger than previous candles or that the trend is starting to decrease if they're getting slightly smaller than the previous candles."
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A dogee candle appearing at the top of an upward market move is a clear caution flag indicating that the trend is about to shift downwards.
"This is so common that at the top of a move, you'll see a dogee. We we love seeing these because it's a very clear caution flag that the trend is about to shift."
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A dogee candle at the bottom of a downward market move is a clear reversal indicator, signaling a potential bullish reversal and a buying opportunity.
"Back down here at the bottom, if this candle down here was a dogee, that's even better for us because that's a very clear indicator that we should be buying down here... That is a reversal indicator."
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A gravestone dogee (open, high, close near bottom, with a long upper wick) following an uptrend is a very powerful bearish reversal indicator, suggesting the price is likely to continue reversing downwards.
"If this is the shape of that candle, this is called this candle is a specific type of dogee. It's called a gravestone dogee... what's most likely to happen is it continues to reverse. So this is a very powerful reversal indicator."
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A dragonfly dogee (open, low, close near top, with a long lower wick) at the bottom of a downtrend indicates that a bullish reversal or bounce has already begun.
"This right there is a dragonfly dogee... It's already begun bouncing. it's already begun reversing."
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A spinning top candle appearing near the top or bottom of a market move indicates that a reversal may be approaching.
"a spinning top candle of indecision can occur during sideways consolidation but is not very significant. However, when it occurs near the top or bottom of a move, it indicates we may be um approaching a reversal."
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A hammer candle at the bottom of a sell-off indicates that a base is forming and buyers are pushing the price back up; the next candle is likely to open higher, signaling the first candle of a bullish reversal.
"So, a hammer in the context of a sell-off... That communicates a little bit more strength. So what the hammer is telling us is that we're basing out that we sold off, we rallied back up, and the next candle is going to open more or less at the high, right? And that is going to be your first candle of reversal."
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An inverted hammer (shooting star) at the top of an uptrend is a very strong reversal indicator, signifying that a bearish reversal has begun.
"This is actually literally the same exact candlestick shape. You've got the body with a topping tail, right? So, in this context, this is a very strong reversal indicator... So if this is a green candle, the reversal has begun."
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A shooting star candle is a bearish indicator, suggesting the price is likely to reverse and move downwards.
"a shooting star candle is a bearish candle... Shooting stars come back down to earth."
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A hanging man candle at the top of an uptrend indicates an unfavorable situation, and the price is likely to reverse and move downwards.
"A hanging man is well, I don't need to tell you what's going to happen. It's not good to be in that situation and the price is likely to come back down."
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A tweezer top pattern, characterized by two candles with similar topping tails at the peak of an uptrend, is a typical bearish reversal indicator.
"The first one we're going to talk about is a tweezer top... at the top of an uptrend, two candles with little topping tail candle wicks. And this is typically a reversal indicator. So, it's a bearish indicator."
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A tweezer bottom pattern, with two hammer-like candles at the bottom of a sell-off, indicates an inability of the price to break lower, suggesting a position of strength and a potential bullish reversal.
"the tweezer bottom is going to occur at the bottom of a sell-off... The fact that it double bottomed shows that it's really unable to break lower. It tried to break lower and it couldn't break lower. So now we we actually have a bit of a position of strength."
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A morning star pattern, a three-candle bullish reversal pattern (often involving a gap down and a hammer-like candle), is a strong indicator of an impending upward trend on daily charts.
"The next one is called the morning star pattern... This rally, this hammer with a bottoming tail in this context is called a morning star pattern... This is a reversal indicator."
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An evening star pattern, the inverse of a morning star, indicates a bearish reversal where the price has been moving higher but then starts to come back down.
"on this side, we're going to have the the evening star, the exact opposite, where the price has been moving higher. And then finally, you get a candle that opens well outside, but you've got that topping tail... And then now we're starting to come back down. So that one's going to be called the evening star."
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A bullish engulfing pattern (a green candle opening below and closing above the previous red candle) indicates that buyers are overpowering all selling, leading to a very strong bullish reversal.
"bullish engulfing pattern... The next day has to open below the bottom of this candle and close above it thus fully engulfing it. So the buyers overpower all of that selling. And this is a very strong bullish candle."
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A bearish engulfing pattern (a red candle fully engulfing the previous green candle) is a very strong and powerful bearish reversal indicator.
"The bearish engulfing is when the red candle fully engulfs coming back down. So that is a very strong very powerful reversal candle."
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A rising three pattern (also known as a bull flag), consisting of a strong green candle followed by three smaller pullback candles, indicates an upcoming continuation of the upward trend.
"The first is called the rising three... You want to see one green candle, then three candles of pullback before the next candle moves higher... We're now looking for the next to move higher."
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A falling three pattern (also known as a bear flag), comprising a big sell-off candle followed by a minor bounce (three smaller candles), signals that the next leg of the downward trend is imminent.
"this is a falling three where you've got the big sell-off candle and then a minor bounce and that but it's it's only a minor bounce because it doesn't come all the way back up and it really is just before the next leg back down."
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Once a specific candlestick count pattern (e.g., three candles up, two down) is established, traders tend to expect that pattern to continue, influencing market behavior.
"It's very common that when we start to get into these patterns that you'll see the same number of candles. It'll be three candles going up, two candles coming down, three going up, two coming down. But if the pattern happens to be two going up, three going down, two going up, three going down, that traders tend to expect that that pattern will remain."
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