Understanding Candlestick Patterns: A Simple Framework Crypto Traders Actually Use
Candlestick patterns aren’t magic signals. They’re a visual language that shows who’s in control: buyers or sellers. Once you read them correctly, charts stop feeling random.
This chart sheet breaks patterns into two core ideas: continuation and reversal.
1) Continuation Patterns
These appear during a trend and suggest the market is pausing, not changing direction.
- Bullish continuations (e.g. Rising Three Methods, Three White Soldiers): buyers stay in control despite short pullbacks. Think “breath before continuation.”
- Bearish continuations (e.g. Falling Three Methods): sellers dominate even after small bounces.
Use these when trading with the trend. Enter after confirmation, not mid-pattern.
2) Reversal Patterns
These signal potential trend exhaustion, not guaranteed reversals.
- Bullish reversals (Morning Star, Hammer, Bullish Engulfing): selling pressure weakens, buyers step in aggressively.
- Bearish reversals (Evening Star, Shooting Star, Bearish Engulfing): buyers lose momentum, sellers take control.
Reversals work best at key levels: support, resistance, previous highs/lows.
How to Use Candles Properly in Crypto
- Context > pattern: A hammer in the middle of nowhere means nothing. A hammer at support matters.
- Confirmation matters: Wait for the next candle to validate direction.
- Volume is your lie detector: Strong patterns with rising volume are more reliable.
- Combine, don’t isolate: Use candles with trend, structure, and risk management.
Candlesticks don’t predict the future.
They reveal real-time market psychology.
Master that, and charts become a decision tool — not a guessing game.