What's up Traders in this video, you'll learn how to read Candlestick patterns like a pro even if you have no prior experience how to use candlesticks to better time your entries. A simple Candlestick trading strategy that works and strategies and Concepts through several examples so you can understand much faster. you might ask who is this training for This is for you. If you're a Forex, Trader, a stock Trader or even a crypto Trader sounds good, then let's get started.

What are candlesticks? Candlesticks are one of the most common ways to read charts. It can be divided into four parts: the open, the high, the low, and the close. Each Candlestick represents a fixed unit of time. If a reading candlesticks, we should be aware that each Candlestick refers to the selected time frame.

If a reading on a daily time frame, one handle stick corresponds to one day for an hourly time frame. 1106 means one hour. When reading candlesticks, we're only looking at four things and any other information will be derived from those four components. The open refers to the starting price, the higher first of the peak price, the low refers to the bottom price, and the closer first to the ending price.

Typically, candlesticks are presented as either green or red. The color of a Candlestick is determined by the relative positions of the open and close or simply the body. When we see a Candlestick with a green body, it means that the price has closed higher than the opening value. This is known as a bullish bar or candle.

On the other hand, a Candlestick with a red body means that the price has closed lower than the opening value. This is known as a bearish bar or candle for both bullish and bearish candles. The black upper Shadow or Wick refers to the highs of the period within the selected time frame, while the Shadow or Wick at the bottom refers to the lows of the period within the selected time frame. Let's dig a Little Deeper.

We can determine who's in control by looking at the size of the candlestick's body and Wicks both independently and relative to each other. In this first example, the Candlestick body tells us that there are strong buyers in control since the close is located much higher than the open. The short Shadow tells us that there is weak press rejection. The Heist showed that the price was raised to this level before the sellers were able to push it back a bit lower until the candles stick closed.

Now in this next example, we see the same weak and body, but it's telling us something entirely different. The body shows that the buyer still close the session in control, but this time there was a significant amount of selling pressure which caused a strong price rejection from up here to down here. After looking at the general structure of candlesticks, we should know that not all candlesticks look alike. Here are some variations of these Candlestick Patterns In this variation here are the Ohlc or Open High and Low close levels.

The price opened here. Then it came down a bit, but was rejected. Then it rallied up to this level, experience slight rejection again before closing here near the highs. This Candlestick shows a sign of strength for this variation.

We can see that the sellers pushed the price downward from the open before the buyers rallied all the way back up. But in the end, there was also considerable price rejection at the highs. so the Candlestick closed just slightly above the open. This Candlestick shows indecision since both buyers and sellers have a nearly equal impact in this particular session.

In the third variation, we can see a huge movement to the downside of the open, meaning the sellers to control early, but the buyers were able to push the price back up to close, near or at the heights. This Candlestick shows that the buyers are in control with a strong price rejection at the lows. Conversely, this is how it would look if the candlesticks were bearish. Moving on earlier, we mentioned that each Candlestick represents a fixed unit of time.

For every hour, we can see one newly formed candlestick. If a reading on a daily time frame, each state corresponds to one candlestick. When we look at charts with candlestick patterns, we're essentially looking at prices at different sessions. Imagine the two candlesticks on the left is one hour candlesticks.

When we combine these two, the result will correspond to a two hour Candlestick. Let's break down how we came up with the structure of the two hour: Candlestick All we have to do is identify the opening of the first component Candlestick and close with the last component. Candlestick For the body. In the highs and lows between the component candlesticks, let's look at an example.

We're looking at a one hour chart. Take a look at these pairs of candlesticks. How would these look in a two hour chart. The two pairs in the one hour chart were simply combined to form the patterns we're seeing on the two hour chart.

This technique can be very useful when trying to make sense of the market condition on a particular time frame. If we're having trouble looking at a one hour time frame, we can go up to the two hour time frame to see the bigger picture of the market condition. One of the common mistakes beginner Traders make is immediately buying or selling. After seeing a series of consecutively similarly colored candlesticks, thinking it's a strong, bullish or bearish signal, then the price suddenly goes the other way.

We should be careful not to use candlesticks in isolation. Knowing how to read and combine Candlestick patterns is only half the battle. The other half is knowing the correct situation or context to use these. Concepts Before we end this lesson, let's do a quick recap.

Candlestick Patterns show who's in control. the body, shows us the net price, movement, and who among the buyers and sellers, closed out a particular session on top. Pay attention to the body, the wick, and their sizes relative to each other. This tells us the conviction behind the construction of the candles Candlestick patterns can be combined.

By observing the open of the first candle and close of the last candle, we can figure out what the resulting body looks like. The upper and lower Wicks will be taken from the highest and lowest prices of the combined candlesticks. Finally, don't trade candlesticks in isolation. Potentially winning trading setups require the Candlestick patterns to be used together with the appropriate Market structure or situation.

Now that we're familiar with the guide to Candlestick patterns, let's find out how we can apply these to a framework that'll increase the probability of winning trades. In the previous lesson, we've already learned about the entry trigger through the Candlestick patterns by showing who's in control as well as the conviction behind the movement. Now, we'll be talking about context or the market conditions we need to meet before we start looking for our entry triggers. Enter: Let's say Framework Taste stands for Trend Area of value and entry trigger.

Let's start with a trend. The trend tells us the general direction the market is going. If the price shows a series of higher highs and higher lows, there's an uptrend. Conversely, if we see a series of lower highs and lower lows, we would be looking at a downtrend by looking for a long-term Trend We get a broad sense of how we should be developing our trade setup.

In other words, we are guided whether we should be watching out for buying or selling opportunities. If we see an uptrend, we should be looking to buy or go long. If we see a downtrend, we should be looking to sell or go short. Now that we have defined the trend, the next thing we want to look for is the area of value.

This is the area within the identified trend from which buying or selling pressure will likely come in. It is the area we want to trade from. This could take the form of static or dynamic support or resistance such as trend lines, moving, averages, channels, and so on. We can visualize this as a barrier or a good area from which we can look out for our next parameter and that is our entry trigger.

This is where we can use the various strong reversal or continuation. Candlestick Patterns based on control and conviction. Examples include angle think patterns, hammer and shooting star, dragonfly and gravestone, doji, morning and evening star, and tweezer tops and bottoms. By using this framework, we can formulate strategies to potentially profit in any Market condition.

Let's look at some examples to better visualize these concepts. For the first example, we can see that the market is in a downtrend based on the price movement. There's also an area of resistance where the price bounced three times. Along the resistance, we can see a shooting star pattern.

This tells us that within the context of the downtrended area of resistance, the sellers have established control and conviction for this particular session through a strong rejection of higher prices. Again, we have a downtrend for the trend resistance for the area of value and a shooting star pattern for the entry trigger. A shooting star pattern occurred at resistance in a downtrend and the price continued to go lower. For our next example, the market is in a downtrend.

Our identified area of value is a horizontal resistance. Our entry trigger here is a tweezer top pattern, which tells us that there is continued pressure ejection at the highs, so we can expect a continuation of the downtrend. here. In example 3, we have an uptrend.

Our area of value is a dynamic support in the form of a moving average, and our entry trigger is a bullish engulfing pattern. During the third bounce of the price, the price ejection of the red candle sticks in the larger green bodies signify control and conviction of the buyers. In this context. Example four: this is an uptrend and our area of value is a trendline support.

We can see that the price graphs of support. Two times. on the second bounce, we can see a bush engulfing pattern. This is our entry trigger.

This is significant price increase in the buyers are in control For this next example, we have a downtrend and the area of value is a static horizontal resistance. We can find our entry trigger here in the middle in the form of an evening star. This represents control of the sellers after the large red candle, so our expectation is that the price will keep going lower if you've noticed. All of the examples shown here were winning trades, but it's important to show that in reality, good setups won't always lead to winning trades.

Let's say, Framework will increase our chances of success, but it won't guarantee it. We'll probably get about 50 of that, so don't get discouraged with the outcome of the trading setup. Does it go the way we want? There will be other factors of play, but for the initial setup, the say, framework is already an excellent way to profit in the markets. To recap, let's say Framework or Trend area of value and entry trigger enables us to develop our trading setup by looking at the market conditions from a broad perspective to a specific point that will give us a very good chance of success regardless of Market condition.

By incorporating the safe framework, we're no longer trading candlesticks in isolation. It helps us trade patterns in the context of the market by increasing the probability of our trades working out. Some of the powerful Candlestick patterns that are commonly used are the engulfing pattern, hammer, Shooting star, doji, tweezer, and morning and evening Star. Lastly, the textbook versions of the Candlestick patterns won't appear the same in live trading, as there will always be variations instead of just memorizing how they look in ideal scenarios.

It's important that we understand what the Candlestick patterns actually mean.