Japanese Candlesticks: The Guide Every Crypto Trader Needs (No Smoke)

If you are new to cryptocurrency trading, you have probably heard someone talking about “hammer”, “doji” and “hanging man”. Yes, it sounds strange. But these strange candle shapes on the chart can save you money ( or cost you everything if you ignore them ). Let's break it down without unnecessary technicalities.

What's Up with Japanese Candles?

Think of it this way: a candle is like a 5-minute, 1-hour, or 1-day snapshot of the market. Four numbers matter to you:

• Open and close: where the price started and where it ended
• Maximum and minimum: the highest and lowest points reached

The body ( the thick part ) shows the battle between buyers and sellers. The wicks ( the thin lines above and below ) are where the price tried to go but turned back.

Green candle = buyers won (price went up) Red candle = sellers won (price dropped)

That's it. It's not more complicated than that.

The Patterns That Really Matter

Bullish Signals ( People Are Buying )

Hammer (Hammer): Small red candle with a long tail downward. Appears after declines and says: “Sellers tried to push down but buyers said no”. Potential upward reversal.

Three White Soldiers: Three consecutive green candles closing higher each time. It's like when you see all the traders rushing towards the door… to buy.

Bullish Harami: Large red candle followed by a small green candle inside. Translation: selling pressure is waning.

Bearish Signals ( People Are Selling )

Shooting Star: Small body with a long shadow pointing up at the top of an ascent. It means: “Sellers appeared out of nowhere”.

Hanged Man: Similar to the hammer but after a long rise. It is dangerous here.

Three Black Crows: Three red candles in a row. Sellers are in control.

The Doji: Indecision Made Candle

When the price opens and closes almost at the same point, it is a doji. It means that no one knows where the market is going. Don't do anything with just this, wait for more signals.

Here Comes the Important Part: DO NOT Just Trust Candles

A nice candle won't make you a millionaire. You need:

1. Additional indicators: RSI, MACD, moving averages (yes, it seems super boring, but it works)
2. Multiple timeframes: Check 1 hour, 4 hours, and 1 day. If they all say the same, then pay attention.
3. Volume: Is there a lot of people buying/selling or just a few movements? It matters.
4. Non-negotiable stop-loss: Before entering, define how much you are willing to lose. No exceptions.

Why Cryptos Are Different ( and Why It Is Good )

Unlike traditional exchanges that close, crypto operates 24/7. This means that “gaps” (price jumps from a closing to an opening) are almost nonexistent. It's an advantage: fewer nasty surprises.

The Winning Plan

1. Understand the patterns well (don't rush)
2. Combine candles with other indicators
3. Analyze multiple time frames
4. Define your risk management before trading
5. Repeat until it becomes automatic

Japanese candles are a tool. Powerful, yes. But alone, they won't make you money. It's like having a good set of tools but not knowing how to fix a house. You need the complete strategy.