What are Japanese candlesticks in trading

Updated: 7 November 2026

In short: A Japanese candlestick shows price movement for a period. The body spans the open and close; the wicks show the high and low. A green (white) candle means price rose over the period, a red (black) one that it fell.

What the shape tells you

A long body — a strong move one way. A long wick — price was pushed away but came back: a sign of rejection at a level. A doji with a tiny body — balance and indecision.

Well-known patterns

Engulfing, hammer and inverted hammer, shooting star, inside bar. The key point: a pattern only means something in the right place — at a level or zone, not in the middle of a move.

Example: what one candle tells you

An hourly candle opened at 100, dipped to 96 and closed at 101. The long lower wick says sellers pushed price down, but buyers bought it all back and more. If such a candle appears at an important low after the stops below it were taken, it is a meaningful clue. The same candle in the middle of a choppy range means almost nothing.

Why context matters more than the pattern

Beginners memorise dozens of names — "hammer", "engulfing", "star" — and trade every one. But the same pattern means different things in different places on the chart. First determine where you are: trend or range, at a zone or in the middle, was liquidity taken just before? A candle is confirmation, not a signal on its own.

An exercise for the week

Every day find five candles with long wicks on the chart and look at what happened before and after. Note: at a level or not, after a high or low was taken or not. After a week you will see for yourself in which context such candles more often precede a reversal.