The Pathway
The Trader’s Blueprint: Reading Charts, Market Structure, and Analysis

Understanding Candlestick Charts

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📍 What is a Candlestick Chart?

  • A candlestick chart is a visual representation of price movements over a specific period. Each candlestick shows what price did during that time, whether it was 1 minute, 1 hour, or 1 day.

  • Unlike basic line charts, candlesticks tell you a full story about price action—where it opened, where it closed, and how much it moved up and down in between.

📍 Anatomy of a Candlestick
🔹 Open: Where the price started for that timeframe.
🔹 Close: Where the price ended for that timeframe.
🔹 High: The highest price reached before closing.
🔹 Low: The lowest price reached before closing.
🔹 Body: The thick part of the candlestick, showing the range between the open and close.
🔹 Wick (Shadow): The thin lines extending from the body, showing how far price moved before closing.

📍 Bullish vs. Bearish Candlesticks

  • Bullish Candle (Price Went Up)

    • The close is higher than the open.

    • The OPEN is the (BOTTOM) of the body and the CLOSE is the (TOP) of the body.

  • Bearish Candle (Price Went Down)

    • The close is lower than the open.

    • The OPEN is the (TOP) of the body and the CLOSE is the (BOTTOM) of the body.

📍 Why Candlestick Patterns Matter

  • Candles reveal buying and selling pressure.

  • They help you spot reversals, continuations, and key market levels.

  • Mastering candles helps you avoid dumb mistakes like buying at the top of a rally or selling into a strong support zone.

📍 Common Candlestick Formations You NEED to Know
1️⃣ Doji – Market indecision, could lead to a reversal.
2️⃣ Engulfing Candle – Strong shift in market control (bullish or bearish).
3️⃣ Hammer & Inverted Hammer – Potential reversal signals.
4️⃣ Shooting Star – Strong rejection, likely downtrend.
5️⃣ Marubozu – Full momentum in one direction, showing aggressive buying or selling.

📍 How to Use Candlestick Charts in Your Trading

  • Don’t just trade based on a single candle. Always consider the overall trend.

  • Use candlestick formations at key levels like support and resistance to confirm your trade setups.

  • Combine candlestick analysis with other tools like volume and market structure to get the full picture.

🔑 Key Takeaway:
Candlesticks aren’t just pretty colors on your chart—they’re a direct language from the market, telling you what buyers and sellers are doing. Learn to read them, and you’ll instantly gain an edge over clueless traders gambling with their money.