A Japanese candlestick is a way of displaying information about an asset’s price movement.
Japanese candlestick charts are one of the most popular components of technical analysis, enabling traders to interpret price information quickly and from just a couple of candlesticks (or bars).
Japanese candlesticks form patterns, which consist of one or more candlesticks, that traders use to analyze the price movement.
Candlestick patterns can provide tremendous insight into the psychology underlying the market in a particular currency pair.
Our Japanese Candlestick Pattern Guide provides an overview of popular Japanese candlestick patterns.
There are many different candlestick patterns that are commonly used by technicians.
Each pattern has a specific meaning that’s backed by market psychology, which traders can use to predict likely future price movements and potentially increase their risk-adjusted returns.
That said, while candlestick patterns are great for interpreting near-term price action, traders looking for longer-term swing trades may need to look at the bigger picture.
Click on a candlestick pattern below to learn more about that pattern.