Japanese candle charts are the most visual and effective way to represent price movements, accurately reflecting the Japanese spirit of 'filtering' information. Although prices fluctuate continuously, candle charts help you clearly see market psychological movements through just a few simple images.
☘️ Why should we use Japanese candle charts?
New traders often choose line charts for simplicity, but sooner or later will switch to Japanese candles for the following reasons:
• Quickly observe crowd psychology.
• Clearly identify important psychological thresholds.
• Quickly predict price movements through candle patterns.
• Combine well with other systems, especially Ichimoku.
• Convey a lot of information in a single candle.
☘️ Start with Japanese candle charts.
Where to see it?
On TradingView or any platform with the option 'Candles'.
How to view it?
Start from a large time frame (Week/Day), then go down to smaller frames (12h - 1h).
Combine with what?
• Can possibly use the MA average: Candle tails or touching the average line.
• Can combine with Bollinger Band: Candle tails touch the edge and then return.
• Combine with RSI: Used to determine the optimal entry point.
• But the most perfect combination is probably Ichimoku: The strongest combination, many advanced themes.
☘️ The structure and nature of a Japanese candle.
Understanding candles is not just about looking at shapes but understanding the hidden psychology behind it.
Do not understand Japanese candles as purely geometric shapes. You need to understand what 'psychological story' it is conveying about the crowd.
A Japanese candle itself contains its own price path over a specific time. But in itself, it is just a 'moment' of the market.
There is a probability when you try to describe the accurate movements of the crowd's psychology within a candle. Because we are using 'form' to infer 'content'.
A candle represents a trading session with:
• Open: Opening price.
• High: Highest price.
• Low: Lowest price.
• Close: Closing price.
• Candle body: The range of buying – selling dispute.
• Candle shadows: Reflecting excessive psychology – fear or greed.
☘️ Practical applications in trading.
Start by observing single candles such as: Pinbar, Doji, Hammer, Spinning Top…
Then enhance by analyzing candle clusters/patterns such as: Inside Bar, Engulfing, Three White Soldiers…
☘️ When observing single candles, be aware of:
1. Look at the previous trend to determine the context.
2. Observe volume – should choose platforms with high volume.
3. Wait for the candle to complete before analyzing.
☘️ Apply observations and plan trades with Pin Bar candles.
Description: Short body, long shadow leaning to one side.
• Long upper shadow → Increased reversal potential.
• Long lower shadow → Increased reversal potential.
Observe 3 factors with Pinbar:
• After a strong drop → It may recover.
• Volume remains unchanged but the price does not drop significantly → Strong buying force.
• Close lower than Open → Clear reversal momentum.
After observing, to earn profit safely we need to plan.
Plan trading with Pinbar.
Advice: Find the entry point by applying Fibonacci.
Based on candle patterns, determine 'bullish' or 'bearish'.
How to ensure that the entry point is always close to the lowest price when buying up or the highest price when selling down. The purpose is to mitigate the case when we are wrong, so the stop-loss point is the most optimal.
If the price movement does not reach the buying point (or short selling), wait for another opportunity. Or use 'stop buy' or 'stop sell' when you have experience.
Plan 1: Buy near the bottom.
• Zoom out the candle to see the internal movements.
• Draw Fibonacci retracement to find entry points close to stop-loss levels.
Plan 2: 'Stop buy/sell' – Buy if it breaks, sell if it falls.
• Determine the highest/lowest price of the candle.
• Place a buy order if it breaks, or sell if it falls.
• Cut losses when the price returns to the candle range.
After successfully entering the trade, 'Zoom out' Pinbar to see the price path.
In this case, the reversal Pinbar gives us a high probability of winning. You see, observing candles helps you determine the trading trend and find a relatively good entry point with Fibonacci.
And we always have a stop-loss point, because once it is a probability, there will always be unexpected volatility risks.
🍀 Conclusion
Understanding the nature of Japanese candles helps you proactively apply it to all models. Practice step by step, from single candles to complex patterns, from observation to planned entry.
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