A candlestick trading strategy is a price action approach that uses Japanese candlestick charts to read market psychology and time precise entries...

A candlestick trading strategy is a price action approach that uses Japanese candlestick charts to read market psychology and time precise entries and exits. Instead of depending solely on lagging indicators, traders analyze recurring patterns—such as engulfing candles, pin bars (hammers/shooting stars), doji, and inside bars—to gauge momentum shifts and potential reversals or continuations. The best results come from combining patterns with context: trend direction, support and resistance, moving averages, and volume or momentum confirmation. A robust plan defines the setup (context), trigger (pattern), confirmation (secondary signal), and risk rules (stop placement and position sizing). Stops are typically placed beyond the candle’s invalidation point, while targets focus on prior structure or reward-to-risk multiples. This structured framework works across markets—stocks, forex, crypto, and indices—and on multiple timeframes, from intraday to swing trading. On this page, you’ll learn proven pattern rules, confluence techniques, and a repeatable checklist to improve consistency. Whether you’re new or refining your edge, a disciplined candlestick trading strategy can simplify decisions and enhance trade quality.

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