Basic Japanese Candlestick Patterns

Question 1

What are the three basic types of Japanese candlesticks?

Answer 1

Spinning Tops, Marubozus, and Dojis.

Question 2

What is a ‘Spinning Top’ candlestick?

Answer 2

A candlestick with a long upper shadow, a long lower shadow, and a small real body (color not important).

Question 3

What does a ‘Spinning Top’ candlestick indicate?

Answer 3

Indecision between buyers and sellers; a standoff where neither side could gain the upper hand despite price movement.

Question 4

What does a Spinning Top forming during an uptrend typically signify?

Answer 4

That there aren’t many buyers left, suggesting a possible reversal in direction.

Question 5

What does a Spinning Top forming during a downtrend typically signify?

Answer 5

That there aren’t many sellers left, suggesting a possible reversal in direction.

Question 6

What is a ‘Marubozu’ candlestick?

Answer 6

A candlestick with a long body and no shadows (wicks), meaning the open/close is the same as the high/low.

Question 7

What does the word ‘Marubozu’ mean in Japanese?

Answer 7

‘Bald head’ or ‘shaved head’.

Question 8

What are the two types of Marubozu candlesticks?

Answer 8

White Marubozu and Black Marubozu.

Question 9

Describe a ‘White Marubozu’.

Answer 9

A long white (or green) body with no shadows. The open price equals the low price, and the close price equals the high price.

Question 10

What does a ‘White Marubozu’ indicate?

Answer 10

It is a very bullish candle, showing buyers were in control for the entire session. It implies bullish continuation or reversal.

Question 11

Describe a ‘Black Marubozu’.

Answer 11

A long black (or red) body with no shadows. The open price equals the high price, and the close price equals the low price.

Question 12

What does a ‘Black Marubozu’ indicate?

Answer 12

It is a very bearish candle, showing sellers controlled the price action for the entire session. It implies bearish continuation or reversal.

Question 13

What is a ‘Doji’ candlestick?

Answer 13

A candlestick where the open and close prices are the same, or at least the real body is extremely short, appearing as a thin line.

Question 14

What does a ‘Doji’ candlestick suggest?

Answer 14

Indecision or a struggle for turf positioning between buyers and sellers; essentially a draw.

Question 15

How many special types of Doji candlesticks are there?

Answer 15

Four.

Question 16

What does a Doji forming after a series of long hollow (white/green) candlesticks signal?

Answer 16

That buyers are becoming exhausted and weakening, suggesting a potential reversal as sellers look to drive price down.

Question 17

What does a Doji forming after a series of long filled (black/red) candlesticks signal?

Answer 17

That sellers are becoming exhausted and weakening, suggesting a potential reversal as buyers look for cheap entry.

Question 18

What further confirmation is typically needed after a Doji forms following a strong downtrend?

Answer 18

A white (green) candlestick to close above the long black (red) candlestick’s open, confirming buying strength for a reversal.