A single candle gives you information about one moment in time.
But trading decisions are rarely made on one candle alone. Just like one word cannot tell a story — one candle cannot give you the full picture.
Reading multiple candles together reveals momentum, trend strength and potential turning points that single candles completely hide.
Three consecutive bullish candles:
Each candle opens near or above the previous close.
Each candle closes higher than the previous.
Strong upward momentum — buyers completely in control.
Three consecutive bearish candles:
Each candle opens near or below the previous close.
Each candle closes lower than the previous.
Strong downward momentum — sellers completely in control.
Decreasing candle size in same direction:
First candle large, second smaller, third tiny.
Momentum is fading. Move may be running out of steam.
Potential reversal approaching.
Increasing candle size in same direction:
First candle small, second larger, third largest.
Momentum is accelerating. Move is strengthening.
Trend likely to continue.
One of the most powerful bullish continuation patterns:
Three consecutive large bullish candles:
What it means:
Buyers are aggressively in control over multiple periods. Strong bullish momentum. Trend is healthy and likely to continue.
Best when:
Appears after a period of consolidation or at the end of a downtrend as a reversal signal.
The bearish equivalent of Three White Soldiers:
Three consecutive large bearish candles:
What it means:
Sellers are aggressively in control. Strong bearish momentum. Downtrend likely to continue or begin.
Warning sign:
After a strong uptrend — three black crows signal potential trend reversal. Take profits and tighten stop losses.
When candles progressively get smaller after a strong move:
Price is consolidating.
The initial momentum is fading. Market is taking a breath.
This is not necessarily bearish — consolidation is healthy in an uptrend. But it signals:
Watch for the first large candle that breaks out of the consolidation zone — that direction becomes the new trade.
An inside bar forms when a candle’s high and low are completely within the previous candle’s range.
Previous candle: High $85,000 — Low $80,000
Inside bar: High $84,000 — Low $81,000
The inside bar is completely “inside” the previous candle.
What it means:
The market is pausing. Neither buyers nor sellers are pushing price beyond the previous range. A breakout is building.
Trading the inside bar:
Where a candle opens relative to the previous candle’s close reveals important information.
Gap up — opens above previous close:
Strong bullish sentiment. Buyers so eager they pushed price up before trading even began.
Gap down — opens below previous close:
Strong bearish sentiment. Sellers so eager they pushed price down before trading began.
Opens at previous close:
Neutral. Market continuing from where it left off.
In crypto — true gaps are rare since markets trade 24/7. But the concept of where price opens relative to the previous close still matters.
The most powerful signals come from candle sequences at support and resistance levels.
Multiple small candles at resistance:
Market is struggling to break through. Sellers defending strongly. Likely to reject and fall.
Multiple large bullish candles approaching resistance:
Strong momentum. Buyers aggressive. Resistance may break.
Multiple candles with long lower wicks at support:
Buyers defending support repeatedly. Very strong level. High probability bounce.
When reading multiple candles ask yourself:
The goal is not to memorize patterns mechanically — but to develop a feel for what the market is communicating through its price action.
In the next topic we will begin studying individual candlestick patterns — starting with the powerful Doji.