1. Solitary candlesticks 
We’ll begin by first discussing candlesticks that have significance on their own. These are single candles that convey a particular message about what’s happening in the market. 
2. Relative candlesticks 
Next, we’ll look at how neighboring candles can give you a better picture of the recent market price action. If a single candlestick can reliably predict future market direction, imagine how powerful a cluster of candlesticks can be! In this section I’ll teach you how to read and understand relative candlesticks so you won’t have to memorize any candlestick patterns. 
3. Significant price formations 
Once you’ve understood the underlying mechanics behind relative candlestick analysis, it’s time to expand our scope to even more significant formations; this time in relation to crucial price levels in the market. 
4. Explosive formations 
The last of the core concepts, this section will provide you with 2 incredibly reliable candle formations that have time and time again provided me with consistent profits. These formations aren’t 100% accurate, but they’re pretty darn close! You’ve to see it to believe it. 
Lastly, I’ll wrap up with a couple of key principles so you’ll get a complete picture of how to execute your trades with pinpoint accuracy.
Solitary Candlesticks 
Just in case you’re new to candlesticks, here’s a quick introduction… 
What are candlesticks? 
Candlesticks are graphical representations of market price movements within a specified time period. A candlestick may represent price movement that occurred in the last 5 minutes; 15 minutes; 30 minutes; 1 hour; 4 hours; 1 day; 1 week; or 1 month for example. 
This is what a candlestick looks like. The thick portion is known as the real body, and the thin parts are known as the shadow.  
Got it? Now let's now see what the real body and shadow can tell us about how market prices have moved. 
Remember that each candlestick represents a specific time period?  
Let's assume the the candlestick to the right represents price movement in a 1 hour period.  
The 'open' would be the market price at the beginning of the 1 hour. The 'close' is the market price at the end of the 1 hour. The 'high' and 'low' are the highest and lowest prices that were traded within that 1 hour, respectively.  
The 'open' would be the market price at the beginning of the 1 hour. The 'close' is the market price at the end of the 1 hour. The 'high' and 'low' are the highest and lowest prices that were traded within that 1 hour, respectively.  
You may have wondered at this point why the candlestick is green in color. Most trading platforms today will allow you the option to change the color of the candlesticks you see on your charts, so it doesn't really matter.  For the rest of this book, let's use green to represent a bullish candlestick, and red to represent a bearish candlestick. 


What’s a bullish/ bearish candlestick?  
 
A bullish candlestick represents market prices that are moving up. If you look back at the 1 hour candlestick (in the previous page), you'll see that the 'close' (end) price is higher than the 'open' (beginning) price. This means that in that 1 hour, the market has moved from the 'open' price, up to the 'close' price.  
And now here's a bearish candlestick: 
Notice that a bearish candlestick is the opposite of a bullish candlestick: it shows how prices have moved down within the time frame that the candlestick represents.  
Bearish candlesticks are usually represented by the color red. 

Special candlesticks 
Occasionally, you'll come across candlesticks that have no shadows, or have no real body. These are very special candlesticks that can provide you with crucial information about here market price may be headed. I will discuss more about these special candlesticks next
The Power of Momentum

This is potentially the most important concept in candlestick analysis. If there's only one thing you can learn from candlestick analysis, I recommend that you learn about how to read momentum. 

So what is momentum? 

Momentum is essentially a measure of how strong price movement is. 

Try to answer this question: 
Which of these candlesticks show a stronger upward price movement? 
Using what you've just learned about how to read candlesticks, take a moment to think about your answer.  
Turn to the next page when you've decided on your answer... 
Did you guess candlestick 2? If you did, good job!  
So why does candlestick 2 show a stronger upward momentum?  
Although both candlesticks have the same high-low price range, candlestick 2 shows no hesitation in upward price movement. Also, candlestick 2 shows a higher closing price.  
Here's an example of how prices moved:
Can you see how candlestick 2 shows the price moving straight up? This is an indication of a strong upward momentum. 

Candlestick 2 is often called a bullish shaven candle. The opposite of a bullish shaven candle is called a bearish shaven candle. (duh) 

But how does understanding price momentum help you make money in trading? 
Let's now look at an example of how shaven candles can help...
Here, we see a bearish shaven candle that is soon followed by a further drop in prices. If you sold the market after seeing this bearish shaven candle, you would have made money!

Now, if you open up your trading charts and take a look, you'll be able to find many similar instances where a bearish (or bullish) shaven candle is usually followed by a subsequent drop (or rise) in prices.

Go ahead and check out your trading charts now. It's important that you're convinced of the strong influence of shaven candlesticks on future price direction.