Candles with Western tools

Convergence

Candles are strongest when they agree with independent evidence at the same price. The more different kinds of evidence line up, the better the reading:

• Trendlines and support/resistance: a hammer on a rising trendline, a shooting star at a prior high.
• Retracements: a bullish engulfing at the 50–61.8% retracement of the last swing up.
• Moving averages: in an uptrend, a reversal candle at the 20 or 50 EMA pullback.
• Oscillators: a bearish candle with bearish RSI divergence (price makes a higher high, RSI a lower high).
• Volume: a reversal candle on the heaviest volume in weeks.
• Measured moves: a target equal to the prior swing, used to check the reward is worth the risk.

A worked example

4H uptrend; price pulls back to the 61.8% retracement, which is also last week's high (old resistance → support) and the 50 EMA. A hammer forms there on rising volume, and the next candle closes above the hammer's high. Plan: long on that close, stop below the hammer's low, target the swing high (2.4R). Every element has a reason; the stop is where the reasons are proven wrong.