THE PSYCHOLOGY BEHIND CANDLE PATTERNS: the irrational dance of mass money

Fuck! Everything we've been told about those damn candles makes trading seem like something for geniuses or crazy mathematicians. But look, don't let all this technical jargon intimidate you. Let's demystify this shit.

If we look beyond the obvious, these candles are much more than just pretty charts. They are the damn reflection of our collective emotions: fear, greed, euphoria... all the human irrationality captured in colorful drawings!

UNDERSTANDING CANDLES:

Sure, we already know that candles are important in technical analysis. And yes, learning all their names is a monumental pain in the ass. But I bring you my personal method to understand this shit without going crazy, analyzing what really lies behind it: the psychology of traders.

A pattern is nothing more than a configuration that repeats over and over again. Like a drunkard stumbling over the same stone every Saturday. These patterns can be bullish or bearish and supposedly tell us where the market is headed.

WHAT TO LOOK FOR IN A BULLISH TREND?

• Bullish candles without upper shadows: These little rascals indicate that buyers have total control. Like a dictator without opposition!

• Impulse candles: Those huge candles that look like towers. They can be a single one or several in a row, like those "Three White Soldiers" that technical analysts in ties love so much.

• Continuation candles: They appear within the trend and tell you "this will keep going up, buddy". Like those "Bull flags" that are just pauses before the next surge.

• Absence of large bearish candles: When things are really going up, you hardly see any red candles. Sellers are hiding under the bed, scared to death.

THE TRUE PSYCHOLOGY OF THE TRADER

What recently happened with that fake Bitcoin ETF news was outrageous. What a circus! Pure FOMO and looting by those smart ones who were already in and took the opportunity to sell to the poor fools.

Behind every pattern, there are pure and harsh emotions:

1. Trust and optimism: When the candles rise like rockets, everyone thinks they are Warren Buffett. "This time is different!", they shout while mortgaging their houses.

2. FOMO: The damn fear of missing out. You see your neighbor bragging about their profits and you jump in without thinking. Then, when everything crashes, that same neighbor doesn't even greet you.

3. Euphoria and overbought: This is like a nightclub at 3 in the morning. Everyone is happy, drinking expensive champagne, and no one wants to think about the hangover the next day.

4. Taking profits: This is where the smart ones start selling while the fools keep buying. This causes those corrections that leave you looking like a fool.

IN A BEARISH TREND, WHAT THE HELL SHOULD I SEE?

• Bearish candles with no shadows below: This is pure seller control. Like when your ex blocks you on all social media. There's no turning back.

• Bearish impulse candles: Huge red candles that say "run, fool". They are equivalent to seeing rats abandoning a sinking ship.

• Bearish continuation candles: They tell you "this will keep falling, don't buy yet, idiot". Bearish flags and pennants are pauses for more people to panic.

• Absence of significant bullish candles: In a real decline, any attempt to rise is ruthlessly crushed. Like trying to swim against a waterfall.

THE PSYCHOLOGY OF PANIC

What happens when the market collapses is fascinating:

1. Concern and pessimism: First come the doubts, then the terror. People start selling out of fear, which causes more fear. A vicious cycle of cowards.

2. Reverse FOMO: The fear of not selling in time. "I will sell now and buy back lower!", everyone thinks... and they end up buying at a higher price.

3. Desperation and panic: When you see drops of 20% in a day, people sell without thinking. Massive liquidations are like a stampede in a stadium. No one thinks, they just run.

4. Short Sellers Taking Profits: The bastards who bet against the market are now cashing in their profits, causing small bounces that further confuse.

Without the irrationality of the small trader, the markets would be as boring as a mass. It is us, the impulsive ones, who provide liquidity for the big players to profit at our expense.

Now when you see those candlestick patterns, you'll know that you are just seeing fear and greed drawn on a screen. And probably, you are part of the drawing.

It's time to learn this shit or die trying!