The I Ching Hexagrams
The I Ching, or "Book of Changes," is an ancient Chinese divination text and one of the oldest of the Chinese classics. It consists of 64 hexagrams, each made up of six stacked horizontal lines. Each line in a hexagram is either broken: - - (yin), or unbroken: — (yang), and each has its own role, symbolism, and function within the context of the hexagram's overall meaning.
Here's a general overview of the roles and symbolism of each line:
1. First Line (Bottom Line): This line represents the beginning or the foundation of the situation. It often symbolizes the initial stages of development, where the potential is just starting to manifest. It can indicate a time of preparation or the need to establish a solid base before proceeding.
2. Second Line: This line is associated with the inner world and personal development. It often deals with the individual's role within the context of the situation and may suggest the need for introspection or the cultivation of personal qualities to deal with the circumstances.
3. Third Line: This line represents a transition point between the lower and upper trigrams. It often indicates a critical juncture or a time of decision-making. The third line can suggest challenges or the need to adapt as one moves from the internal to the external realm.
4. Fourth Line: This line marks the entrance into the upper trigram and the external world. It often deals with social interactions, relationships, and the individual's role in the broader context. It may suggest the need for diplomacy or the importance of considering others' perspectives.
5. Fifth Line: This line is typically considered the most powerful and auspicious position in the hexagram. It represents leadership, influence, and the zenith of the situation. The fifth line often suggests a time of success or the need to take a commanding role.
6. Sixth Line (Top Line): This line represents the culmination or the conclusion of the situation. It often symbolizes the end of a cycle, reflection on the past, or the need to let go and prepare for a new beginning. It can also indicate a time of retreat or the need to consider the broader implications of one's actions.
Each line's specific meaning can change depending on whether it is yin (broken, - -) or yang (unbroken, —), and whether it is a changing line (a line that is transforming from yin to yang or vice versa, which adds another layer of interpretation). The changing lines are particularly significant as they indicate dynamic aspects of the situation and can lead to the formation of a new hexagram, providing further insight into the evolving circumstances.
In practice, when consulting the I Ching, one would cast a hexagram and then interpret the meaning of each line in the context of the question or situation at hand. The interplay of the lines and their transformations can offer complex and nuanced guidance.
1. The Foundation: Yin & Yang Candles
Let’s start applying this to charts in accordance with the basic Taoist duality:
Bullish candles are equal to Yang, and are portrayed by a solid line: ⚊.
These candles represent expansion, strength, and upward momentum.Bearish candles are equal to Yin, and are portrayed by a broken line: ⚋.
These candles represent contraction, weakness, and downward momentum.
So, the symbolism goes like this:
Yang (Solid Line, —) = Bullish. Buyers in control.
Yin (Broken Line, - -) = Bearish. Sellers in control.
A single candle alone is like a single I Ching line—it has meaning, but deeper wisdom comes from combinations.
2. Two-Candle Combinations (Bigrams) – The First Layer of Meaning
Two candles form a “bigram,” revealing early trend shifts or continuations.
⚊ ⚊ (Yang-Yang) Strong bullish momentum, confidence. Trading Application: Stay long or enter new longs.
⚋ ⚋ (Yin-Yin) Strong bearish momentum, caution. Trading Application: Stay short or consider exits.
⚊ ⚋ (Yang-Yin) Bullish attempt, but weakening—potential reversal. Trading Application: Watch for bearish confirmation.
⚋ ⚊ (Yin-Yang) Bearish pressure, but buyers step in—reversal possible. Trading Application: Watch for bullish confirmation.
3. Three-Candle Combinations (Trigrams) – The Power of Change
Three candles form trigrams. There are eight trigrams in the I Ching, each with distinct energy.
Remember: In order to visualize candlestick patterns as these trigrams, imagine a candlestick chart rotated 90 degrees counterclockwise.
☰ (Yang-Yang-Yang) “Heaven” - Strong uptrend, pure yang energy. Extreme bullishness—watch for exhaustion.
☷ (Yin-Yin-Yin) “Earth” - Strong downtrend, pure yin energy. Extreme bearishness—watch for reversal.
☲ (Yang-Yin-Yang) “Fire” - Bullish but with internal conflict. Volatile uptrend—caution needed.
☵ (Yin-Yang-Yin) “Water” - Bearish but with internal struggle. Volatile downtrend—possible reversal.
☴ (Yin-Yang-Yang) “Wind” - Rising but losing strength. Early warning of trend weakness.
☳ (Yang-Yin-Yin) “Thunder” - Falling but finding support. Early sign of bullish reversal.
☶ (Yin-Yin-Yang) “Mountain” - Failed bullish attempt. Strong rejection—possible short.
☱ (Yang-Yang-Yin) “Lake” - Failed bearish attempt. Strong bounce—possible long.
Practical Use:
Fire (☲) & Water (☵) indicate churning markets—hesitate before trading.
Mountain (☶) & Lake (☱) suggest failed moves—fade the breakout.
4. Four to Six Candles – Emerging Hexagrams
Now, we move into hexagram territory (six-line combinations), where deeper market psychology emerges.
A. Four-Candle Patterns (Early Hexagram Formation)
⚋ ⚊ ⚋ ⚊→ The Water trigram having already formed below; might be forming "Conflict" (Hexagram 6, ䷅).
⚊ ⚋ ⚋ ⚋ → The Thunder trigram having already formed below; might be forming "Return" (Hexagram 24, ䷗).
B. Five-Candle Patterns (Stronger Signals)
⚊ ⚊ ⚊ ⚊ ⚋ → The Heaven trigram having already formed below; might be forming "Great Power" (Hexagram 34, ䷡).
⚊ ⚊ ⚊ ⚊ ⚊ → The Heaven trigram having already formed below; might be forming "Breakthrough" (Hexagram 43, ䷪).
C. Six-Candle Hexagrams (Full Market Psychology)
Now, each six-candle sequence maps to an I Ching hexagram, revealing deeper market sentiment.
⚋ ⚋ ⚊ ⚋ ⚊ ⚋ → The Mountain trigram below; the Water trigram above—paired together in this way form the hexagram "Obstruction" (Hexagram 39, ䷦)
Hexagram 39 in the context of forex trading suggests a period of obstacles, challenges, and the need for patience and perseverance. It encourages traders to be cautious, manage risk effectively, and learn from challenges.
⚊ ⚊ ⚋ ⚊ ⚋ ⚊ → The Lake trigram below; the Fire trigram above—paired together in this way form the hexagram "Opposition" (Hexagram 38, ䷥)
Hexagram 38 in the context of forex trading suggests a period of conflicting forces, mixed signals, and the need for caution and discernment. It encourages traders to balance conflicting information, prioritize risk management, and remain patient and flexible.
Practical Steps for Traders
1. Observe single candles (Yin/Yang).
2. Track 2-3 candle combinations (Bigrams/Trigrams) for early signals.
3. Watch for 4-6 candle hexagrams to confirm broader trends.
4. Use I Ching wisdom—e.g., "Persistent yang leads to yin" (overbought markets reverse).
The Tao of Market Flow
By seeing candlestick sequences as I Ching hexagrams, you become able to:
Read market psychology through Taoist principles.
Anticipate reversals using Yin-Yang balance.
Trade in harmony with natural cycles (not against them).
"The market that is always strong will weaken; the market that is always weak will strengthen. This is the Tao."
