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What is a Candlestick? PDF Print E-mail

Japanese Candlestick Charting increases the information conveyed to the visual analysis. Each candlestick trading formation or series of formations can clearly illustrate the change of investor sentiment. This process is not apparent in standard bar chart interpretation.

Each candle formation has a unique name. Some have Japanese names, others have English names. Where possible the English name and Japanese name will be given.

  • How To Use Candlesticks?

There are a lot of misunderstandings and misuses of candles. For instance one of the secrets to using candles correctly is that candles are a tool- they are not a trading system. Buying or selling on every candle signal - and this includes testing on only candle signals.
ONLY successful traders adapt quickly to the market's clues. And candles, once you know how to read them correctly, will let you quickly and accurately read the "mood and manner" of the market so that you can often get into a trade before other traders jump on the new move. And this is the real force of the candles.
Many candle patterns can be used as Support or Resistance. And the lowest low of the two sessions that make up the bullish engulfing pattern is one of those patterns we can use as support (based on a close).
In contrasting to traditional bar charts, many traders consider candlestick charts more visually appealing and easier to interpret. Each candlestick provides an easy-to-decipher picture of price action. Immediately a trader can see compare the relationship between the open and close as well as the high and low.

The relationship between the open and close is considered vital information and forms the essence of candlesticks. Hollow candlesticks, where the close is greater than the open, indicate buying pressure. Filled candlesticks, where the close is less than the open, indicate selling pressure.

Forex candlestick anatomy
 
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