subject: Trade Forex with Japanese CandleSticks [print this page] Trade Forex with Japanese CandleSticks Trade Forex with Japanese CandleSticks
The candlesticks or the candlestick charts are purely a visual demonstration of the existing market price in the current market. You may be wondering why it is called candlestick. The reason is quite obvious and due to the fact that its shape resembles very close to that of candle.
Forex traders should keep in mind some very important things and they should be cautious about with a couple of points, of which one is that you have to decide that on what basis you are going to trade or not and second you have to find the appropriate time to do the same. If you follow seriously these two factors then it will really help you in achieving your aim.
If you want to create a typical candle stick chart pattern then you should get yourself a data set which contains all the values such as the open, close, high and the low for each and every time phase. If you want to look for behaviors in order to make good trading decisions, then here are few patterns that you should know, as they will show you the right way and whether and when to trade in order to gain the maximum.
There are some specific candlestick examples that may come your way and can help you, following are some of them.
Hammer: It is named as hammer because the candle patterns produced in this chart has got a small body and an extended wick, which gives it a look exactly resembling a hammer. This design signifies the decline of the current market and symbol of probable turnaround of the trend.
Doji: It is amongst the most admired candlestick designs known. It might sound a bit confusing among some traders in the forex and currency market. It is produced when the closing as well as opening of the price is almost nearly equal. The supposed patterns are formed in the candlestick chart which gives it a look exactly like a plus sign or a cross. Sometimes, it's also shown as an inverted cross. When they are alone they are unbiased patterns.
Engulfing: This is generally formed when you are watching in between the two candlesticks. In the case of engulfing, what happens is that the second day prices opens at a very lesser price than the closing price of the other days and closes at much higher value than the previous days' starting opening price.
A candlestick generally represents the clash between the buyers (also called as bulls) and the sellers (also known as the Bears). These are some of the most popular candlestick patterns that you should have mastery upon, if you really want to do extremely well in forex market. Some of the few other patterns which can help you in making a sensible trading decision are piercing, shooting star, harami and kickers etc.
One of the very advanced candlestick pattern designed exclusively for the traders to use is the bearish three black crow's pattern. This pattern only happens during the course of strong uphill trend but once it has been recognized, then a trader can be quite confident that a price reversal is just round the corner and about to happen.
This particular design naturally contains the three candlesticks together & first one of those have to be there at the top of the upward trend. This first candlestick should be supposed to have an extended body and at the same time it must display a lower closing price than opening price. A mix of all the technical analysis tools will be an intelligent decision to make your trading a successful one.
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