Forex Candlesticks
The Japanese Forex Candlestick In Forex Trading
Technical analysis of the market is of major importance to forex business practitioners. This technical analysis is used to forecast future price and market development. Forex candlesticks are chart patterns that are commonly used by forex traders as a constituent of technical analysis. The forex candlestick patterns use bars, lines or candlesticks.
The candlesticks technique has a rich and long history. Way back in the 18th century, it was being used by Japanese rice traders to effectively predict future prices. It has continued to be used by many business people to this day. Forex Candlestick analysis makes use of how the majority of forex traders think to generate predictions.
Forex Candlestick Patterns
Forex candlesticks consist of basic and reversal patterns as well as single card patterns. Basic patterns include Long days, Short days, White Marubozu, Black Marubozu, Spinning tops, Stars and rain drops The reversal patterns have Three Black Crows, Three White Soldiers, Morning Star Doji, Evening Star, Harami, Dark Cloud Cover, Engulfing and Piercing Line. The Dojis, Shooting Star, Hollow Red, Hammers/Hanging Man, Candle and Filled Black Candle are all components of a single card pattern.
The open, high, low and close are features depicted in candlesticks. If the close is higher that the open, then a hollow forex candlestick displayed in white is drawn. If it is the open that is above the close, then the candlestick is filled or displayed as black. When the candlestick is filled or hollow it is known as a body. The high and low ranges presented by are called shadows. Shadows indicate the trading session's highs and lows.
Candlestick Bodies
Long bodies are a sign of strong buying or selling whereas short bodies indicate quite the opposite. Spinning tops is the name given to the forex candlestick patterns that have long upper and lower shadows with small bodies. This kind of pattern is indicative of indecision between buyers and sellers.
When shadows are missing from the forex candlesticks bodies, this is known as Marubozu. It means there are no shadows from the bodies. In such a case, the high and low are similar to the candlestick's open or close. A White Marubozu is a prediction of buyers controlling the price. The White Marubozu occurs when the close equals the high and the open is at the same level as the low. If the open equals the high and the close equals the low, then what is formed is the Black Marubozu. This is an indication that price action was controlled by the sellers themselves.
In Doji forex candlestick patterns, the open and close prices are the same. They could also have very short bodies, a feature which means that the selling and buying activities are not very strong, they are their lowest point.
Short forex candlestick bodies imply very little buying or selling activity. In street forex lingo, bulls mean buyers and bears mean sellers. The hammer, which is a kind of reversal pattern, indicates that there is a lot more buying than selling that is going on. This happens mostly during a downtrend. Another component of thee reversal pattern is the hanging man which indicates an upward trend with very strong selling. The shooting star also indicates rising levels of selling.
The forex candlestick has been proven to be quite a useful and dependable technical analysis tool. If you are a forex trader, make good use of forex candlestick patterns and you could get yourself a big fortune.