Candlestick analysis – simple to the complex
Candlestick analysis – Just about the complex. Let’s investigate.
analysis candlestick came to the West about 20 years ago. Since then, he has become
one of the most important elements of technical analysis of financial markets. first
active disseminator analysis candlestick became Steve Nison. Sometime
More recently, he went to Japan and saw that the Japanese a little differently analyzed
markets. In the West, all the bars used, while in Japan – candles. Since then, Steve started
actively collect information on Japanese methods of market analysis and after a
He published a book called “candlestick analysis”, which quickly became
A long time ago
Most traders use candlesticks as a graphic
indicator showing the dynamics of prices of issuers. There are several reasons: 1. Japanese
Candles are very popular. They are implemented in any trading platform. AT
interenete a myriad of information on the analysis of candlesticks. 2. Many
believe that the candlestick most convenient and perceived legro format
display of asset prices.
candles, as well as bars, are based on the opening price, the maximum and minimum
price, the closing price for a fixed period of time. If the closing price is higher than the opening price –
a rising trend in the market, and the candle is colored in white. If the price
opening more than the closing price, the market trend downward and candle
painted in black. candle colors can be anything, it’s all
configured in the terminal for all tastes. candle size shows in
which band was the security price for the selected period. upper and
lower shadows indicate maximum and minimum prices for the period
respectively. candle body (white or black area) shows the change in prices
for the selected period.
It looks candlestick chart currency pair EUR / USD with a period of 1 hr. analyzing
such a schedule, traders pay attention to the size of the body of the candle, shadow size and
for different combinations of candlesticks. The price chart – is market psychology.
It is in the chart based on all the players emotions: fear, desire, greed. task
Trader is a candlestick chart analysis, found some formations, to assess
risks and potential, and on the basis of all this, to make a decision about entering into a transaction.
Candlestick analysis of the combinations do not look for the ideal formation, which will be
are presented below. In the market there is always noise and it is necessary to understand the meaning of
formation, rather than use it as an accurate pattern. The same can not be used
candle Foreman in complete isolation. It is necessary to take into account the current trend, support and resistance levels. Because the same formation in
different places may have the opposite meaning. Let us examine the main candle
figures continue the trend in the financial markets:
1. Method of three rising (falling).
The meaning of the model is that the trend begins to roll back, and if the price of the next candle
absorbs all the rollback and makes a new low or high, we believe that the trend
I have not yet come to an end. This candlestick pattern is similar to the graphical model
Technical Analysis “Flag”. Example candlestick formation on the issuer’s chart.
notice, the formation is not entirely similar to the illustration above, but the meaning of the formation
2. Divide the candles.
model is that after the candle trend correction, the next candle opens with
gap, closing the correctional candle, indicating a serious stir in
direction of the trend. An example of a pattern of “divide candles” on the Issuer’s chart:
great excitement towards trends, candle opens with a gap and
Attempts were made to roll back and close the gap, but the attempt fails and candle
It retains the trend. An example of formation “Opposition” on the Issuer’s chart:
some more figures continue the trend, but they repeat each other,
because increasing and decreasing the timeframe candles.
to understand that the figures turn can be used as a continuation pattern, by
applying them on pullbacks from the main trend. Reversal pattern will be
much better to work in integration with technical analysis, what we are now and
We shall see.
Poglozhenie. Bullish engulfing, bearish engulfing.
model that trend last candle is completely absorbed following
counter-trend candles that indicate a change in the local market sentiment.
Examples of the pattern “absorption” of the issuer charts:
On the image
bold color circled column classic setup, and the rest have the same meaning, but
made up of more of candles.
Figure shows how pivots shapes can be used as a figure
continue. I started the trend, stopped, made a small retracement and Bear
the candle is completely consumed the entire pullback and the trend continued.
Hammer or doji.
The essence of the model
is the same as in the past pattern, bears consume bulls and vice versa. This
the model is fairly common on graphics and good work out of
support and resistance levels. This formation is also called “Pin bar”. Example model “Hammer” on the Issuer’s chart:
there is a trend going on with GEO thoron trend and the amplitude of the following
several spark is sharply reduced, and then there is a sharp breakdown range
these candles and closed the gap. This figure shows a local change
market balance. Example pattern “Break” on the Issuer’s chart:
reversal of the trend is still very much, but they are as a result of such
the same as set forth above and shall bear the same meaning.
Reminder of the various formations (thanks to user Artur I):
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