If you use technical analysis as one of your forex trading strategies, you are probably using candlestick charts. Candlestick charts are one of the three options (along with bar and line charts) and are the most popular among modern retailers as they give the brightest picture of what is happening on the market. But do you use them to their full advantage?
By studying the charts of the candlesticks you can get an immediate picture of the opening, closing, low and high prices for the period he has chosen. But that’s not all candles can reveal.
An experienced candlestick reader can gain a great idea of the mood, strength and momentum of the market only by studying the shapes and patterns of candles. Some successful retailers reject all indicators and simply focus on what candlesticks reveal about price action.
The candlestick charts date back centuries to Osaka from the 18th century, when the legendary rice merchant Homa Munehisa used them to conquer the market. Japan’s long isolation meant that candlestick techniques remained hidden from the rest of the world.
But then merchant Steve Neeson studied the method of mapping candlesticks in the 1990s using old Japanese documents. Neeson hastened to appreciate the beauty of Zen’s candlestick trading method and continued to defend the system in a series of popular books.
Neeson’s books are extremely comprehensive, describing many candlestick formations, including a dark cloud, a hanging man, morning and evening stars, and the famous doji with his various incarnations, such as the dragonfly doji and the tombstone doji.
You may be overwhelmed by reading such books, but you actually need a small group of candlestick patterns to use with confidence and clarity every day. You just need to know which models to focus on and how to correctly interpret what they tell you.
Candles never lie, but predicting their message is not always easy. You need to take some time to understand what they are telling you. Make candlestick reading one of your forex trading strategies and prepare for success in forex trading.