Japanese Candlestick Charting - Mysteries Solved - Truth Revealed
Cancel "Mystery Night at the Bijou.
" There is nothing mysterious about the Candlesticks, or about Japanese Candlestick Charting.
Actually, they are almost self-defining, because Candlestick patterns are pictures, and the eye is designed to recognize pictures.
Candlestick charting begins with the old familiar bar chart, the format which has been in use for hundreds of years.
Nearly everyone who invests or trades understands the bar chart, which reports prices in the form of a vertical line the top and bottom of which represents the high and the low price of the day and in which the opening price is shown by a little tab on the left side of the line and the closing price by a little tab on the right side.
Japanese Candlestick Charting price presentation builds on that by "fattening-out" that part of the vertical line which represents the price area between the open and the close.
The result appears to be a cylinder within a portion of the total price bar.
If the closing price (or the current price, if the market is then trading) is higher than the opening price, then the cylinder is left blank, or white; if the closing (or current) price is lower than the opening price, then the cylinder is filled in black.
There is nothing at all in Japanese Candlestick Charting which conflicts with the old bar chart or with anything else that you may have learned along the way.
On the contrary: it builds upon all of that knowledge.
One of the most important attributes of the Candlesticks is that they reveal the underlying psychology of the traders as a group.
The computer operator can see in an instant what the traders were thinking and worrying about on that particular day, or what they are thinking about at this very moment if price action is being shown in real time.
Price display is truly a "movie" when it is shown in real time.
Japanese Candlestick Charting is most useful in scouting out reversals of trend within candlestick chart patterns, whether as reversals are happening or are soon to emerge.
Candlestick analysis works equally well on all financial vehicles across all time frames- whether the Indexes, or individual stocks, or the commodities, or Forex.
The basic principles are the same throughout.
It can be immensely gratifying to spot an incipient reversal even before it takes final shape and then to see it come to fruition and produce the result that it foretold.
You may have heard that you must memorize a hundred or more Japanese Candlestick patterns.
That is simply not so.
There are only 15 or so that appear the most frequently and have the best record of accuracy in their inherent predictions.
Included among the Magic 15 are the Dark Cloud Cover, the Doji, the Shooting Star, the Evening Star, the Morning Star, the Hammer, the Bullish Engulfing and the Bearish Engulfing, and the Piercing pattern.
My own favorite is the Shooting Star, because it looks so like the phenomenon for which it is named.
You will learn these very quickly; it's very intuitive, helped along of course because the patterns and their names fit so well together.
You will find that you can learn them in an evening's reading; and once learned, the knowledge and the ability to spot them on sight will never leave you.
" There is nothing mysterious about the Candlesticks, or about Japanese Candlestick Charting.
Actually, they are almost self-defining, because Candlestick patterns are pictures, and the eye is designed to recognize pictures.
Candlestick charting begins with the old familiar bar chart, the format which has been in use for hundreds of years.
Nearly everyone who invests or trades understands the bar chart, which reports prices in the form of a vertical line the top and bottom of which represents the high and the low price of the day and in which the opening price is shown by a little tab on the left side of the line and the closing price by a little tab on the right side.
Japanese Candlestick Charting price presentation builds on that by "fattening-out" that part of the vertical line which represents the price area between the open and the close.
The result appears to be a cylinder within a portion of the total price bar.
If the closing price (or the current price, if the market is then trading) is higher than the opening price, then the cylinder is left blank, or white; if the closing (or current) price is lower than the opening price, then the cylinder is filled in black.
There is nothing at all in Japanese Candlestick Charting which conflicts with the old bar chart or with anything else that you may have learned along the way.
On the contrary: it builds upon all of that knowledge.
One of the most important attributes of the Candlesticks is that they reveal the underlying psychology of the traders as a group.
The computer operator can see in an instant what the traders were thinking and worrying about on that particular day, or what they are thinking about at this very moment if price action is being shown in real time.
Price display is truly a "movie" when it is shown in real time.
Japanese Candlestick Charting is most useful in scouting out reversals of trend within candlestick chart patterns, whether as reversals are happening or are soon to emerge.
Candlestick analysis works equally well on all financial vehicles across all time frames- whether the Indexes, or individual stocks, or the commodities, or Forex.
The basic principles are the same throughout.
It can be immensely gratifying to spot an incipient reversal even before it takes final shape and then to see it come to fruition and produce the result that it foretold.
You may have heard that you must memorize a hundred or more Japanese Candlestick patterns.
That is simply not so.
There are only 15 or so that appear the most frequently and have the best record of accuracy in their inherent predictions.
Included among the Magic 15 are the Dark Cloud Cover, the Doji, the Shooting Star, the Evening Star, the Morning Star, the Hammer, the Bullish Engulfing and the Bearish Engulfing, and the Piercing pattern.
My own favorite is the Shooting Star, because it looks so like the phenomenon for which it is named.
You will learn these very quickly; it's very intuitive, helped along of course because the patterns and their names fit so well together.
You will find that you can learn them in an evening's reading; and once learned, the knowledge and the ability to spot them on sight will never leave you.