Japanese candlestick Forex: simplicity, convenience, visibility
Who said that trading internationallyforeign exchange market - a boring occupation, devoid of any imagination and subject only to strict pragmatic rules, where there is no place for romance and sentimentality? And yet, one of these methods of technical analysis, to which the word "romantic" can be applied, is certainly the Japanese forex candles.
It is widely believed that JapaneseCandles are very similar to bars, is nothing more than a delusion. It is more correct to say that the bars look like Japanese candles, because they were used much later, and they were created on the basis of candles. Moreover, even before the advent of the Forex market, Japanese candles have been used for more than one century. And all because they allow to take into account the movement of the price on the chart with the utmost accuracy, and regardless of the time interval they are applied. The candles were invented in the 8th century by Munehiso Homma, a rice merchant from the Japanese port city of Sakata, who succeeded so much that, for his services, he was recruited by the emperor as a financial adviser and received the honorary title of a samurai. As they say, a lot of rice has flowed under the bridge since that time, but still Japanese candles are used for trading on any stock exchange. Forex is not an exception.
In order to build a candle, you need to knowfour values of the price for a specific time interval (from a minute to a year), namely, open and close prices, as well as their maximum and minimum values (high and low). The closing and opening prices form the body of the candle, and the thin lines (maximum and minimum) are its shadows. If the closing price is higher than the opening price - the Japanese forex candles are white, if on the contrary - then black. True, earlier white was used instead of white, but, by and large, it plays absolutely no role, because modern software used in stock trading allows you to choose any colors. The main thing is that the forex candles correctly reflect the growth or fall of the market, not merging with the background color.
By itself, a single candle does not mean anything. Of particular value are various candle combinations (of two or more candles). And then the Japanese would not have been Japanese if they had not invented in the candle analysis a lot of colorful and exotic terms (a hanging man, a falling or morning star, a hammer, an abandoned baby, a pregnant one, a skylight in the clouds, a seizure for the belt, etc.). As a rule, all these names are based on a graphic representation of all possible combinations, multiplied by traditional Japanese philosophy.
It should be noted that the method of candle analysisthere are both supporters and opponents. Even some experienced traders and analysts reject the Japanese forex candles, considering their combinations too complicated and confusing, making it difficult to make the right decision on opening or closing a position in a timely fashion. In any case, in order for trading in the foreign exchange market to be successful, technical analysis initially implies the integrated use of all available indicators.