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Japanese Candles

05-08-2017 | No Views : 662

We are now moving on to a new lesson - Japanese Candles. At first, Japanese candles were discovered in our modern era by Steve Nison, who learned from a Japanese broker. Where the origin of Japanese candles dates back to 1600 in Japan. The Japanese were trading in the rice market, and hamburgers called Houma Monhisa devised a technical technique to represent and analyze the price of rice, which was called Japanese candles.
Most traders prefer Japanese candlesticks compared to other charts because they are a clearer picture of price action, setting the opening price, closing price, higher price and lower price. Japanese candlesticks are one of the most important technical tools used by technical analysis traders to help them make decisions and enter into transactions whether selling or buying.

How to be the shape of Japanese candles?

The previous illustration shows the shape of the rising candle and the descending candlestick. The rising candle is white in which the opening price is higher than the closing price. Meaning that the price opens during a certain period of time at a certain level, and during that period the purchase subsidy on prices to push them to higher levels.
The candle is down. The opening price is lower than the closing price, meaning that the price opens the trades during a certain period of time at a specified level, during which time the pressure of the sale to the pair to push it to lower levels.

So we can deduce several points as follows:

1- If the opening price is below the closing price, the candle will be bullish and often a white candle will be drawn.
2- If the opening price is higher than the closing price, the candle is bearish and is often drawn with black candle.
3- The difference between the opening price and the closing price is called the real body of the candle.
4- Lines drawn higher and lower are called shadows.
5- The highest point in the upper shade of the candle is the highest price during a given period.
6- The lower point of the lower shade of the candle shall be the lowest price during the specified period.

What do candle sizes reflect?

  • The higher the real size of the body, the difference between the opening and closing price, the higher the volume of liquidity and the acquisition of one of the two forces, whether selling forces or purchasing power on the trades.
  • The smaller the real size of the body, the more it reflects the relative calmness of the trades during a particular period.
  • Long shadows reflect the volume of trading to include many levels.
  • Short shadows reflect the close of trading in a certain range near the opening and closing price.
  • Long shadows may be evidence of the weakness of the dominant forces at the moment and a sign of the start of price reversal.
  • Short shadows may be evidence of the continued acquisition of certain forces on the trading and therefore the continuation of the pair in its general direction, whether upward or downward.

In the previous chart, which shows AUD/USD over four hours we can conclude that the general upside trend for the pair since July 26, 2016 and until August 9th of the same year that the general trend is bullish and that the dominant forces are trading during a certain period purchasing power with the composition of the price peaks Higher than the previous peaks and most of the candles are white any candles and sizes are larger than the sizes of black candles any candles falling.


Japanese candle shapes
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