If you ask any Forex trader about charts, he would be talking about the Japanese candle stick charts.
If you have read it, you must be pretty sure why this candlestick charts get more importance over the others.
It is fun to learn about the candlestick charts as there very interesting names and shapes involved in the study.
Long body Candles
Longer the body, more the selling and buying activity happening. Long Green body indicates more buying power and long red body indicates more selling power.
Mysterious Shadow
Long upper shadow - This means that the buyers bid prices higher and the sellers drove then back to the open price.
Long Lower Shadow - This means that the sellers ask for higher price but the buyers drove then back to the open price.
Candles with short shadows indicate that the bidding and asking activity was very close to the open and close price.
Spinning Tops
These are candles with long lower and upper shadow but really a small body. The color of the real body is not important. This indicates indecision between the buyers and sellers.
If a Spinning Top forms in the UPTREND, this means that there aren't many buyers left and a possible reversal in direction could occur.
If a Spinning Top forms in the DOWNTREND, this means that there aren't many sellers left and a possible reversal in direction could occur.
Marubozu
A Green Marubozu contains a long Green body with no shadows.
The open price equals the low price and the close price equals the high price. It is a Bullish Candle and indicates that the buyers are in control. This candle comes as a bullish continuation or as a bullish reversal. |
A Red Marubozu contains a long Red body with no shadows. The open equals the high and the close equals the low.It is a Bearish Candle and indicates that the sellers are in control. This candle comes as a bearish continuation or as a bearish reversal.
More to come in Part 2 of Japanese Candlestick charts
