Leitura 3 - Japanese Candlestick Patterns - Forex Trading Tutorial Learn To Trade
Leitura 3 - Japanese Candlestick Patterns - Forex Trading Tutorial Learn To Trade
Leitura 3 - Japanese Candlestick Patterns - Forex Trading Tutorial Learn To Trade
(https://www.facebook.com/learntotradethemarket)
(http://www.twitter.com/nialfuller)
(https://plus.google.com/+NialFullerAU)
(https://linkedin.com/in/nialfuller)
(https://www.instagram.com/nialfuller/)
(https://www.youtube.com/user/OzTrader?
sub_con rmation=1)
Candlestick charts originated in Japan during the 18th century. Since no de ned currency standard
existed in Japan during this time rice represented a medium of exchange. Various feudal lords
deposited rice in warehouses in Osaka and would then sell or trade the coupon receipts, thus rice
become the rst futures market. In the 1700s legendary Japanese rice trader Homma Munehisa
studied all aspects of rice trading from the fundamentals to market psychology.
Homma subsequently dominated the Japanese rice markets and built a huge fortune. His trading
techniques and principles eventually evolved into the candlestick methodology which was then used
by Japanese technical analysts when the Japanese stock market began in the 1870s. The method was
picked up by famed market technician Charles Dow around 1900 and remains arguably the most
popular form of technical analysis chart in use by today’s traders of nancial instruments.
Candlestick charts visually display the supply and demand situation by showing who is winning the
battle between the bulls and the bears.
Candlestick charts reveal another dimension of the given period’s price action by pictorially
displaying the force (or lack of force) behind each price bar’s movement.
Candlestick formations make all single bar and multi-bar patterns signi cantly easier to spot in real
time, thus increasing your chances of catching high probability trade setups. In addition, because
candlestick charts use the same data as bar charts (open, high, low, and close), all Western technical
signals used on a bar chart can easily be applied to a candlestick chart.
Candlestick charts o er everything bar charts do and more, using them is a win-win situation
because you can use all the trading signals normally used on bar charts with the added clarity and
additional signals generated by candlesticks.
Candlesticks have a central portion that displays the price distance between the open and the close.
This area is known as the real body or simply the body.
The price distance between the open and the high for the period being analyzed is called the upper
shadow, sometimes referred to as an “upper wick” as well. The highest price paid for a particular
period is the marked by the high of the upper shadow.
The price distance between the close and the low for the period being analyzed is called the lower
shadow, sometimes referred to as a “lower wick”.
The real body displays the opening and closing price of the security being traded. Closing prices have
added signi cance because they determine the conviction of the bulls or bears. If the security closed
higher than it opened, the real body is white or un lled, with the opening price at the bottom of the
real body and the closing price at the top. If the security closed lower than it opened, the real body is
black, with the opening price at the top and the closing price at the bottom. Depending on the price
action for the period being analyzed a candlestick might not have a body or a wick.
To better highlight or visualize price movements, modern candlestick charts (especially those
displayed digitally) often replace the black or white of the candlestick real body with colors such as
red (for a lower closing) and blue or green (for a higher closing).
There are multiple forms of candlestick patterns; here is a brief overview of the most popular and
widely used single and multi-bar patterns commonly used today.
Bullish Candle
Signals uptrend movement, they occur in di erent lengths; the longer the body, the more signi cant
the price increase
Bearish Candle
Signals downtrend movement, they occur in di erent lengths; the longer the body, the more
signi cant the price decrease.
Long Lower Shadow
These candles provide a bullish signal, the lower shadow must be at least the size of the real body;
the longer the lower shadow the more reliable the signal.
Hammer
The hammer is a bullish signal that occurs during a downtrend. The lower shadow should be at least
twice the length of the real-body. Hammers have little or no upper shadow. When a hammer occurs
during an uptrend it is known as a “hanging man” and is a bearish signal. Because of the bullish long
lower shadow however, this pattern needs bearish con rmation by a close under the hanging man’s
real body.
Shooting Star
This candle has a long upper shadow with little, or no lower shadow, and a small real body near the
lows of the session that develops during or after and uptrend.
Harami
The Harami is a two-candlestick pattern in which a small real body forms within the prior session’s
larger real body.
Doji
The Doji is a candlestick in which the session’s open and close are the same, or almost the same.
There are a few di erent varieties of Dojis, depending on where the opening and closing are in
relation to the bar’s range.
Dragon y doji
The Dragon y Doji has a long lower shadow, the open, high, and close are at or very near the
session’s high. This pattern often signals reversal of downtrend.
Gravestone doji
The Gravestone Doji has a long upper shadow, the open, low, and close are at or very near the
session’s low. This pattern often signals reversal of an uptrend.
High wave candle / long-legged doji
This candle has a very long upper or lower shadow and a small real body. If the opening and closing
price are the same the candle has no real body and is then called a Long-Legged Doji. The rst
picture is a high wave candle the second is a Long-Legged Doji.
Engul ng candles
The bullish engul ng pattern consists of large white real body that engulfs a small black real body in
a downtrend. The bearish engul ng pattern occurs when the bears overwhelm the bulls and is
re ected by a long black real body engul ng a small white real body in an uptrend.
Spinning tops
• How Candlestick patterns translate into Nial Fuller’s Price Action Setups
Pin Bars
In Conclusion
Good trading,
Nial Fuller (http://www.learntotradethemarket.com/nial-fuller-forex-bio?rel=author) – Learn To Trade
Forex (http://www.learntotradethemarket.com)
Add a comment...
Pauline Bennett
thanks. real help to my building blocks of knowledge toward competency when trading.
Like · Reply · 1 · 16w
Valerie Riordan
Explaination is excellent. Thanks Nial.
Like · Reply · 22w
Shahnazshakiba
February 11, 2018 at 4:59 am
dear fuller thanks for you mr fuller for educat forex they are very good exuss me iam dont know english
you are very good i am iranian and love you good by shahnaz iran
Reply
Siddharth
February 9, 2018 at 5:47 pm
Ajit
January 2, 2018 at 9:34 pm
Francesca
December 11, 2017 at 12:51 pm
Great explanation with graphics! Others often just explain candles by descriptions, but having it in
graphics makes it more easier to understand.
Reply
LORRAINE LEBEYA
November 24, 2017 at 4:38 am
MANOJ
September 10, 2017 at 11:36 pm
EXPLANATION IS GREAT
Reply
Earnest
March 1, 2014 at 2:09 pm
Thanks Nial for your help and lucid explanation about every aspect of trading.
I really appreciate your concerns.
Additionally, for a newbie in Forex , what do you recommend in the rst place?
Is studying books a good start in trading career?
Thanks
Reply
Chayadi
September 7, 2013 at 11:24 pm
Leave a Comment
Your email address will not be published. Required elds are marked *
Comment
Name *
Email *
Website
POST COMMENT
Sign Up
Find Us on Facebook
(http://www.learntotradethemarket.com/forex-
articles/trading-
legend-
george-
soros)
(http://www.learntotradethemarket.com/forex-
trading-
strategies/types-
tailed-
bar-
candlestick-
trading-
strategies)
(http://www.learntotradethemarket.com/forex-
trading-
strategies/master-
one-
thing-
reach-
trading-
success)
(http://www.learntotradethemarket.com/forex-
articles/brain-
tweak-
dramatically-
improve-
trading)
(http://www.learntotradethemarket.com/forex-
articles/10-
things-
learn-
worlds-
best-
traders)
(http://www.learntotradethemarket.com/forex-
articles/to-
make-
big-
money-
trading)
CONNECT strategies/what-if-4-trades-a-month)
(http://www.learntotradethemarket.com/forex-
trading-
Contact Nial Fuller (http://www.learntotradethemarket.com/contact)
strategies/what-
if-4-
Nial Fuller on Google+ (https://plus.google.com/+NialFullerAU?rel=author)
trades-
a-
month)
Nial Fuller on Facebook (https://www.facebook.com/learntotradethemarket)
ForexForex
Beginners Trading ToolsCourse
Trading (http://www.learntotradethemarket.com/forex-trading-tools)
(http://www.learntotradethemarket.com/forex-university)
CATEGORIES
Forex Trading Commentary (http://www.learntotradethemarket.com/forex-trading-commentary)
RECENT POSTS
What Trading Legend George Soros Can Teach Us About Trading (http://www.learntotradethemarket.com/forex-
articles/trading-legend-george-soros)
Trade Ideas & Technical Chart Analysis by Nial Fuller, April 23rd to 27th 2018
(http://www.learntotradethemarket.com/forex-trading-commentary/trade-ideas-technical-chart-analysis-by-nial-
fuller-april-23rd-to-27th-2018)
Trade Ideas & Technical Chart Analysis by Nial Fuller, April 16th to 20th 2018
(http://www.learntotradethemarket.com/forex-trading-commentary/trade-ideas-technical-chart-analysis-by-nial-
fuller-april-16th-to-20th-2018)
Disclaimer
(http://www.learntotradethemarket.com)
Copyright © 2008-2018 Learn To Trade The Market (http://www.learntotradethemarket.com)
platform) |