candlestick analysis - this is one of the most effective methods of technical analysis.Candlesticks were invented in Japan in the 18th century, a resident of the city of Sakata, Munehisa Homma.The invention candlesticks allowed fairly accurately on the basis of past prices to predict their future movement.
candlestick analysis (Forex) is mainly used for analysis of price movements on the daily time interval based on relative prices: the opening and closing of a particular trading day, the previous closing and opening the next.
difference between the opening price and closing price is portrayed as a rectangle, which is called the body of the candle.If the closing price of the candle is lower than its opening price, the candle body paint over black (bearish candle), and when the closing price of the candle is higher than its opening price - white (bullish candle).
As a rule, under and / or over the body of the candle on the chart price movements appear thin lines, which are called the "shadow".The top one shows the agreement reached in the time interval the maximum price lower, respectively, minimum.These are the shadows, like a wick, formed the basis of the name "Candlestick".
body of the candle is actually talking about a quantitative change of candles during its formation: a long body candle - a significant change in short - less than substantial.
analysis of shadows, too, has its own characteristics.If the candle body is shorter than the lower shadow, even if the candle is bullish (white), one on the market at a given time advantage for the bears.If the candle body is equal to or shorter than the upper shadow, even if the bearish candle (black), the market leaders - the bulls.
candlestick analysis helps the trader to correctly analyze the market, compare data and make clear effective strategy.
All candlestick combination is divided into three types: some candles, and paired combination of a combination of three or more candles.The last - this is a much more reliable signals to the transaction than a single candle.This is due to the fact that the last candle or virtually confirm the meaning of the first or refute it.
Candlestick analysis of the market is none other than the analysis of successive combinations of candlesticks.Its basic principle is to find a certain standard models (trend continuation or reversal), which are sufficiently accurate interpretation.
Candle responds quickly to price changes than any indicator, so if you use candlestick analysis, along with other methods, it will make trading much more efficient.
algorithm works on a certain sense of combinations of candles, which appears in the graph on the right side, similar to the following:
- to define the meaning of the last of the candles;
- establish a link with the previous;
- if necessary, to determine the meaning of the latest trio of candles.
particular interest are Candlestick analysis of market reversal.
probability of maintaining the current trend is generally higher than the probability of change, so when any reversal candlestick signal configuration is necessary to get it confirmed.
If topping signals preceded by a long time and a strong trend, then the probability is quite high approaching a turn, the longer the trend and the stronger it is, the closer the moment of changing trends.
appearance of reversal signal near strong enough the old resistance levels and support increases the likelihood of its operation.
correct predictions also contribute to the data volume of trading, if at the close of the last candle existing models marked by growth, it will be a confirmation of a preliminary forecast.
