Sunday, September 17, 2017

Japanese Candlestick Anatomy,


Japanese Candlestick Anatomy

Let’s break down the different parts of a Japanese candlestick.

Sexy Bodies

Just like humans, candlesticks have different body sizes. And when it comes to forex trading, there’s nothing naughtier than checking out the bodies of candlesticks!
Japanese Candlestick Anatomy
Long bodies indicate strong buying or selling. The longer the body is, the more intense the buying or selling pressure. This means that either buyers or sellers were stronger and took control.
Short bodies imply very little buying or selling activity. In forex lingo, bulls mean buyers and bears mean sellers.
Long vs. Short Japanese CandlesticksLong white Japanese candlesticks show strong buying pressure.
The longer the white candlestick, the further the close is above the open.
This indicates that prices increased considerably from open to close and buyers were aggressive. In other words, the bulls are kicking the bears’ butts big time!
Long black (filled) candlesticks show strong selling pressure.
The longer the black Japanese candlestick, the further the close is below the open.
This indicates that prices fell a great deal from the open and sellers were aggressive. In other words, the bears were grabbing the bulls by their horns and body-slamming them.

Mysterious Shadows

No, we’re not talking about wearing dark smokey eye shadow.
The upper and lower shadows on Japanese candlesticks provide important clues about the trading session.
Upper shadows signify the session high.
Lower shadows signify the session low.
Candlesticks with long shadows show that trading action occurred well past the open and close.
Japanese candlesticks with short shadows indicate that most of the trading action was confined near the open and close.
Japanese candlesticks with long shadows

If a Japanese candlestick has a long upper shadow and short lower shadow, this means that buyers flexed their muscles and bid prices higher.
But for one reason or another, sellers came in and drove prices back down to end the session back near its open price.
If a Japanese candlestick has a long lower shadow and short upper shadow, this means that sellers flashed their washboard abs and forced price lower.
But for one reason or another, buyers came in and drove prices back up to end the session back near its open price



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Saturday, September 16, 2017

What is a Japanese Candlestick in Forex Trading?


What is a Japanese Candlestick?










While we briefly covered Japanese candlestick charting analysis in the previous forex lesson, we’ll now dig in a little and discuss them more in detail. Let’s do a quick review first.

Japanese Candlestick Trading

Back in the day when Godzilla was still a cute little lizard, the Japanese created their own old school version of technical analysis to trade rice. That’s right, rice.
A Westerner by the name of Steve Nison “discovered” this secret technique called “Japanese candlesticks,” learning it from a fellow Japanese broker.
Steve Nison
Steve researched, studied, lived, breathed, ate candlesticks, and began to write about it.
Slowly, this secret technique grew in popularity in the 90’s.
To make a long story short, without Steve Nison, candlestick charts might have remained a buried secret.
Steve Nison is Mr. Candlestick.

What are Japanese candlesticks?

The best way to explain is by using a picture:
Japanese Candlestick Anatomy

Japanese candlesticks can be used for any time frame, whether it be one day, one hour, 30-minutes – whatever you want!
They are used to describe the price action during the given time frame.
Japanese candlesticks are formed using the open, high, low, and close of the chosen time period.
  • If the close is above the open, then a hollow candlestick (usually displayed as white) is drawn.
  • If the close is below the open, then a filled candlestick (usually displayed as black) is drawn.
  • The hollow or filled section of the candlestick is called the “real body” or body.
  • The thin lines poking above and below the body display the high/low range and are called shadows.
  • The top of the upper shadow is the “high”.
  • The bottom of the lower shadow is the “low”.




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What is Trends Line In forex

Trend Lines

Trend lines are probably the most common form of technical analysis in forex trading.
They are probably one of the most underutilized ones as well.
If drawn correctly, they can be as accurate as any other method.
Unfortunately, most forex traders don’t draw them correctly or try to make the line fit the market instead of the other way around.
Trend Line Example
In their most basic form, an uptrend line is drawn along the bottom of easily identifiable support areas (valleys).
In a downtrend, the trend line is drawn along the top of easily identifiable resistance areas (peaks).

How do you draw trend lines?

To draw forex trend lines properly, all you have to do is locate two major tops or bottoms and connect them.
What’s next?
Nothing.
Uhh, is that it?
Yep, it’s that simple.
Here are trend lines in action! Look at those waves!
Forex trend line examples: uptrends, downtrends, and sideways trends

Types of Trends

There are three types of trends:
  1. Uptrend (higher lows)
  2. Downtrend (lower highs)
  3. Sideways trends (ranging)

Here are some important things to remember using trend lines in forex trading:

It takes at least two tops or bottoms to draw a valid trend line but it takes THREE to confirm a trend line.
The STEEPER the trend line you draw, the less reliable it is going to be and the more likely it will break.
Like horizontal support and resistance levels, trend lines become stronger the more times they are tested.
And most importantly, DO NOT EVER draw trend lines by forcing them to fit the market. If they do not fit right, then that trend line isn’t a valid one!




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