Japanese Candles Patterns
Japanese Candles were created in 18th century by the renowned rice trader called and named Homma Munehisa who used these candles to give a general overview of opening price, high, low and closing market price over a specified time period.
The candles charts were used by the renowned rice trader to predict the future prices. After dominating the rice market, Munehisa eventually moved to the Tokyo exchanges where he gained a huge fortune using this candles analysis. He is said to have made over 100 consecutive winning trades.
Types of XAU/USD Charts
There are three types of charts used in XAUUSD trading charts: Line charts, bar charts & candles charts.
Line charts
Line charts - line charts are plotted using a continuous line joining closing prices of a XAUUSD, XAUUSD metal.
Gold Line Chart
Bar Charts
Bar charts - bar charts are displayed as a sequence of O.H.C.L. bars. OHCL represents OPEN HIGH LOW & CLOSE price. The Opening price is shown as a horizontal hyphen to the left and closing price as a horizontal hyphen to the right.
XAUUSD Bar Charts
Main disadvantage of bar charts is that they aren't visually appealing; therefore most Gold traders don't use these trading charts.
Candlestick Charts
Candle Charts - candle charts use the same price info as bar charts (open, high, low, and close price). However, these charts are presented in a more visually appealing way that looks like a candlestick with wicks on both ends.
Gold Candles Charts
How to Analyze/Interpret Japanese Candles Charts
The rectangle part is called the body of the candle.
The high & low are referred to as shadows & drawn as protruding lines.The colour is either blue or red
- (Blue or Green Colour) - Shows prices moved up
- (Red Color) - Shows prices moved down
Most platforms like the MT4, use colors to mark the direction of the candlesticks. Color used are blue or green: when the price moves up and red: when price moves down.
When candlesticks charts are used it's very easy to see if the price went up or down as compared to when bar charts are used.
XAUUSD Candles Charts vs Bar Charts
The Japanese candles charting techniques also have many trade formations which are used by technical analysts to trade the Gold Metal. These candle patterns have different trading analysis interpretation and the most regular Japanese candles patterns are:
- Marubozu & Doji candlesticks
- Spinning Tops candlesticks
- Reversal Patterns candlesticks
- Inverted Hammer & Shooting Star candles
- Piercing Line & Dark Cloud candles
- Morning Star & Evening Star candlesticks
The above Japanese Candles patterns is what makes the Japanese candles charting popular among traders & it is why this type of analysis is the most widely used when it comes to analyzing the Gold metal prices. The analysis for these candles setup formations and setups in XAUUSD trading is the same as that one used in stocks trading as well as Forex trading.
Drawing These Candles Charts on MT4 Software Platform
To draw these candles charts on the MT4 software, choose the charts drawing tools within "MetaTrader 4 Tool-Bar" like shown below.
MT4 Charts Drawing ToolBar
To view this charts toolbar on MT4 go to "View" Next to file at the top left corner of the MetaTrader 4 Software/Platform, Click "View", Then Press "ToolBars", Then check the "Charts" Button. The above tool bar will appear.
Once the above charts toolbar, appears you can then choose & select the chart type you as a trader want to convert to, If you as the trader want to view using the bar charts format, click the bar chart toolbar button like as shown above, for line charts format click the line chart tool-bar button, for Japanese candles format click the "candlesticks chart toolbar button".
Study More Guides & Guides:
- XAUUSD Price Action Trading Strategies
- RSI Classic Bullish Divergence and RSI Classic Bearish Divergence Setup
- How XAU/USD Leverage Greatly Increases Gold Profits & XAUUSD Losses
- How to Draw Fibonacci Projection Levels on Trends & in Charts Analysis
- JP 225 Stock Index Trading Strategies Example
- How to Develop My One Page XAU/USD Plan Example Template Explained
- EURGBP Open Hours & EURGBP Close Time
- How to Set Alligator Trading Indicator in Trading Chart on MT4 Software Platform
