Japanese Candles Patterns Explained - Forex Trading Japanese Candles
Forex Trading Using Candles - Trade Forex with Candlestick Setups
Brief History
Candles were developed in 18th century by legendary rice trader called Homma Munehisa to give an overview of opening, high, low and closing market price over a specified period of time.
They were used by legendary rice trader to predict future market prices. After dominating the rice market, Munehisa then eventually moved to the Tokyo exchanges where he then gained a huge fortune using this analysis. It is said that He made over a hundred consecutive winning trades.
Types of Forex Trading charts
There are Three types of charts which are used in Forex: Line, bar & candles.
Line - plots a continuous line joining closing prices of a currency pair.
Bars- displayed as sequence of OHCL bars. OHCL represents OPEN HIGH LOW and CLOSE. Opening price is displayed as a horizontal dash to the left and the closing price as a horizontal dash to the right.
The main disadvantage of a bars is that it is not visually appealing, therefore most traders don't use them.
Candlesticks Patterns - Japanese Candle Charting Techniques - these use the same price data as bar charts (open, high, low, and close). However, they are displayed in a much more visually identifiable way that resembles a candle with wicks on both its ends.
How to Interpret Japanese Candle Charting Techniques
The rectangle section is called the body.
The high and low are described as shadows & plotted as poking lines.
The color is either blue or red
- (Blue or Green Colour) - Prices headed up
- (Red Colour) - Prices headed down
Most forex softwares like the MetaTrader 4, use colours to mark direction. Colors used are blue or green: when the price moves up, red: when price moves down.
Candlesticks Vs. Bar Chart
When candlesticks are used it is very easy to see if the price headed up/down as compared to when bar charts are used.
The Japanese Candlestick Charting Techniques also have very many formations that are used to trade the trading market. Japanese Candlestick Charting Techniques - candlesticks patterns have different technical analysis interpretation and the most common Japanese Candlestick Charting Techniques are:
| Reversal Setups |
The above Japanese Candlestick Charting Techniques and Patterns is what makes the Japanese candlesticks popular among forex technical traders and it is why this type of analysis are most often utilized when it comes to analyzing the trading market. The analysis for these Japanese candles pattern formations in Forex is same as that one used in stocks trading - Japanese Candle Charting Techniques.
Drawing japanese Candles Charts on MetaTrader 4
To draw these on the MT4, select MT4 charts drawing tools within the "MetaTrader 4 Tool bar" - illustrated below.
To view this tool-bar on MT4 navigate to 'View' Next to file at the left top corner of the MT4 Platform, Click 'View', Then Click 'Toolbars', Then check 'Charts' Button Key. Above tool bar will appear.
Once the above tool-bar, pops up you can then choose the type you want to convert to, If you as a trader want to view using the bar chart format, click the bar tool button as illustrated above, for line format click the line tool button, for Japanese candlesticks format click the "candlesticks tool button".
Forex Trading Japanese Candlesticks. Japanese Candles Setups - Forex Trading Using Candlesticks. Trading with Candle - Trade Forex with Candle Pattern
