Japanese Candles Patterns Explained - Forex Trading Japanese Candles

Forex Trading Using Candles - Trade Forex with Candle Patterns

Brief History

Candle-sticks were developed in 18th century by legendary rice trader called Homma Munehisa to give an overview of opening, high, low & closing market price over a given 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 and candlesticks.

Line - plots a continuous line connecting closing prices of a currency pair.

Bars- displayed as sequence of OHCL bars. OHCL represents OPEN HIGH LOW and CLOSE. The Opening price is displayed as a horizontal dash on left & closing price as a horizontal dash on right.

The main disadvantage of a bars is that it is not visually appealing, therefore most traders don't use them.

Candlesticks Patterns - Japanese Candlestick Charting Techniques - these use the same price data as bar charts (open, high, low, and close). However, they in a much more visually identifiable way which resembles a candle-stick with wicks on both its ends.

How to Interpret Japanese Candlestick Charting Techniques

The rectangle section is called the body.

The high & low are described as shadows & plotted as poking lines.

The color is either blue or red

• (Blue or Green Color) - Prices moved up
• (Red Color) - Prices moved down

Most forex trading platforms like the MT4, use colors to mark the direction. Colors used are blue or green: when price moves up, red: when price moves down.

Candle Sticks Vs. Bar Chart

When candles are used it's very easy to see if the price moved up or down as opposed to when a bars are used.

The Japanese Candlestick Charting Techniques also have very many formations that are used to trade the FX trading market. Japanese Candlestick Charting Techniques - candlesticks patterns have different technical analysis interpretation and the most common Japanese Candlestick Charting Techniques are:

The above Japanese Candlestick Charting Techniques and Patterns is what makes the Japanese candlesticks popular among forex technical traders & it is why this type of analysis are the most widely used when it comes to analyzing the FX trading market. The analysis for these Japanese candles pattern formations in Forex trading is same as that one used in stocks trading - Japanese Candle Charting Techniques.

Drawing japanese Candlesticks Charts on MetaTrader 4

To draw these on the MT4, select MT4 charts drawing tools within the "MetaTrader 4 Tool bar" - shown below.

To view this tool-bar on MT4 navigate to 'View' Next to file at the tops left 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 select the type you want to convert to, If you want to view using the bar format, click the bar tool button as displayed above, for line format click the line tool button, for Japanese candlesticks format click the "candlesticks tool button".

Forex Trading Japanese Candlesticks. Japanese Candlesticks Forex Candles Patterns - Forex Trading Using Candlesticks. Forex Trading with Candle Stick - Trade Forex with Candlestick Pattern