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Forex Trading Strategies – Guessing the Mysteries of Japanese Candlestick Charts and Patterns

If you are using technical analysis as one of your forex trading strategies, you probably use Japanese candlestick charts. Candlestick charts are one of three options (along with bar and line charts) and are the most popular among modern traders as they provide the most vivid picture of what is happening in the market. But are you using them to their maximum benefit?

By studying the candlestick charts, you can get an immediate picture of the open, close, low and high prices for the period you have chosen. But that’s not all that candles can reveal.

An expert candlestick reader can gain a lot of information about market sentiment, strength, and momentum simply by studying the shapes and patterns of the candlesticks. Some successful traders disregard all indicators and only focus on what the candlesticks reveal about price action.

Candlestick charts date back centuries, to 18th century Osaka, when the legendary rice trader Homma Munehisa used them to corner the market. Japan’s long isolation meant that candlestick techniques remained hidden from the rest of the world.

But then trader Steve Nison researched the Japanese candlestick charting method in the 1990s through old Japanese documents. Nison was quick to appreciate the zen beauty of the candlestick trading method and went on to defend the system in a series of popular books.

Nison’s books are extremely comprehensive, detailing a large number of candlestick formations, including the dark cloud, the hanging man, the morning and evening stars, and the celebrated doji, with its various incarnations such as the dragonfly doji. and the tombstone doji.

You may feel overwhelmed reading these books, but you really only need a small set of candlestick patterns to use with confidence and clarity on a daily basis. He just needs to know what patterns to focus on and how to properly interpret what he’s being told.

Candles never lie, but guessing their message isn’t always easy. You need to spend some time understanding exactly what they are telling you. Make reading candlesticks one of your forex trading strategies and set yourself up for success in forex trading.

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