While we briefly covered Japanese candlestick charting analysis in the previous 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 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.
Okay, so what the heck are Japanese candlesticks?
The best way to explain is by using a picture:
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
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”.
Read more: http://www.babypips.com/school/elementary/japanese-candle-sticks/what-is-a-japanese-candlestick.html#ixzz3HyLq3IRQ
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