Leveraging Candlestick Patterns For Successful Forex Mining In Dallas

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Leveraging Candlestick Patterns For Successful Forex Mining In Dallas – The graphic analysis method of Japanese candlestick charts is the oldest method of technical analysis. It was developed by Japanese merchants in the XVIII-XIX centuries. The psychology of market participants’ behavior and market sentiment is determined by the supply/demand ratio, which affects price movements. Usually, asset prices move in cycles, because people behave the same in certain situations.

This article will help you understand trader psychology and analyze candlestick chart patterns to trade successfully in financial markets. You can practice your technical analysis skills on the free demo account without registration with .

Leveraging Candlestick Patterns For Successful Forex Mining In Dallas

Leveraging Candlestick Patterns For Successful Forex Mining In Dallas

A candlestick chart is a style of financial price chart organized as a candlestick that shows price movements over a specific period of time.

Bearish Harami Candlestick Pattern

The meaning of candlestick analysis is in the name itself. The principle of graphical representation of price action is a sequence of candlesticks, which define market sentiment and price direction in different periods, from seconds to months. Moreover, you can determine the high and low of each candlestick. A full candlestick also shows the open and close prices. A combination of these data provides information for making trading decisions using candlestick chart patterns. The Japanese candlestick chart is a universal tool, candlestick chart analysis can be applied to trade currencies, stock markets, commodities, CFDs, cryptocurrency, or any type of trading asset.

Munehisa Homma, a Japanese rice trader, developed the concept of the candle chart. He put together four indicators, based on which future demand could be accurately predicted. Homma was the first to develop a basic trading system that determined entry and exit points.

First, a bullish candle was rising white and a bearish candle was falling black. With the development of technology and the advent of multi-functional trading terminals, traders and investors have the opportunity to paint candlesticks in the colors that suit them.

The main difference between candlestick charts and bar charts is the presence of the so-called “body” in the Japanese candlestick, which makes the candlestick charts more expressive.

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As a rule, there are bullish candles, which indicate the price increase, a white or green candle; it shows initial and final levels.

The bearish candle is usually black (or red candle), which means the price decline. This candlestick shows open and close prices.

The horizontal lines on the side of the bars show the opening and closing prices over a certain period.

Leveraging Candlestick Patterns For Successful Forex Mining In Dallas

If the opening price is less than the closing one, the bar is bullish. If the opening price is higher than the closing one, the bar is bearish.

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The difference between bars and candlesticks is a different classification and terminology since bars were developed and used in the West.

Candle charts are a technical tool that shows the price dynamics of various financial instruments in the stock, currency, cryptocurrency and commodity markets.

The main motivation for traders is the opportunity to make money. To do this, all market participants must be able to analyze price movements and understand the psychology of a trader. A candlestick chart is a convenient and practical tool that shows price changes, thanks to which traders and investors can easily define the direction of the trend.

The candlestick shows information about the price action. For example, a red candlestick or a black candlestick means that the bears are ahead at the specified time. A green candlestick or a white candlestick means that the bulls rule the market.

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There are also Doji candlesticks which mean uncertainty in the market. A Doji is often seen when the market is in the overbought/oversold zones, and is a reversal candlestick pattern. There are several types of doji candlestick patterns, such as Tombstone, Dragonfly, doji with a long upper shadow or down shadow, Rickshaw man doji candlestick, and Tri-star.

When analyzing a candlestick chart, it is also important to take into account the time periods of emerging candles or the so-called time frames.

Time frames range from one minute to a month. Short-term time frames, 1 minute – 30 minutes, are more vulnerable to market noise, including small corrections and intraday volatility. The longer the time frame, the more accurately you will be able to determine the trend and the more effective Japanese candlestick chart techniques work. This is due to the fact that candlesticks formed in shorter time frames can be the shadow of a candlestick in a longer time frame.

Leveraging Candlestick Patterns For Successful Forex Mining In Dallas

The 30-minute chart on the left shows the highlighted activity area of ​​one candlestick in the daily time frame on the right.

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In a shorter time frame, we see an evening star bearish reversal pattern, with a hanging man pattern inside.

Looking at a 30-minute chart, a newbie would sell and lose money quickly, while an experienced trader looking at a daily chart would see a bullish flag price candlestick pattern forming, with daily candle bullish momentum.

This candlestick was a sign that the flag would break out soon, and, after the trader waited for the correction to complete, he would open a buy position and make a good profit.

However, the candlestick trading strategy is very important. There are short, medium and long term trading strategies. In the first case, one could use a high-risk day trading strategy, which combines Japanese candlestick analysis and candlestick price action patterns. In the second case, one trades more conservatively and a position could be closed in a week, but the profit from one trade would be higher.

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The opening price is the price level at which the movement in a new period began. If the price is rising, the candlestick will be green or white. If the price is going down, the candlestick will be red or black.

The high price is the highest price level reached over the period. It is marked by the candlestick shadow. If there is no shadow, the open or close prices are the highest over the period.

The low price is the lowest level hit by the price in the candlestick; it is marked by the lower shadow. If there is no shadow, the lowest price is at the open/close level.

Leveraging Candlestick Patterns For Successful Forex Mining In Dallas

The closing price is the closing price of the candlestick formed over the period. The candlestick is green or white if the closing price is greater than the opening price. If the closing price is less than the opening price, the candlestick is red or black.

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The wick of the candlestick is the same as the shade. The wick of the candlestick shows the high and low price over a certain period. It can be a top peak or a wick down. The length of the candlewick shows the price volatility.

The price direction is the line of price movement indicated by the candle body. The candlestick color shows whether the price falls or rises. If the candlestick is green or white, the price is up. If the price goes down, the candlestick will be black or red.

A single candlestick pattern can signal a trend reversal. For example, hammer candle, inverted hammer, hanging man, shooting star, doji, and others.

A bullish candlestick is a full-bodied green or white candle with a wide range that can have short shadows. When a candlestick appears bullish, it means a sharp increase in the number of asset purchases, implying that one may enter long.

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Such a candlestick means that the number of sell trades has increased, and one could enter a short trade.

Double candlestick patterns consist of two candlesticks. Based on how the candlesticks are positioned, you can predict future price movement.

For example, such candlestick patterns as engulfingcandlestick, dark cloud cover, cloud break are strong reversal patterns, indicating that the ongoing trend is about to reverse soon.

Leveraging Candlestick Patterns For Successful Forex Mining In Dallas

Triple candlestick patterns are made up of three candlesticks. The most common reversal patterns are morning star, evening star, three-star doji top, three-star doji bottom, three black crows.

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A hammer pattern is a classic single-candle reversal pattern in candlestick analysis. A hammer candle at a downside momentum low signals a downward trend reversal, which suggests that the price should be rising.

The Japanese name for this pattern is takuri. Takuri means groping bottom, because the candlestick body is short and the lower shadow is long.

When a hammer forms at the high, after a long uptrend, it means that the trend should be down soon. At the top, a hanging man is called a reverse pattern.

You can see from the BTCUSD daily chart below that, after a long consolidation in a sideways channel, the price has formed a key support level. A series of bullish hammer candle patterns followed, after which the market reached a new high price.

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An inverted hammer is a candlestick with a short body and a long upper peak. This is a reversal pattern that usually forms at the low level after a downtrend.

The same candlestick on high is called a shooting star; it is a sign that a downtrend is imminent.

Before entering a buy trade, make sure the hammer candle is inverted bullish. The bullish attitude can be confirmed with other candlestick patterns, such as an engulfing candlestick, a hammer, three white soldiers, and so on.

Leveraging Candlestick Patterns For Successful Forex Mining In Dallas

A spike is a single candlestick pattern, with little or no body and long up or down curves.

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A pattern can be traded as a spike if the body of the candlestick is at least ten times smaller than the candlestick.

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