One of the most basic foundations of technical analysis is watching price charts. There are three popular types of charts used by forex traders and these are line charts, bar or open-high-low-close charts, and candlestick charts. The line chart is the simplest among the three, with a price line connecting one closing price to the next. This … Continue reading Types of Charts
Candlestick charting originated around the 17th century among Japanese rice traders. Munehisa Homma developed this methodology to monitor daily changes in the prices of rice in order to help him make better decisions when it comes to buying or selling the commodity. These methods were eventually compiled and improved on by the more popularly known … Continue reading Japanese Candlestick Basics
Single candlestick patterns are perhaps one of the most straightforward ways of reading price action and interpreting market psychology. Candlesticks with long bodies and short wicks signify strong buying or selling momentum that is likely to carry on until a reversal candlestick is formed. Meanwhile, candlesticks with long wicks and short bodies can either reflect … Continue reading Common Candlestick Formations
Memorizing double candlestick patterns can be a bit more challenging, but the trading results can be very rewarding. As with the single Japanese candlestick patterns, these come in bullish and bearish versions. The most basic type of dual candlestick formation is the bullish or bearish engulfing pattern. Simply put, the engulfing pattern occurs at the … Continue reading Double Candlestick Patterns
Group candlestick patterns are more creative but take time to form. Generally, these are believed to be more effective signals when they occur on the longer-term time frames. First is the three-inside-up or three-inside-down pattern, which is basically indicative of a possible reversal. It can be considered a harami double candlestick pattern plus an additional … Continue reading Group Candlestick Patterns
