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Familiarity with Japanese candles in Forex and stock exchanges

Familiarity with Japanese candles in Forex and stock exchanges

Deal with Japanese candles

In ancient times, when Godzilla was a small and funny lizard, the Japanese built their own old-school technical analysis version for the rice trade. That’s right, rice.

Traders traded in those days as well. You traded rice for ice.


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A European named Steve Neeson discovered this clandestine technique called “Japanese candles”. He learned the technique from his Japanese friend, a rice trader.

Steve studied candles seriously, as if he lived and breathed with them. Then he started writing about them.

Slowly, this secret technique became popular in the 90’s.

In short, without Steve Neeson, the candlestick charts might have remained a mystery.

Steve Neeson can be called the father of Japanese candle patterns.

 

What are Japanese candles?

 

The best way to describe candle patterns is to use photos.

Types of charts in Forex and how to read them

Japanese candle patterns can be used at any time, such as a day, an hour, thirty minutes, and 5 minutes.

These patterns show price changes or so-called price action over a period of time.

Japanese candle patterns are drawn based on the starting prices, the highest price (ceiling price), the lowest price (floor price) and the final price, in the desired time period.

  • If the closing price is higher than the starting price, a hollow candle (usually shown in white) is drawn.
  • If the closing price is lower than the starting price, a solid candle (usually indicated in black) is drawn.
  • The hollow or solid part of the candle is called the “main body” or body.
  • The thin lines at the top and bottom of the body represent the ceiling and floor over time and are called shadows.
  • The top shadow tip indicates the “highest price (price ceiling)”.
  • The bottom of the shadow shows the “lowest price (floor price)”.

 

Description of Japanese candles

 

Now let us examine the different parts of these candles.

Attractive bodies

 

Just like humans, candles also have different sizes and sizes. When it comes to Forex trading, there is nothing more important than examining the body of these candles.

Familiarity with Japanese candles in Forex and stock exchanges 

Familiarity with Japanese candles in Forex and stock exchanges

Stretched and elongated structures and bodies indicate more and more intense activity in the field of buying or selling. The longer the body, the stronger the buying and selling pressure. This means that the buyer or seller is stronger and has taken control.

Shorter bodies indicate very little buying or selling activity. In the special language of Forex, cows are the buyers and bears are the sellers.

Familiarity with Japanese candles in Forex and stock exchanges 

Familiarity with Japanese candles in Forex and stock exchanges

Long Japanese white candles indicate high buying pressure.

The taller and longer the white candle, the greater the distance between the closing price and the starting price.

This indicates that the closing price has risen significantly compared to the starting price and buyers have been aggressive. In other words, the cows overcame the bears for a long time.

Long black candles (solid) show high sales pressure.

The longer the black Japanese candles, the lower the closing price.

This shows that the closing price has dropped significantly compared to the starting price and the sellers have been aggressive. In other words, this time the bears have taken the branches of the cows and defeated them.

 

Mysterious and mysterious shadows

 

The top and bottom shadows on Japanese candles provide important clues about the trading session.

The top shadows show the highest price obtained.

The lower shadows indicate the lowest price obtained.

Candles with long shadows indicate that good trading activity has taken place after the starting price and the closing price.

Japanese candles with short shadows indicate that most of the trading activity is done in the range close to the starting and ending price.

Familiarity with Japanese candles in Forex and stock exchanges 

Familiarity with Japanese candles in Forex and stock exchanges

If the Japanese candle has a long top shade and a short bottom shade, it means that buyers have offered higher prices.

But for some reason, sellers have stepped in and pushed prices down, to the point where the closing price is close to the starting price.

If a Japanese candle has a long lower shadow and a short upper shadow, it means that the sellers have forcibly reduced the prices.

But for some reason, buyers have stepped in and raised prices so that the final price is close to the starting price.

 

Note:  In this article, we have examined Japanese candles away from the complexity and extra details. Try to fully understand this brief. Go back if necessary and review it several times. We promise you will not lose.


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