Trading With Candlesticks Made Easy
We all know candlesticks. And we all know how trading with candlesticks is one of our most powerful tools. It's hard to imagine techinal chart analysis without candlesticks. So for that reason alone it clear that understanding candlesticks and knowing how to use this tool, is of the utmost importance to you.
The Basics Of Trading WIth Candlesticks
The first to use trading with candlesticks were the Japanese. There was a man named Homma, who traded the rice futures in the 1700s, discovered that besides there being a link between supply and demand, the market was also heavily influenced by emotional decisions of the traders. He understood that he could gain a benefit from understanding the emotions of the traders. He saw that there could actually be a difference between the value and price of the rice. This difference between value and price is still relevant in every market today, including forex.
There are two ways to look at price. There's fundamental analysis and technical analysis. Technical analysis and candlesticks are of the psychological or emotion sort. The technical analysis is seeking to answer the question "how are other traders viewing this and how will that effect the price in the immediate future".
When they are used in the correct way, candlesticks can give a signal of market direction before most other indicators. They can be created for any time period you want: Monthly, weekly, daily, hourly, per minute and even per an odd number like 52 minutes (if that's your kind of thing). Regardless of the time frame, candlesticks should not be viewed as a sole entity in your trading approach. Even when candlesticks are viewed in a pattern, be sure to incorporate other signals and indicators into your trading as well.
Candlesticks As A Tool
There are heaps of candlestick patterns and it can be daunting to recognise and take advantage of all the different patterns. Ofcourse some patterns are more useful than others and some suit your trading personality much better than others. But when the right patterns are used correctly, they are a great tool to increase the accuracy of your trades. And having the ability to recognise these patterns will provide for plenty of trade situations for trading with candlesticks.
As always when it comes to tools. Treat them as just that, a tool. Never rely on just one tool and gather confirmation from other tools as well. This will decrease the risk of the trade not working and it will improve the accuracy of your forecasts greatly.
Once you understand your set of patterns, you will be reading the story of the price as told by a sequence of candlesticks, like a pro. You will be able to make forecasts with decent accuracy and acting on confirmation once they show up.
Watch the video above for the full lesson so you can continue to enhance your skills and be better everyday.
Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. Urbanforex will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.<7p>
Editors’ Picks
EUR/USD hits two-day highs near 1.1820
EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.
GBP/USD reclaims 1.3600 and above
GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.
USD/JPY drops back below 157.00, as focus shifts to Japan snap election
USD/JPY is back in the red below 157.00 in the Asian session on Friday. The Japanese Yen recovers ground against the US Dollar amid some profit-taking ahead of Japan's snap general election on Sunday. The preliminary reading of the Michigan Consumer Sentiment Index report for February will be released later on Friday.
Editors’ Picks
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates Premium
The EUR/USD pair lost additional ground in the first week of February, settling at around 1.1820. The reversal lost momentum after the pair peaked at 1.2082 in January, its highest since mid-2021.
Gold: Volatility persists in commodity space Premium
After losing more than 8% to end the previous week, Gold (XAU/USD) remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000.
GBP/USD: Pound Sterling tests key support ahead of a big week Premium
The Pound Sterling (GBP) changed course against the US Dollar (USD), with GBP/USD giving up nearly 200 pips in a dramatic correction.
Bitcoin: The worst may be behind us
Bitcoin (BTC) price recovers slightly, trading at $65,000 at the time of writing on Friday, after reaching a low of $60,000 during the early Asian trading session. The Crypto King remained under pressure so far this week, posting three consecutive weeks of losses exceeding 30%.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.
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