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Formation of A Japanese Candlestick and What are its Properties and Benefits - Forex Function

Formation of A Japanese Candlestick and What are its Properties and Benefits

Last Update: 21 December,2016
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Candlestick Patterns

There are various different names for all candlestick patterns, but basically the idea behind all candlestick patterns is the same i.e. the more is the real body, the more is the strength of a particular trend and the more is the shadow, the more is the indecision in the forex market because a shadow is the result of bulls and bears fighting and ending up into a draw or a tie.
☑️ A Japanese candlestick provides all four types of prices i.e. open, high, low and close for any particular respective time frame.
☑️ The Real Body i.e. a hollow (white) or a filled (black) portion of a candlestick displays the difference of price movement between the opening and closing prices.
☑️ The Shadows i.e. a vertical line above and below the real body displays the highest and lowest traded price for any particular respective time frame.
☑️ A Bullish candlestick is formed i.e. a white or green color real body candlestick if the closing price is above the opening price.
☑️ A Bearish candlestick is formed i.e. a black or red color real body candlestick if the closing price is below the opening price.
☑️ A single complete candlestick i.e. shadows + real body displays the entire trading range for any particular respective time frame.
☑️ A candlestick is formed in all possible sizes i.e. from extremely short with no real body to any gigantic long with no shadows.
☑️ A combination of multiple candlesticks used for speculating the forex market is known as Japanese candlestick chart patterns technical analysis, and there are three types of candlestick patterns varying from single to triple candlesticks.

There are lots of candlestick patterns and every candlestick pattern reflects different type of market information; some reflects the continuation of the current trend, some reflects the cautionary signal for the current trend and some reflects the potential reversal in the current trend, a list of all important candlestick patterns with their respective roles is available below

A couple of points to remember before using any Japanese candlestick chart patterns.

☑️ A candlestick pattern should be used as a tool for confirmation of a trade setup in context with your personal trading strategy. Do not make a trading decision solely based on a candlestick pattern.
☑️ A candlestick pattern is formed only after there is a final closing price; do not make an assumption of any type of candlestick pattern while the trading session is active for any particular respective time frame.
☑️ All candlestick patterns are only valid until the price respects the patterns i.e. the price moves in the appropriate direction and it is only after that a trading decision can be made for any currency pair if the price shows an opposite or different behavior, then the candlestick pattern is treated as a failed one or invalid.
☑️ Even if, a perfect candlestick pattern has formed, this does not mean that the price will 100% surely act as accordingly to the pattern analysis, patterns do fail sometimes, but it is recommended to wait for the price confirmation in order to take calculated low risks for higher profits i.e. let the bulls and bears show their power by pushing or pulling the prices.
☑️ If any single candlestick and/or all candlestick patterns is formed at a support and resistance levels; we get a double price confirmation, as a result, we are able to profit from a low risk forex trading opportunity to reap huge profits from the trade.

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