What are Candlestick Charts and Why We Should Use Them?
The candlestick charts are also considered to be quite related to the bar chart. It also has the same four features or primary price points: the high, the low, the open and the close. The candlestick is often at times taken to be a lot much easier to look at and quite easier to analyze than its bar and line chart groups.
These charts are believed to be one of the oldest types of charts which are used for predicting prices. They try to trace back the history of it, and believed it to be during the 1700s where it was used for the purpose of rice price prediction. In reality, during this early period in Japan, Munehisa Homma becomes a legend when it comes to rice trading and he obviously gained a huge fortune using candlestick analysis.
People around him believed he is one of the people who have carried out over 100 consecutive winning trades. In this type of chart also, similar to other common charts, this also have the open, close, high and low of the features of online Forex prices. Japanese Candlestick charts are the most understandable visual representation to observe movements in prices. It records the price movement on Forex charts which gives a clear picture for Forex traders to study. Japanese candlestick charts are also known as sign language of the Forex market.
The Forex candlestick charts are used to predict the present situation of the market. Although it corresponds to the usual OCHL prices as 'candlesticks' with a wick at each end, the candlestick provides a more understandable illustration detail more than any other chart being used. When the initial rate is higher than the closing rate the candlestick is considered to be solid. When the closing rate exceeds the opening rate, the candlestick is believed to be hollow as a result of the colored bodies.
One advantage that Forex candlestick charts may provide is when you only take a quick view; you may notice a lot of information about the unpredictable movements in an online Forex currency. Most importantly, you engage yourself to be aware of the difference between the open and close prices of the online Forex. Forex Candlestick charting is great for Forex traders looking for better ways to gain better profits and earn income.
If you detect a red candlestick, it can be considered to be taken as a warning about the way the currency price is going. The plump red part of it is the body of that Forex candlestick. The lines analytical from the top and bottom are the upper and lower wicks. The very peak of a candles wick is the highest price for that specific candle while the bottom of the wick is the lowest price for that particular candle.
Other advantages of using this candlestick chart are: are used together with other technical tools . You may combine them with conventional market indicators. It could be a great method of spotting opportunities at the same time. Second, this chart can notice changes in trends which could give warnings showing reversals in market more visual than bar charts.
This type of chart also is clear-cut to use. It has the same points like open, high, low and close data in Forex trading bar charts which are very conventional. This chart gives way in defining present situation of the wavering market.