The total number of existing trading versions and options for combining Japanese candlesticks is approximately 83. Most of them have long sunk into oblivion due to the volatility of the market, the remaining ones are still used as a means of earning.
What is candlestick market analysis or the history of Japanese candlesticks
Candlestick analytics is a way of interpreting various combinations of Japanese candlesticks from the position of financial experts. The method was discovered in Japan at the end of the XVIII century. It was invented by the legendary entrepreneur of the time - Munehisa Homma, who later became a state financier and honorary adviser to the Japanese government. In the markets of Western countries, japanese candlestick analytics was learned thanks to the works of Steve Neeson.
In modern trading, the interpretation of candlestick combinations is also used in trading according to the technique of algorithms. This type of analysis has found its application on all exchanges:
- currency;
- stock;
- cryptocurrency;
- Futures.
The meaning of combinations of Japanese candlesticks is the same on all charts for any exchange. The use of this method is possible in the work of beginners and traders with experience. Japanese candlesticks are used in both technical and graphical analysis.
Analysis of Japanese candlesticks and the basics of candlestick analysis in trading
Japanese candlesticks are presented in the form of graphic images. The difference between the figures "Japanese candlesticks" and the figures in the form of "bars" is in the color of candle bodies. Green color is colored bars of price rise, red - decreases. With the same meaning, white and black shades are used, respectively.
All variations of the Japanese analysis look like one or more candles. Combinations of Japanese candlesticks are divided into:
- Spread shapes
- trend continuation figures.
Doji or Doji candles in market analysis — doji
Doji (or Doji) is a well-known and easily recognizable combination of candles, which is endowed with the same meaning as a pin bar in Price Action, or an ap trust in VSA. Doges have a short body with an elongated wick. Their appearance indicates low volatility and the formation of a sideways trend in the market.
The doji candle is one of the most famous types of Japanese candlesticks. The figure can be either an independent source of data for a technical analyst, or a separate component of some important models or patterns.
Candles "hammer" and "gallows" in market analysis – hammer & hanging man
Candles "hammer" and "gallows" reversal price models. Both bullish and bearish patterns are used in trading. Their appearance at the peak of the chart may mean the upcoming turn of the market in the opposite direction, the appearance in the lower part of the market - a turn up. Combinations of "hammer" and "gallows" signal a possible reversal in any trend.
The science of candlestick reading must assume that the reliability of the figure's signal decreases in direct proportion to the time period. In other words, the most accurate candles are formed within a week or a month. The minimum possible daily range is recognized, but the figures formed within an hour are no longer considered reliable.