Candlestick pattern analysis is one of 3 types of charts in addition to the lines and bars in forex trading. Candlestick chart is a chart formed from a price set in the form of a candle bar. Through this form of charts traders can get information about open, high, low and close from a certain period. This information becomes a much needed material in forex trading. Use an official Indonesian forex company that has registered with a financial institution in Indonesia. Choosing an Indonesian online forex company broker is the first step to achieving your success.
The form of candlestick pattern analysis is considered very important because it is very useful in the study of technical analysis. This analysis is referred to as the source of all sources of technical analysis.
This analysis was first discovered by a Japanese businessman named Homa Munehisa. This entrepreneur initially used this pattern to predict the price of the commodity of the business he ran at that time. With the pattern he made Homa read the level of availability and demand of his trading commodities. Thanks to the pattern he created, Homa was able to read the odds and make the greatest profit at that time.
In modern times, traders follow the system run by the inventor of this candlestick pattern, and find several types of candles with their own character. The basic understanding of candlesticks is that all the information has been reflected in its price. Sellers and buyers move the market based on the expectation of greater profits and fear of loss (fear and greed).
Also Read: How to Read Forex Chart Patterns
Candle analysis uses data on opening price (open), highest (high), lowest (low) and close (close). If the close is below the opening price then the body candle is usually dark or black. If the closing is above the opening price then the candle body is usually light in color is white. While the line above or below the body is referred to as shadows, it indicates the high and low prices for a certain period of time.
Before learning more about candlestick analysis, a trader should first know the basis of the formation of a candle in terms of psychological. Candlestic consists of body (body) and tail (shadow). The white body shows a very strong buyer position against the market, candles like this are called bullish, High represents greed (greed) of buyers while low represents Fear (fear) of sellers. The black body indicates the position of the seller dominating the market, this candle is also called Bearish. The open position above is then closed below, High represents fear from the buyer while low represents greed from the seller.
Although it is quite representative of the psychology of candlestick price movements, there is another thing that is actually not informed on candlesticks, namely movements that occur in a certain period of time. There are at least 4 types of basic candles that we can learn and produce a price prediction going forward, namely long day (buyyer / dominant seller so that prices move a lot and in the direction). Doji (prices tend to be weak, usually occurring after a trend occurs). Spinning Top (weak movements caused by the lack of market excitement) and High Wave (prices tend to go back and forth irregularly signifying confused markets).