Use the Japanese Candlestick Structure to Forex Profit
The Japanese Candlestick Structure, or Candlestick Chart, is a trend following mechanism used in Forex trading. Candlesticks show how trends develop in the Forex market and how they are likely to change, both in direction and magnitude.
The Japanese Candlestick Structure looks like the ticker of a stock. Its chart pattern was first used by John Hussman in 1979 and is referred to as the Hussman Trend Indicator. It is one of the most popular trading indicators used today in Forex markets.
The Japanese Candlestick Chart displays four phases, which include the formation of a trend, a reversal of the trend, consolidation and the reversal of the consolidation. The chart structure may also display one or more candlestick shapes that follow a particular trend or move of the market.
A Japanese Candlestick chart always displays four independent candlestick shapes that follow the action of the market. All of the candlestick shapes are made up of at least one of the candlestick shape pairs, usually the White Triangle, Black Diamond and Red Round Candle.
In this Forex trading system, the formation of a trend, i.e. the first formation of a rising or falling trend can be easily seen. It can also be found by using two-day time frames or longer time frames that include the last 24 hours of price history.
With the formation of a trend, you have confirmation that the market is now trending and so there is a high chance of making money. As the trend moves upward, the move up in price is likely to become more pronounced.
You have a number of options to profit from the market. A higher price indicates a bigger profit. A lower price, on the other hand, indicates a smaller profit.
A reversal of a trend indicates a break of the previous high price and a break of the previous low price. The longer a trend lasts, the more profit potential it has. If a trend is already broken, the longer the trend, the greater the chance of ending in a lower price.
Market patterns are found in the chart and show the trend of the market as well as its trend reversal. There are normally four patterns that are common in the Forex market.
The Japanese Candlestick Chart is used in most Forex markets and it helps traders determine the likely direction of the market and when to exit trades. Using the Candlestick Chart can provide the Forex trader with a market reading of how many times the market has been open for a given period of time.
By looking at the chart you can make a Forex trade by looking at how often the market is open. This can help narrow down your range of trading options as you are able to see the patterns more clearly than if you just use your eye.
Forex traders can see how the trends in the market are developing in the Japanese Candlestick Chart and can make informed decisions about when to exit trades and what to expect from the market in the near future. A Forex trader who knows the patterns of the market can make good decisions about their trading program and use the information they glean from the Japanese Candlestick Chart to make a profit.